Not so sweet: DSM exits aspartame
10 April 2006 00:00 [Source: ICB Americas]
SLIDING ASPARTAME prices have soured the high-intensity sweeteners market for DSM, forcing the company to exit the sector.
DSM will terminate Holland Sweetener Company (HSC), its 50-50 joint venture with Tosoh Corp. of Japan, by the end of 2006. HSC is the third-largest aspartame producer worldwide.
“The global aspartame markets are facing structural oversupply, which has caused worldwide strong price erosion over the last five years,” says DSM. “This has resulted in a persistently unprofitable business position for HSC and no significant improvements are expected in the near or foreseeable future.”
DSM is shutting down HSC’s plant in Geleen, the Netherlands, affecting 100.
Global aspartame capacity in 2005 was estimated at between 16,500 to 17,000 tons per year, with the market valued at around $572 million. NutraSweet Company and Ajinomoto, the two largest producers, have been boosting capacity since late 2004 because of increased demand in the calorie-reduced beverage market.
Ajinomoto’s $58 million expansion in Yokkaichi, Japan, and Gravelines, France, is expected to be completed this year, bringing its global aspartame capacity to 10,000 tons per year. NutraSweet reopened its shuttered aspartame plant in Augusta, Ga., last year and expects to ramp up production to its full 10,000 ton-per-year capacity this year.
Since NutraSweet’s US patent on aspartame manufacture expired in 1992, aspartame’s price reportedly declined by an estimated 75% as competitors entered the market. Other suppliers include Chinese producers such as Wujin Niutang, Zhejiang Haosen Pharmaceutical, Shaoxing Yamei Biochemical Industry, and VitaSweet.
Demand for aspartame in the low-calorie tabletop sweeteners is also sliding because of increased competition from Tate & Lyle’s sucralose, which is currently used under McNeil Nutritionals’ Splenda brand. Between 2003 and 2005, Splenda’s dollar share of the US retail grocery market has grown from 15% to 60%, surpassing Equal, which uses aspartame, as the number-one sugar substitute. Splenda’s sales in 2005 reached $198 million, an 11% increase from the year-ago period, according to Information Resources Inc. (IRI).
Merisant, marketer of Equal and one of the top five users of aspartame worldwide, says its net sales between 2003 and 2005 declined significantly, especially in North America. IRI reports US sales of the Equal brand fell 13% to $53 million in 2005.
Aspartame demand has also been affected by negative publicity linking its consumption with cancer. “A new study by the Nat-ional Cancer Institute confirmed it found no relationship between aspartame and any form of cancer,” says Lyn Nabors, president of Calorie Control Council, an international association representing the low-calorie and reduced-fat food and beverage industry.
Another threat is the growing introductions of new high-intensity sweeteners. There are five FDA-approved sweeteners: saccharin, aspartame, neotame, acesulfame potassium and sucralose. Two more are under review: cyclamate and alitame.
TOP 10 SUGAR SUBSTITUTES, 2005
| Brand | Sales |
| Splenda | $197,946,600 |
| Equal | 53,021,400 |
| Sweet & Low | 48,272,890 |
| Private label | 16,617,740 |
| Natrataste | 11,956,400 |
| Nutrasweet | 4,431,086 |
| Sugar Twin | 3,144,986 |
| Equal Sugar Lite | 1,964,341 |
| Sweetleaf Stevia Plus | 1,928,013 |
| Necta Sweet | 1,604,864 |
| Total US sales* | $345,989,200 |
| *Excluding Wal-Mart sales | |
| Source: Information Resources, Inc. (IRI) |
