Sean Moloughney04.01.08
As the public health crisis burgeons with more than 20 million diabetics and 60 million obese adults in the U.S. alone, an expanding market of alternative natural sweeteners could proffer significant benefits to consumers, and businesses if they can generate an effective cost structure.
U.S. demand for alternative sweeteners is projected to increase 4% per year to $1.1 billion in 2010, up from $772 million in 2000, according to a 2007 study from the Freedonia Group, Inc., a Cleveland, OH-based industry research firm.
"There is a significant industry trend to find alternatives to synthetic sweeteners, led by companies like Whole Foods," said Paul Altaffer, vice president of business and product development at RFI Ingredients, Blauvelt, NY, which supplies Talin, an all-natural flavor enhancer derived from the West African thaumatin fruit. "Natural food and beverage manufacturers especially are being challenged to find these alternatives. The issues have come down to cost, functionality compared to synthetic, and regulatory status. It has so far been a daunting task to find natural sweeteners that have high sweetening impact, are suitable for numerous applications, are approved for use in foods, and have a cost structure that permits their use."
Sometimes referred to as "alternatives to the alternatives," natural sweeteners that boast low caloric and glycemic impact could begin to boom-and soon. For example, stevia, currently sold in the U.S. and Europe as a dietary supplement, could attain generally recognized as safe (GRAS) status in the foreseeable future, particularly in light of the recently forged partnership between industry giants Coca-Cola, Atlanta, GA, and Cargill, Minneapolis, MN.
Native to Paraguay, Stevia rebaudiana is a perennial shrub of the aster family that has been used for hundreds of years to sweeten food and drinks in South America and other countries. The plant's leaves contain chemicals called glycosides, the major one being stevioside, which is used as a sweetener in Japan and Korea, where it is recognized as a safe food additive. Stevia represents 40% of the Japanese sweetener market.
Jim May, founder of Wisdom Natural Brands, Gilbert, AZ, who helped first introduce stevia in the U.S., said it's only a matter of time before stevia gains regulatory approval.
"And when it's finally accepted as a sweetener, the health of Americans will substantially improve," he said. Data from the National Institutes of Health (NIH) and the American Diabetes Association (ADA) show that the number of Americans with higher than normal blood glucose levels has reached 75 million.
Some studies suggest stevia-300 times sweeter than sugar-has antioxidant, anti-inflammatory and antibacterial properties, helping to fight against diabetes, high blood pressure and tooth decay. However, in October 2007 FDA sent a warning letter to Hain Celestial Group, Boulder, CO, which uses the product in certain tea and drink mixes, citing concerns the sweetener could negatively impact blood sugar levels, the cardiovascular system and the reproductive system.
"Though it can impart a sweet taste to foods, it cannot be sold as a sweetener because FDA considers it an unapproved food additive," FDA spokeswoman Kimberly Rawlings said of stevia. "However, under provisions of 1994 legislation (i.e., the Dietary Supplement Health & Education Act), stevia can be sold as a dietary supplement, although it cannot be promoted as a sweetener.
"Years ago, FDA had some GRAS petitions submitted for stevia," she added. "However, none were ever filed because they were not complete. Since 1997, FDA uses the GRAS notification process rather than reviewing GRAS petitions. At this time we have received no submissions for stevia, whether GRAS or as a food additive. We are aware of press reports that suggest that there may be an imminent submission to the FDA." Coca-Cola and Cargill would not confirm or deny such reports.
Despite its classification, the retail stevia category in the U.S. has grown from virtually zero in 1995 to approximately $60 million in 2006, as more and more companies have acknowledged its potential. Mr. May's Wisdom Natural Brands is now the leading U.S. stevia manufacturer, offering a full line of SweetLeaf stevia products, including single-serving packets, which contain 1 gram of inulin fiber, a naturally sweet prebiotic-derived mainly from chicory-found in more than 36,000 plants.
"Stevia is one of those products that shows incredible promise as a natural sweetener," said RFI's Mr. Altaffer. "It is relatively inexpensive to use, provides high impact, can be used in different formulations…Should stevia attain GRAS status, there will be a significant boom in the development of food and beverage products containing stevia."
Brien Quirk, technical director, Draco Natural Products, San Jose, CA, a stevia supplier, said GRAS status is important to consumers, as it offers them assurance that products are healthful.
