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 In less than a decade, the sweet-tasting stevia powder has stolen a
big chunk of the $1.3-billion global market for artificial
sweeteners as more health-conscious consumers use it in what they
eat and drink.
Consumers' appetite for artificial sweeteners like Cumberland
Packing Co.'s Sweet'N Low and corn syrup has waned amid rising
interest in foods perceived as natural.
The powerful corporations that dominate the global sugar market are
also facing slowing demand, especially in the United States, for
refined sugar that is used in everything from coffee to cakes. The
U.S. slowdown is due in part to concerns about extremely high rates
of obesity and diabetes.
Big Sugar's response? To offer new non-sugar products that are not
calorific, are suitable for diabetes sufferers and, more
importantly, are seen as a more attractive alternative for
health-conscious consumers than artificial sweeteners.
"If you look down the sweeteners aisle at any supermarket, there are
stevia products there. Whatever consumers are looking for, we want
to provide," Domino President and Chief Executive Officer Brian
O'Malley told Reuters.
ASR Group, which sells Domino Sugar and is the world's largest
refiner of cane sugar, will launch its new product by the end of the
year - its first to be made solely from the plant extract rather
than a blend of sugar and stevia.
For ASR Group, which also owns the Tate & Lyle brand, it's a bold
move: sugar represents 98 percent of its business.
But stevia's low production costs and relatively high retail sales
prices are a sweet spot for food companies.
After spying growing interest four years ago, Louis Dreyfus Corp.'s
Imperial Sugar has its own blends of sugar and stevia, and agri
business Cargill Inc.'s Truvia brand is the U.S. market leader after
entering the fray in 2008.
Archer Daniels Midland Co, a major player in the U.S. corn syrup
market and global commodities trade, this month completed a
$3-billion acquisition of Wild Flavors, looking to expand in the
fast-growing "natural" markets.
To be sure, demand is still tiny compared with global sugar
consumption of more than 170 million tonnes. It is also still a rare
ingredient in U.S. foods - only 1.5 percent of new food products
launched in the first nine months of 2014 contained stevia,
Datamonitor Consumer's database shows.
Some health experts caution the sweetener contains additives as well
as the plant extract. Questions also remain whether its taste can
really match the flavor of sugar.
Still, U.S. consumers will eat and drink about 597 tonnes of stevia
in manufactured food and drinks by 2018, with demand soaring from a
meager 14.5 tonnes in 2008, according to estimates from market
research group Euromonitor International.
Over the same period, the country's demand for artificial sweetener
aspartame is expected to drop by a third to 3,243 tonnes,
Euromonitor's forecasts show. U.S. sugar consumption has stagnated -
the average American consumed about 68 pounds of refined sugar last
year, down from a 1972 peak of over 102 pounds, according to the
U.S. Agriculture Department (USDA).
Natural no-calorie sweeteners "have definitely eroded some volume of
traditional sugar sources," Steve French, managing partner of market
research firm Natural Marketing Institute (NMI) in Harleysville,
Pennsylvania.
"It's not that we're using more sweeteners as a population, we're
just shifting usage across different types of sweeteners."
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ROOTS IN PARAGUAY
Stevia's roots go back to Paraguay and Brazil, where people have
used leaves from the plant to sweeten food for centuries.
It became big business in the United States through a medical
products salesman in Arizona called James May who got his first
taste of stevia in 1982 when a Peace Corps volunteer returning from
a stint in Paraguay gave him some leaves to try.
"After tasting them, I gave him my life savings to go back to
Paraguay and send me some stevia leaves," he told Reuters.
He now runs Wisdom Natural Brands in Gilbert, Arizona, whose
SweetLeaf sweetener is used in salad dressings, tortilla chips and
ice creams.
His big breakthrough came in 2008 when U.S. regulators approved
stevia as a sweetener after more than two decades of lobbying. Until
then, it had been used in foods, but not as a sweetener.
Some 17 percent of U.S. consumers surveyed in 2013 by the Natural
Marketing Institute said they use stevia, up from just 4 percent in
2008. Just under half of consumers used table sugar, down from 57
percent in 2008, the survey showed.
HOW NATURAL IS 'NATURAL'?
While much of stevia's appeal is that it's natural, some critics
note that most products include more corn sugar and bulking agents
than the stevia plant itself and that the term "natural" is tricky
territory for food companies.
In 2013, Cargill agreed to pay $5 million to settle a class-action
lawsuit in a Minnesota state court that claimed its Truvia brand
should not be marketed as "natural" because it is highly processed
and uses genetically modified ingredients.
Truvia spokeswoman Katie Woolery said it is made from natural
ingredients and meets all legal guidelines.
Even so, recent entrants are betting on stevia being more than just
a U.S. fad. In Japan, where it has been used since the 1970s, it has
established a stronghold in products like sports drinks.
"Sugar could be in danger. If there's a product out there that can
taste enough like sugar, there's potential for that product to take
share," said Jeff Stafford, a Morningstar analyst in Chicago.
Some household food and drinks manufacturers have already spotted
the opportunity to sweeten products naturally without adding
calories: Greek yogurt maker Chobani has put stevia in its first
light yogurt brand, Simply 100, and PepsiCo. is launching a new soda
this month that uses stevia.
(Reporting by Chris Prentice and Marcy Nicholson, editing by
Josephine Mason and Ross Colvin)
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