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 You won't find monk fruit in any of the soft drinks at your local
convenience store. So far, shaky supplies and limited demand have
kept the expensive melon on the sidelines of the sweetener industry.
But some experts think the fuzzy green fruit, which ripens to the
size of an apple, could be the ingredient soda makers have sought
for decades: a natural product with great taste and no calories.
When "someone figures this out and gets a taste that is low-calorie
and natural, it could really be a silver bullet that catapults that
company ahead," said Ali Dibadj, an analyst at Bernstein who follows
the soft drink industry.
Soft drink makers are increasingly desperate for just such a miracle
ingredient. Once a booming sector, diet soda has become a laggard.
In the United States, consumption fell about 7 percent this year and
could shrink by 20 percent through 2020, according to Nielsen data.
Consumers, increasingly wary of the health risks of artificial
sweeteners, are ditching diet sodas for juices, teas and naturally
sweetened lemonades, according to a recent Wells Fargo analysis.
"We believe we are seeing a fundamental shift in consumption
behavior as diet drinkers leave the category altogether," said
Bonnie Herzog, an analyst at Wells Fargo Securities.
FLAVOR TESTS
Beverage companies have struggled to hold on to customers amid fears
about the safety of FDA-approved aspartame, which has sweetened diet
soda for 30 years.
The aspertame debate continues to rage on the Internet, even though
the American Beverage Association says the artificial sweetener is
safe for consumption.
Five years ago stevia, a low-calorie sweetener made from the leaves
of a Paraguayan plant, was heralded as an ideal natural sweetener.
But it has had only limited success in the marketplace.
Coca-Cola Co uses stevia in 45 products in 15 countries, including
in Coke Life, a low-calorie alternative available in Chile and
Argentina. PepsiCo uses stevia in Pepsi NEXT, a low-calorie drink it
sells in Australia and France. But customers have complained that
stevia's bitter aftertaste alters the sodas' flavors.
Now, some beverage manufacturers are pinning their hopes on monk
fruit, which is already used in protein shakes, snack bars and
brownies.
This week, Zevia, a premium-brand company based in Culver City,
California, introduced a new recipe for its no-calorie sodas
sweetened with a blend of monk fruit and stevia. The company's
drinks, which sell in 12-ounce cans for about $1 each, were
previously sweetened exclusively with stevia, which gave it a bitter
kick.
"We feel like we've really cracked the code," said Paddy Spence,
chief executive officer of Zevia, which sells its naturally
sweetened no-calorie soft drinks at about 16,000 high-end grocery
stores in the United States.
"Using the two side by side, we were able to get a higher level of
sweetness without the bitterness," said Spence.
Zevia, which was founded six years ago, has seen its sales quadruple
in the past three years, to $60 million this year.
"If you do detect any kind of taste, it is a fruity taste, which
goes well with soda," said Linda Gilbert, CEO of EcoFocus Worldwide,
a consumer research company focusing on green and sustainable
trends.
Analysts say the company could be on to something because monk fruit
neutralizes stevia's bitter notes.
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Coca-Cola, which uses monk fruit in its Core Power protein drink,
said it is exploring ingredient options but would not confirm that
monk fruit is among them. Aurora Gonzalez, a spokeswoman for
PepsiCo, said the company is not considering monk fruit but would
not provide further details.
STEP BY STEP
Monk fruit has been consumed for centuries in southern China,
especially by the Cantonese, but in recent years it has become
popular across the country, where it is marketed in dried form and
used to flavor soups and tea, and as a remedy for sore throats.
One gram of the fruit extract replaces eight teaspoons of sugar,
allowing consumers to significantly reduce their calorie intake,
according to Laura Jones, a global food science analyst at Mintel, a
food and drink research firm.
While Procter & Gamble Co. patented monk fruit sugar extraction as a
potential substitute for sugar in 1995, it wasn't until BioVicttoria,
a New Zealand company, shepherded the fruit through the U.S. Food
and Drug Administration approval process that it became available
for mass consumption.
The FDA approved monk fruit for consumption in 2010, and the fruit
has no reported adverse side effects.
Monk fruit presents a number of challenges for beverage makers. It
is twice as expensive as stevia and is grown only in some regions of
China. It's also not yet approved by European regulators for
consumption.
Extracting sugar from monk fruit is a long and arduous process that
further increases costs.
Meanwhile, Chinese law prevents monk fruit seeds and genetic
material from leaving the country, according to BioVittoria,
confining production to China.
At BioVicttoria, the fruit's top exporter, monk fruit is bred for
maximum sweetness and is hand-pollinated. The company mechanically
extracts its sugar content.
As public concern about artificial sweeteners has grown, demand for
monk fruit extract has increased. Chobani recently launched a line
of its popular Greek yogurt that is sweetened by monk fruit, and
this year 91 public schools in Omaha replaced sugar in its flavored
milk with monk fruit extract.
Supplies have also steadied since BioVittoria began producing monk
fruit extract. The company has deals with local farmers to produce
60 percent of China's yield of 400 million monk fruits, distributed
exclusively by global sugar and sweetener giant Tate and Lyle.
Ultimately, big soda companies may have to swallow higher prices to
hold on to diet soda drinkers.
"I'm not sure they have much of a choice," said Dibadj, the
Bernstein analyst. "The consumer is voting with their taste buds and
concern for wellness. Investors realize that they have to shift
their ingredient base not to be artificial and it is a tough
combination to get right."
(Reporting by Marina Lopes; Beijing
Newsroom contributed reporting; editing by Jilian Mincer and Douglas
Royalty)
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