Sweet nothings: the drive for low-cal sweeteners

20 April 2015

Heightened health-consciousness is driving demand among consumers for low-calorie sweeteners that won’t rot their sweet tooth. Market research firm Canadean reports on the global market.

The three dominant zero-calorie (ZC) sweeteners for food-grade products are acesulfame potassium (acesulfame K), aspartame and sucralose. Saccharin and cyclamate have been on the market for many years but are still going strong in some products and parts of the world. In addition, maltitol and sorbitol are often used frequently in toothpaste and mouthwash, as well as in foods like no-sugar-added ice cream. Erythritol is gaining momentum as a replacement for these or other sugar alcohols in foods, as it is much less likely to produce gastrointestinal distress when consumed in large amounts, and in some countries, xylitol and the herbal sweetener stevia are used extensively. Generally, herb-derived sweeteners are gaining momentum, and many industrially refined varieties of these ingredients are being launched into the market.

Although ZC sweeteners are sometimes seen as modern ingredients, they have been used for more than a century and are typically classified as food additives. In the US, Europe and around the world, low or zero-calorie sweeteners, like other food additives, undergo a rigorous assessment process. The European Food Safety Authority (EFSA) continuously sets acceptable daily intake levels and reviews new evidence on any safety issues that arise. These measures reassure consumers that the approved low-calorie sweeteners are safe.

View around the world

Demand is expected to continue its steady growth as a result of increased focus on sugar calories in more markets. The sweetener industry is changing as a number of new options are available after years of relative inertia. The fact that many are from plant-derived sources chimes with the current consumer trend towards natural ingredients, and this can only mean a positive future for these types.

The World Stevia Organisation announced it is broadening its scope to include all-natural sweeteners, such as monk fruit and thaumatin, still in the exploratory phase. This comes from the general agreement within the scientific committee that the future will see a combination of natural sweeteners being used.

The global capacity of ZC sweeteners was approximately 1.5 million tons in 2013. The type of food or beverage application mostly determines the choice of sweetener related to formulation stability and flavour issues, and pricing and consumer sentiment are the next important factors. However, as these sweeteners have different sweetness capabilities, the actual impact on the consumer products market is not directly aligned with consumption quantities; rather, it is more appropriate to establish the consumed quantity in relation to sugar equivalent.

Low or ZC sweeteners, calculated according to sugar equivalents, suggest a product distribution dominated by sucralose (26.5%), aspartame (15.9%), acesulfame K (14.7%), saccharin (13.2%) and cyclamate (5.9%), followed by newcomers such as stevia (5.7%). However, it should be mentioned that stevia-derived sweeteners are marketed in many varieties and sugar equivalence varies considerably.

Currently, refined stevia ingredients are relatively more expensive than other sweeteners. In some countries, the product manufacturers still use the herbal extract directly, whereas recent advancements in rebaudioside and stevioside-type enhanced fractions have changed the industry dramatically. Product manufacturers may still be struggling to find the right balance of steviol glycoside in their drinks as taste is often an issue, but masking technology and new fractions are improving the options all the time. The taste may also be suited for more 'natural' products such as teas, nectars and juices, as it enhances the natural ingredients in those products.

From a marketing point of view, product manufacturers are able to state that "all-natural ingredients are used". A few drinks, such as Glaceau VitaminWater, still combine this sweetener with sugar in order to preserve the taste. American Consumers have not appreciated the stevia taste, however, and Coca-Cola in is now returning the VitaminWaters to their original composition in the US.

Market outlook and dynamics

From a marketing point of view, product manufacturers are able to state that "all-natural ingredients are used".

The growth in the global sweeteners market is set to be driven by the natural trend wave and increasing consumer concerns over sugar intake and. The development of more plant-derived sweeteners is anticipated to benefit from this market driver. The gradual demise of sugar yet the retention of desire for sweetened food and drink suggests good opportunities for intense sweeteners.

Signs that the global market for intense sweeteners has reacted to this increased demand for 'healthier' sweetener solutions is evident from the market growth within soft drinks. Steviol glycosides are newer sweeteners, and the fact that innovators as well as multinational product manufacturers have started using them creates a tail of other manufacturers trying to incorporate them in new products to stay competitive and gain popularity among consumers. Steviol glycosides have already been adopted in many new products within the US and Europe. Stevia is also growing in popularity in many parts of Asia, especially Japan.

However, this change will take years to really affect production capacities, as the soft drinks industry in 2013 consumed only 700t of stevia ingredients vs 12,300t of aspartame and 8,700t of acesulfame K. However, acesulfame is projected to aim for market leadership by presenting a double-digit growth rate by 2016 with a 0.9% decrease forecasted for aspartame.

Natural sweeteners such as stevia and monk fruit are showing impressive growth rates and have a lot of potential in North America, Europe and Japan, albeit from very low volumes; these will take years to catch up with the market leaders, as many super brands, volume-wise, are consumed outside these regions.

In terms of volume and growth, sucralose shows good promise within the global intense sweeteners market as it already has a decent share of the volume market and a positive growth rate, as well as great potential in specific regions, given its position as the most sugar-like of the artificial sweeteners.

Sugar vs sweetener consumption

There are two main market segments, sometimes called natural and artificial. However there is also the relation between sweeteners of being calorific and non-calorific. Calorific sweeteners include calorie-bringing sugars and high-fructose corn syrups (HFCS); non-calorific sweeteners include zero-calorie (or close to zero) high-intensity sweeteners - artificial sweeteners such as aspartame and sucralose - and naturally derived sweeteners like stevia. Sugar has been the most widely used sweetener in the world, with its closest substitute being HFCS.

