Indonesia’s sugar industry faces a persistent structural challenge in reconciling aging processing assets, limited milling efficiency, fragmented sugarcane supply, farmer incentives, logistics, and the ambition to strengthen domestic sugar production. This qualitative literature review critically examines business unit consolidation as one possible pathway for restructuring the national sugar industry. Rather than assuming that larger factories are inherently superior, the review develops a conditional framework in which processing scale must be evaluated jointly with feedstock geography, transport economics, cut-to-crush time, farmer–factory relationships, technological capability, and opportunities for by-product valorization. Evidence from Indonesia and other major sugar-producing economies indicates that larger processing units may capture fixed-cost, energy, automation, and diversification advantages, but these benefits can be offset when expanded capacity requires excessively large cane catchments, longer transport distances, unstable farmer participation, or underutilized milling capacity. The review further argues that modern sugar factories should increasingly be evaluated as integrated circular biorefineries producing sugar alongside electricity, ethanol, biogas, fertilizer, biochar, and potentially higher-value bioproducts. A three-pathway restructuring framework is proposed: revitalize, consolidate and replace, or repurpose, selected through mill-specific and region-specific diagnostics. Sustainable restructuring therefore requires optimizing total value per tonne of cane rather than maximizing factory size alone.