Key Ingredient in Coca-Cola and Pepsi 'Controlled by RSF Militia in Sudan

Gum arabic, a natural emulsifier derived from acacia trees, is used in everything from soft drinks to cosmetics. Sudan accounts for 70% of the world’s supply, making it a critical component in global production chains. However, the country is currently in a civil war between the Rapid Support Forces (RSF) and the Sudanese Armed Forces (SAF), turning gum arabic into a strategic resource controlled by armed groups.

For traders, the key question is: How much risk does this pose to companies and supply chains, and where are the potential market opportunities?

Key Takeaways

• Sudan’s civil war has made gum arabic—a key ingredient in Coca-Cola, Pepsi, and other industries—a high-risk commodity.
• The RSF and SAF impose fees, making transportation expensive and ethically controversial.
• Multinational corporations remain silent, but supply disruptions and reputational risks are mounting.
• The crisis could impact beverage, food, and pharmaceutical companies, with potential spillover into commodities markets.

According to reports, RSF forces charge companies $2,500 per truck to move gum arabic, often stealing part of the cargo. Meanwhile, SAF imposes a $155 per 100kg export fee at Port Sudan. This means that nearly all gum arabic leaving Sudan financially supports one of these groups.

Why does this matter for traders?

• Higher Costs: Increased bribes and fees will likely drive up gum arabic prices, affecting beverage and pharmaceutical costs.
• Supply Chain Vulnerability: With warlords controlling logistics, production disruptions or blockades could lead to shortages.
• Ethical and ESG Concerns: Companies like Nestlé and Mars have made statements about responsible sourcing, but Coca-Cola and Pepsi have remained silent. As scrutiny increases, brands could face backlash similar to the Middle East boycott of Western soft drink companies.

Companies like Coca-Cola (KO), PepsiCo (PEP), Nestlé (NSRGY), and Mars rely heavily on Sudanese gum arabic. If costs rise or reputational risks increase, we may see downward pressure on these stocks.

Tip: Watch for potential shorting opportunities if supply chain risks escalate or if alternative suppliers fail to meet demand.

Countries like Chad, Nigeria, and Senegal also produce gum arabic, but at much smaller volumes. If traders anticipate a prolonged crisis in Sudan, companies may shift sourcing strategies, benefiting alternative suppliers.

Tip:Look for emerging export deals, agricultural investment opportunities, or new market entrants in the gum arabic supply chain.

If the Sudan crisis worsens, companies may seek alternatives to natural gum arabic, potentially increasing demand for synthetic emulsifiers or substitutes. This could benefit chemical and food science firms developing replacements.

Tip: Monitor chemical companies involved in food additives, such as International Flavors & Fragrances (IFF) or Kerry Group (KYGA.L).

Sudan’s war has already led to 12.5 million displaced people and thousands of deaths, making it a major humanitarian crisis. The U.S. and EU have previously sanctioned conflict-related supply chains; blood diamonds, Congolese cobalt. If they take similar action on Sudan’s gum arabic, we could see:

• Tighter export restrictions impacting supply chains.
• Higher costs for companies reliant on the ingredient.
• Volatility in FMCG and soft drink stocks as investors react to potential regulatory hurdles.

Monitor news about sanctions and government intervention as they could significantly impact stock movements in affected industries.

Bottom Line: Gum Arabic Crisis

The gum arabic crisis is a textbook example of how geopolitical conflicts disrupt global supply chains. While soft drink giants may remain silent for now, the longer the crisis drags on, the harder it will be for them to ignore.

Key Trading Takeaways

• Monitor Sudan’s conflict closely for signs of escalation, as this could lead to supply shortages.
• Watch for shifts in sourcing strategies from beverage and food companies.
• Stay ahead of potential regulatory action that could disrupt trade and impact major stocks.
• Look for alternative supply chain beneficiaries in Chad, Nigeria, and synthetic food science sectors.