"The FDA has to see further research to support the safety so that we know under what circumstances, if any, or at what dosages it could cause side effects in the general population with increased use," said Mr. Quirk.
Even if stevia gains approval as a sweetener, supply issues could impact the market, sources say.
"There aren't enough plants in the ground to satisfy the demand for natural sweeteners," according to Tim Avila, founder and CEO of Ventana Health, San Clemente, CA, which manufactures the zero-calorie sweetener Zsweet.
Mr. May's sources have informed him that Cargill could attempt to lay claim to existing supplies, cornering the market in China, which produces 80% of the world's stevia, in order to sell its products in Asia and other regions where stevia is already approved.
But there is considerable opportunity in Paraguay, for example, because the crop is a perennial that can be harvested three or four times a year, compared to just once a year in China.
Overall, high intensity sweeteners will continue to dominate the market through 2010, according to the Freedonia report, mainly because of their ubiquity in diet soft drinks and tabletop use. Aspartame and acesulfame potassium (ace-K) will remain on top of the sweetener hierarchy for their use in diet beverages, while sucralose, the main sweetener in Splenda, will continue to lead the tabletop market.
However Freedonia's study also predicts, "The market value for high intensity sweeteners will be suppressed by falling prices, as patent protections expire and new competitors-especially importers based in developing nations-enter the marketplace."
Combined with growing demand from consumers, who are increasingly skeptical about artificial sweeteners, companies are beginning to capitalize on the opportunities that alternative natural sweeteners present.
"There's a huge impetus for the reduction of calories and carbohydrates, particularly in beverages," said Ventana's Mr. Avila. "Ninety-five percent of the market is dominated by high intensity artificial ingredients."
Acknowledging a sizeable demographic concerned about blood sugar, specifically Latinos, who are almost twice as likely to have diabetes compared to other ethnic groups, according to the ADA, Mr. Avila set out to create an all-natural, zero-calorie sweetener. In 2005 he launched Zsweet-which has attained GRAS status-blending erythritol, a sugar alcohol already popular in Japan, with natural fruit extracts for flavor enhancement.
Agave is another low-glycemic sweetener ideal for diabetics that is growing in popularity. Extracted from a South American cactus and often referred to as "honey water," the agave nectar or agave syrup is light in taste and color, but sweeter than honey.
While these natural sweeteners offer great promise for consumers, profitability, alongside palatability, currently presents a sizeable obstacle for businesses to overcome.
"Right now there is a huge Grand Canyon gulf between replacing artificial sweeteners with natural, low-calorie, low-glycemic ones because of cost," said Mr. Avila. "Secondary to that, holding up a huge part of innovation are marketers who are not prepared to invest the premium that consumers would ultimately pay for natural sweeteners."
But for health-conscious buyers, natural alternative products look, well, a lot sweeter. Retail sales for natural health and wellness products have reached more than $68 billion per year, according to the Natural Marketing Institute, Harleysville, PA.
"Whatever has been proven to be safe and regulatory allowable in foods is going to move that needle to a more balanced global market," Mr. Avila added.
But that balance will likely take several years and several iterations of product development, he predicted. "I think we're going to have to get through this second generation of natural high intensity sweeteners, which will be dominated by stevia," he said, estimating that it could take about three to five years. "Beyond that you'll see maturation and consolidation of sugar alternatives, driven by cost improvements."
Meanwhile, polyols, or sugar alcohols, like erythritol will grow at a faster rate than high intensity sweeteners, according to Freedonia Group. Numerous manufacturers have already registered success with a range of polyols, including BENEO-Palatinit, GmbH, Mannheim, Germany, which developed Isomalt, a beet sugar derivative with half the calories of sucrose.
"Isomalt has a mild sweetness profile similar to that of sucrose, but with a greater scope for flavor development," said Debra Bryant, director of business development and technical services for U.S. subsidiary BENEO-Palatinit Inc., Morris Plains, NJ. "Furthermore, it does not have any cooling effect and is completely devoid of any aftertaste. Isomalt also dissolves somewhat more slowly than sugar-so the sweet taste stays in the mouth longer, resulting in longer enjoyment."
Also characterized by its "tooth friendliness" and low-glycemic impact, isomalt has made an appearance in more than 1700 products, including a host of sugar-free candies.
