Nutrasweet prepares to meet challengers Top artificial sweetener facing new competitors for market leadership

December 29, 1996|By BLOOMBERG BUSINESS NEWS

CHICAGO -- After ruling the $1 billion U.S. market for artificial sweeteners for the last decade, Monsanto Co.'s Nutrasweet may be on the verge of its first challenge.

Chemical and drug industry powers such as Johnson & Johnson, Hoechst Celanese Corp. and others are coming out with products that could rival Nutrasweet, which is used to sweeten everything from diet soft drinks to low-calorie yogurt.

St. Louis-based Monsanto isn't waiting to find out if the competition catches up. It's revising the Nutrasweet formula and betting on a growing global sweet tooth as consumers in developing countries spend more on sweetened food and beverages.

Even if the new sweeteners eat into Nutrasweet's market, Monsanto and its competitors may be poised to grab business from sugar producers.

"You can sweeten a product for less with artificial sweeteners," said Bill Miller, director of the Beverage Research Center and the man widely credited with developing the first diet soft drink, Diet Rite in the mid-1950s.

That cost advantage could be crucial should world supplies of sugar tighten.

While sugar producers say they can handle the added demand, the artificial sweetener makers disagree.

"There's quite an opportunity there," said Richard Nelson, a spokesman for Monsanto, whose Chicago-based Nutrasweet-Kelco division makes Nutrasweet.

Growth in demand for sweeteners of all kinds has the look of a sure thing. The average person in China, for example, consumes 6.5 kilograms of sugar a year, or 14.3 pounds. That's far from the intake of the United States, where consumption is 30.7 kilograms, or 67.5 pounds per person -- and that's not counting the important sweetener corn syrup, widely used in soft drinks made by Coca-Cola Co. and PepsiCo Inc.

"If the Chinese raise consumption by 10 to 15 pounds per capita, that could produce quite a market," said Charles Shamel, president of the Sugar Association Inc., a trade group.

That's not to say artificial sweeteners don't have some problems. For starters, there's taste. While today's formulations are better, industry observers agree they still taste, well, artificial.

More troubling perhaps, is the steady current of safety concerns dating to the 1970s, when the government first banned cyclamates and raised questions about the 100-year-old sweetener saccharin. And within the last two months, critics have said Nutrasweet may be linked to higher rates of brain cancer, a claim Monsanto disputes.

"There's no such thing as an ideal sweetener," said Keith Keeney, a spokesman for the Calorie Control Council, an artificial sweetener trade association. "It just hasn't been found."

In a rare sign of cooperation among traditionally fierce rivals, the chemical companies say they will blend their products as a way to improve taste and chemical stability.

For example, Hoechst's Acesulfame-K, known as Sunnett, in combination with Monsanto's aspartame, is said to make a beverage taste more like it's sweetened with sugar while using 40 percent less sweetener.

"We don't necessarily see aspartame as a competitor," said Jon Simplicio, Hoechst's director of scientific and regulatory affairs. "When you blend the two, the sweetness profile tastes much more like sugar than any of the two sweeteners on their own."

Hoechst's sweetener has received approval from the U.S. Food and Drug Administration for use in everything but nonalcoholic beverages, which makes up about 80 percent of the U.S. market for artificial sweeteners.

Monsanto also is revising its aspartame formula, which in its original form tended to break down in high heat, a problem in the tropical markets where Monsanto seeks growth. That also made it difficult for food-processors to use it in cooked foods.

Monsanto said its new Nutrasweet 2000 could be ready for FDA review by 1998.

By cooperating, the chemical makers figure they stand a better chance against sugar as the sweetener of choice, perhaps one day replacing it in ordinary foods and beverages.

"Their strategy may ultimately be to get into a soft drink that's not necessarily a diet soft drink," said Gary Hemphill, Beverage Marketing Corp., an industry consultant.

The stakes are high to produce the next generation of artificial sweetener. Soda giants Coke and Pepsi both want their diet drinks to taste as sweet as those flavored with corn syrup.

Pepsi has already experimented with a blend of artificial sweeteners in Latin America.

The diet beverage segment got a big boost when Nutrasweet supplanted saccharin in the early 1980s. The market stagnated in recent years, though, and offering a beverage with an improved sweetener would "be the biggest news that a company could have for its diet product," said industry consultant Hemphill.

Other chemical producers also are waiting to crack the U.S. market.

Johnson & Johnson's McNeil Specialty Products Co. has joined with British sugar giant Tate & Lyle PLC to market sucralose, known by its brand name Splenda, in 16 countries outside the United States. The sweetener is awaiting FDA approval.

Smaller companies also are trying to elbow their way into the market. Beltsville-based Biospherics Inc. has joined with Danish company MD Foods to market its D-tagatose, which it claims is both a natural and nonfattening sugar substitute.

Cultor Oy, a Finnish concern, holds the U.S. rights to market Alitame, known as Aclame, which it says is 2,000 times sweeter than sugar.

Pub Date: 12/29/96

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