Sweet sweetener sales

28 August 2006 00:00  [Source: ICB Americas]

NEW PRODUCT introductions and health trends continue to push up sales for high-intensity sweeteners. US sales of sugar-free foods and beverages reached a sweet total of $6 billion despite high consumer concern over potential health risks of artificial sweeteners, according to a recent report by Mintel.

"Consumers are weighing the benefits of sugar-free products against these perceived risks but sales have not been negatively affected," says Marcia Mogelonsky, senior analyst for Mintel. "Newer substitutes such as Splenda have been reinvigorating the market. In addition, new product introductions have been critical in fueling growth for the sugar-free category."

Close to 3,000 new products have been introduced in the past three years that claim to have no-, low- or reduced sugar, says Mintel. Most of the products are gums, desserts, condiments and carbonated beverages.

Splenda, which uses the ingredient sucralose manufactured by Tate & Lyle, is now being bought by one in every five US households, says Debra Sandler, president of McNeil Nutritionals, the marketer of Splenda. "Consumer demand is driving the growth and innovation of Splenda sweetener products," she adds.

The company launched several new sweetener products under the Splenda brand for the past year, and this fall, will introduce its new Splenda Flavor Blends for Coffee.

US retail sales of Splenda in 2005 (ended March 19) went up 11% to $198 million, according to Information Resources Inc. (IRI). Tate & Lyle says its 2005 fiscal sales of Splenda sucralose worldwide went up 23% to £142 million ($268 million).

"Demand for Splenda sucralose continued to exceed supply despite our gradual increase in capacity at our Alabama plant," notes Tate & Lyle in its recent earnings report. "Our ingredient customers launched a number of new products in both the food and beverage categories. We witnessed the first product launches in France containing Splenda. In January, we also saw the launch of a reformulated Coke Light in Norway and Sweden sweetened with Splenda."

Tate & Lyle expects demand for Splenda sucralose to remain strong for the rest of the year. The company recently started its newly expanded Alabama plant, while a new sucralose plant is being built in Singapore, which will start in January. The investments are expected to triple the company's original total sucralose capacity, says Citigroup.

Merisant, which uses aspartame in its low-calorie tabletop sweeteners brands Equal (US) and Canderel (Europe), is also initiating the development and introduction of new aspartame-sweetened products and brand extensions to the market in order to boost sales. The company says it plans to launch several new products this year.

"We believe that there are opportunities for future growth in the low-calorie tabletop sweetener and sweetened food category," says Paul Block, Merisant's CEO. "Despite recent declines in net sales, Merisant's premium brands Equal and Canderel are among the most recognized sweetener products in the world."

Merisant also recently developed an all-natural, zero-calorie sweetener under the brand Sweet Simplicity, which is being marketed by its newly formed subsidiary, Whole Earth Sweetener Company. The sweetener is being shipped to independent organic retail outlets such as Whole Foods and Wild Oats.

US sales of Merisant's sugar substitute products last year went down 14% to $61 million, according to IRI. Merisant holds 17% of the market while McNeil accounted for 57% of the US sugar substitute market.

IRI estimates US sales of sugar substitutes in food, drug and retail stores (excluding Wal-Mart) last year at around $346 million, up 1% from 2004.

Sales of sugar-free foods and beverages, meanwhile, is expected to grow to $7.7 billion by 2010, according to Mintel.

"Product positioning and generational perspectives are factors pointing for further growth," says Mogelonsky. "If the health benefits of artificial sweeteners can outweigh the risks, then younger adults will continue using sugar-free products as they start families of their own."

• HIS by volume represents around 10% of the total sweetener market (composed of HIS, sugar and high-fructose corn syrup)
• Market growth is at 4% per year
• By volume, Asia represents 50% of the market

ICIS Copyright © Reed Business Information 2009

Author: Doris de Guzman
+1 713 525 2653

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