The overall global sweetener market is growing at 2-3% a year. Sugar and HFCS comprise 80% of the market, and are growing in line with retail product market expansions, although HFCS has become less attractive and represents less growth than sucrose.

A key factor for reduced growth is seen in the soft drinks markets, as there is increased focus on glycemic index value in addition to the calorific value. Glycemic index designates the effect on blood sugar level and has been attributed to be a risk factor in insulin imbalance in the long term.

Glucose is popular as a sweetener in the fast-growing sports and energy drink segments. The fructose, glucose and combined fructose-glucose syrups all represent the best prospects in terms of volume (approximately 2.5 million tons) and growth potential (2.6-6.8% depending on type) among the calorific sweeteners. However, white sugar from beet and cane is still the largest ingredient in soft drink sweetness.

Non-calorific sweeteners are on average projected to grow at 5.0% a year until 2017. The overall drivers are clearly the health trends and taxes related to sugared products. In addition, low-calorie sweeteners as polyols have resulted in an uptick in the sugar alcohols industry. Driven by increasing demand, there is a need for additional manufacturing capacity in major manufacturing bases of the world, such as China and India. The biggest consumer market for sugar alcohols is Europe, which uses them in various areas such as baked products, confectionery and frozen desserts.

Aspartame is currently the most consumed artificial sweetener in the US food industry, as its price dropped significantly when the Monsanto patent expired in 1992. Since 2008, however, sucralose has grown in hugely in popularity, and is rapidly replacing aspartame to artificially sweeten food and soft drinks. Ever since its approval in the Americas in the 1990s, countries such as the US and Mexico have continuously used sucralose as a taste enhancer in soft drinks as the taste is very similar to sugar.

There has been a general switch in consumers' preferences to other categories of non-calorific drinks, such as iced tea, sport drinks, energy drinks, and low-calorie fruit-based drinks like squash and functional drinks. The growth of sweeteners is attractive for global suppliers within the iced tea, sports drinks, functional drinks, and squash markets, as they represent significant sweetener volumes already and are increasingly positioned towards natural sweeteners.

Today, 200 million Americans consume sugar-free or low-calorie products, and half of them are frequent users, consuming an average of four products every day that contain low-calorie sweeteners. 

The iced tea market is highly attractive for non-calorific sweeteners, as these drinks have high consumption in Asia and the Americas, and are moving towards more retail ready-to-drink formats where a non-calorific variety would be attractive.

However, another opportunity for suppliers to address the fruit-powder market is there for regions such as Latin America, North America, and the Middle East and Africa. Consumption in general is high in these markets, but still under-represented on the low or non-calorific side - the category represents more than 100t of non-caloric sweeteners as an opportunity.

The profit margins on artificial sweeteners can be very high for manufacturers, and many of them cost less to produce than sugar or HFCS. Generally, the food industry promotes diet or reduced-calorie products due to consumer interest and the high profit margins available, and over the past few years, the proportion of new product introductions containing sugar substitutes has risen steadily.

Concern about obesity and related health problems has also risen dramatically, and this further stimulates the market for sugar substitutes. Today, 200 million Americans consume sugar-free or low-calorie products, and half of them are frequent users, consuming an average of four products every day that contain low-calorie sweeteners. Much of this is accounted for by diet soft drinks.

Large multinational soft drinks companies such as Coca-Cola, Kraft Foods, PepsiCo, Britvic, Snapple and Wahaha own brands across many soft drinks categories and are using many different non-calorific sweeteners. The consumption of aspartame, acesulfame K and cyclamate is predominant, due to large multinationals' non-calorific megabrands expanding into new markets. However, these companies also slowly try to move to new sweeteners, like sucralose, stevia, sorbitol and erythritol, depending on successful formulation - a requirement for consumer success.

The consumer relationship

Despite some concerns that artificial sweeteners are unhealthy, causing headaches, cancer, blood disorders and strokes, the trend is for the greater use of artificial sweeteners. For example, new low-sugar soft drinks, dairy products and snack foods are proliferating.

In 2013, the National Center for Health Statistics in the US released data showing that food contributes 67.0% of calories from added sugars compared with 33.0% from beverages for US consumers. More than two thirds of the added sugars consumed from food were consumed at home (67.2%), compared with 57.8% of added-sugars calories from beverages, so out-of-home consumption of sugar via soft drinks is key from a consumer health perspective, as it is easier to address than many other areas.

Among new soft drinks products released into the market in 2013, more than 78% contained artificial sweeteners. Non-calorific carbonated soft drinks are going strong in the US, but the drive towards moving more consumers to this subcategory is limited. More US consumers are instead migrating to other drink categories that do not necessarily give rise to increased demands for non-calorific sweeteners. For example, many fruit-based drinks are naturally sweetened via the sugar from fruit juice.

Among European consumers, consumption also moves towards still and fruity squash drinks as opposed to carbonates, as these are often focused on health and wellness, provide opportunities for sugar reduction or are even non-calorific.

As positive sentiment towards natural sweetness or natural non-calorific sweeteners is high among western Europeans, the concepts that address drink category and natural sweetness will prosper. Eastern European consumers are not far behind, and the geographical spread within the EU on preferences is limited, whereas sports and energy drinks may represent the biggest opportunities for sweetener suppliers in some eastern European markets, such as Russia.

More consumers are replacing the sugar on their table with sweeteners.
With a growing demand for low-cal, natural options...

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