Ms. Bryant predicts that demand for functional sweeteners will continue to thrive in the future, offering consumers alternatives to sugar that promote overall healthiness.
"With obesity and overweight problems reaching epidemic proportions worldwide, the good news is that more consumers are choosing foods that promote wellness in their lives," said Ms. Bryant. "At the same time, they don't want to give up flavor and texture, which raises the challenge of developing food products that fit into an active, health-oriented lifestyle but do not compromise on taste. Thus, functional carbohydrates like Palatinose and sugar replacers like isomalt will be on the rise because they provide health benefits and great taste at the same time. Whereas isomalt cuts down on calories, Palatinose promotes fat oxidation both in the resting state and during sporting activity. Of course it would be wrong to assume that the mere consumption of Palatinose is enough to reduce the waistline, but it makes it easier to target problem areas."
Palatinose, like sucrose and fructose, is fully digested and absorbed in the small intestine, providing the same total energy as most other sugars (4 kcal per gram). While hydrolysis and absorption are complete in the body, they occur much more slowly in comparison to sucrose, Ms. Bryant said, leading to a lower increase of blood glucose and insulin levels.
Businesses have a great opportunity to turn a profit if they can offer functional products at a reasonable price, said Mr. Altaffer, of RFI Ingredients. "I feel that providing consumers with a cost-viable, wholesome alternative to synthetic sweeteners is a significant leap forward," he said. "It may be that functional claims may arise from some of these sweeteners or there may be associations between the use of these sweeteners and functional benefits. One example of a functional benefit from a sweetener is Xylitol, which has established itself as a product that does not promote tooth decay."
Xylitol, a five-carbon sugar alcohol, is a naturally occurring sweetener found in the fibers of many fruits and vegetables. It can be extracted from corn, birch, raspberries and plums.
"Polyols will continue to benefit from their image as natural products rather than synthetic chemicals, and from continued interest in reducing sugar intake to combat obesity, tooth decay and diabetes," the Freedonia study predicts. "Sorbitol is the largest and most established product, and will register below average growth. Xylitol is expected to register above average advances. It has less than half the calories of sugar, but is equally sweet, making it a desirable tabletop replacement."
While demand continues to rise for alternative sweeteners, sugar remains one of the most actively traded commodities. The world produces about 122,229 metric tons of sugar per year, and its value will likely remain high due to its versatility. Sugar cane ethanol production has fueled a growing economy in Brazil and could play a role in the development of a post-Fidel Castro Cuba.
However, as U.S. healthcare spending is expected to balloon to $4.3 trillion in 2017, consumer focus will likely turn to the alternative sweeteners, as people access more information about their health and wellness benefits. And that will ultimately steer the industry.
"The market trends are being driven by natural and organic consumers," said Mr. Altaffer. "For many of these consumers there is a disconnect in buying natural, wholesome and organic foods that have synthetic additives in them, including sweeteners."
 |
"There is a significant industry trend to find alternatives to synthetic sweeteners, led by companies like Whole Foods," said Paul Altaffer, vice president of business and product development at RFI Ingredients, Blauvelt, NY, which supplies Talin, an all-natural flavor enhancer derived from the West African thaumatin fruit. "Natural food and beverage manufacturers especially are being challenged to find these alternatives. The issues have come down to cost, functionality compared to synthetic, and regulatory status. It has so far been a daunting task to find natural sweeteners that have high sweetening impact, are suitable for numerous applications, are approved for use in foods, and have a cost structure that permits their use."
The State of Stevia
Sometimes referred to as "alternatives to the alternatives," natural sweeteners that boast low caloric and glycemic impact could begin to boom-and soon. For example, stevia, currently sold in the U.S. and Europe as a dietary supplement, could attain generally recognized as safe (GRAS) status in the foreseeable future, particularly in light of the recently forged partnership between industry giants Coca-Cola, Atlanta, GA, and Cargill, Minneapolis, MN.
Native to Paraguay, Stevia rebaudiana is a perennial shrub of the aster family that has been used for hundreds of years to sweeten food and drinks in South America and other countries. The plant's leaves contain chemicals called glycosides, the major one being stevioside, which is used as a sweetener in Japan and Korea, where it is recognized as a safe food additive. Stevia represents 40% of the Japanese sweetener market.
