Market Performance and Competitiveness: The EU–Serbia Sugar Gap

The European Union (EU) sugar sector has undergone significant transformations, particularly after the abolition of sugar production quotas in 2017, which reshaped market dynamics and competitiveness. Serbia, as one of the few European countries with a sugar production surplus, faces both opportunities and challenges in positioning itself within the regional and global sugar market. This study intends to examine the competitiveness and structural characteristics of the sugar sector in the EU and Serbia, focusing on market concentration, trade performances, and financial sustainability. Using the revealed comparative advantage (RCA) index and the Intra-Industry Trade (GLIIT) index, Serbia’s market integration and competitiveness in comparison to the EU is evaluated. Additionally, a panel data regression model assesses the effect of market concentration on the profitability of sugar processors. The results indicate that the EU sugar market is greatly concentrated, with dominant manufacture in Germany and France, collectively accounting for over half of total production, while Serbia emerges as a significant regional producer with export volumes comparable to Denmark and Sweden. The findings also highlight a positive link between market concentration and profitability, emphasizing the role of economies of scale and market power. The findings suggest that Serbia maintains strong comparative advantages in sugar production, but its long-term competitiveness is challenged by increasing market liberalization, shifting EU trade policies, and the dominance of larger multinational players. The research underscores the need for strategic policies to ensure sustainable production amid global trade fluctuations.