Stevia hits the sweet spot

30-01-2014 | Foresight | Diederik Basch

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Natural sugar substitute sweetens the beverage industry

It is no secret that sales volumes of carbonated soft drinks have been in decline over the past decade. The soft drink industry faces growing negative public opinion as sugary beverages are linked to obesity and diabetes and many nations consider taxes on soft drinks to limit consumption and curb rising healthcare costs. Algeria, Fiji, Finland, France, Hungary and recently Mexico have passed these “fat taxes.” With an adult obesity rate of 32.8% – the highest in North America and Europe – Mexico is also the world’s top consumer of soft drinks at 163 liters per capita per year, or about 40% higher than the US average.1 As the largest emerging market to take action, Mexico’s tax on full-calorie beverages is widely viewed as a game changer that could lead to a 5-8 % decline in volumes this year. Debates over a sugar tax in the UK have also gained momentum after a study indicated that a 20 % tax would result in a 1.3 % decline in the nation’s obesity rate. Beverage companies are responding by seeking alternative all-natural, low to zero calorie sweeteners.

The global sweetener market is dominated by sugar and high fructose corn syrup, which combined account for 88% of the market. High Intensity Sweeteners (HIS) – or low calorie sugar substitutes – account for the remaining 12%. One promising HIS is stevia, an-all natural zero-calorie sweetener derived from a plant: a key selling point compared to existing artificial sweeteners. Stevia has been around for decades but only gained Generally Recognized as Safe (GRAS) approval as a sweetener in 2008 in the US and was authorized for the EU market in December 2011. This has led to a rapid rise in food and beverage products sweetened with stevia. Since 2009, new product launches have grown 57 % annually to reach more than 1,600 products in 2013. Market adoption continues to accelerate especially in the soft drink industry. For example, in France, Coca-Cola has reformulated its Sprite brand with stevia and is expanding this to the UK. In June of 2013, it launched a new version of Coke in Argentina called Coca-Cola Life, which is sweetened with 50 % sugar and 50 % stevia and thus has half the calories of the full calorie version.

Major beverage companies are investing in sweetener innovation and 2014 may see more new products. Coca-Cola has partnered with PureCircle, the world’s largest stevia supplier, to develop a new high purity stevia-based sweetener pending GRAS approval. Pepsi is working with Senomyx to develop alternative beverages with reduced calories. Senoymx’s S617 product is a taste modifying compound that could allow for an approximate 50% reduction in sugar pending its GRAS approval in 2014. Givaudan is also working closely with major food and beverage companies and has developed masking flavors that can reduce the bitter aftertaste associated with stevia.

"Health and wellness is a driving factor in consumer demand and will continue to support innovation in the natural and low or zero calorie sweetener market."

1 World Health Organziation

diederik-baschDiederik Basch
Senior Analyst
RobecoSAM Sustainable
Healthy Living Strategy

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