Jim May, founder of Wisdom Natural Brands, Gilbert, AZ, who helped first introduce stevia in the U.S., said it's only a matter of time before stevia gains regulatory approval.
"And when it's finally accepted as a sweetener, the health of Americans will substantially improve," he said. Data from the National Institutes of Health (NIH) and the American Diabetes Association (ADA) show that the number of Americans with higher than normal blood glucose levels has reached 75 million.
Some studies suggest stevia-300 times sweeter than sugar-has antioxidant, anti-inflammatory and antibacterial properties, helping to fight against diabetes, high blood pressure and tooth decay. However, in October 2007 FDA sent a warning letter to Hain Celestial Group, Boulder, CO, which uses the product in certain tea and drink mixes, citing concerns the sweetener could negatively impact blood sugar levels, the cardiovascular system and the reproductive system.
"Though it can impart a sweet taste to foods, it cannot be sold as a sweetener because FDA considers it an unapproved food additive," FDA spokeswoman Kimberly Rawlings said of stevia. "However, under provisions of 1994 legislation (i.e., the Dietary Supplement Health & Education Act), stevia can be sold as a dietary supplement, although it cannot be promoted as a sweetener.
"Years ago, FDA had some GRAS petitions submitted for stevia," she added. "However, none were ever filed because they were not complete. Since 1997, FDA uses the GRAS notification process rather than reviewing GRAS petitions. At this time we have received no submissions for stevia, whether GRAS or as a food additive. We are aware of press reports that suggest that there may be an imminent submission to the FDA." Coca-Cola and Cargill would not confirm or deny such reports.
Despite its classification, the retail stevia category in the U.S. has grown from virtually zero in 1995 to approximately $60 million in 2006, as more and more companies have acknowledged its potential. Mr. May's Wisdom Natural Brands is now the leading U.S. stevia manufacturer, offering a full line of SweetLeaf stevia products, including single-serving packets, which contain 1 gram of inulin fiber, a naturally sweet prebiotic-derived mainly from chicory-found in more than 36,000 plants.
"Stevia is one of those products that shows incredible promise as a natural sweetener," said RFI's Mr. Altaffer. "It is relatively inexpensive to use, provides high impact, can be used in different formulations…Should stevia attain GRAS status, there will be a significant boom in the development of food and beverage products containing stevia."
Brien Quirk, technical director, Draco Natural Products, San Jose, CA, a stevia supplier, said GRAS status is important to consumers, as it offers them assurance that products are healthful.
"The FDA has to see further research to support the safety so that we know under what circumstances, if any, or at what dosages it could cause side effects in the general population with increased use," said Mr. Quirk.
Even if stevia gains approval as a sweetener, supply issues could impact the market, sources say.
"There aren't enough plants in the ground to satisfy the demand for natural sweeteners," according to Tim Avila, founder and CEO of Ventana Health, San Clemente, CA, which manufactures the zero-calorie sweetener Zsweet.
Mr. May's sources have informed him that Cargill could attempt to lay claim to existing supplies, cornering the market in China, which produces 80% of the world's stevia, in order to sell its products in Asia and other regions where stevia is already approved.
But there is considerable opportunity in Paraguay, for example, because the crop is a perennial that can be harvested three or four times a year, compared to just once a year in China.
Changing of the Sweetener Guard?
Overall, high intensity sweeteners will continue to dominate the market through 2010, according to the Freedonia report, mainly because of their ubiquity in diet soft drinks and tabletop use. Aspartame and acesulfame potassium (ace-K) will remain on top of the sweetener hierarchy for their use in diet beverages, while sucralose, the main sweetener in Splenda, will continue to lead the tabletop market.
However Freedonia's study also predicts, "The market value for high intensity sweeteners will be suppressed by falling prices, as patent protections expire and new competitors-especially importers based in developing nations-enter the marketplace."
Combined with growing demand from consumers, who are increasingly skeptical about artificial sweeteners, companies are beginning to capitalize on the opportunities that alternative natural sweeteners present.
"There's a huge impetus for the reduction of calories and carbohydrates, particularly in beverages," said Ventana's Mr. Avila. "Ninety-five percent of the market is dominated by high intensity artificial ingredients."
Acknowledging a sizeable demographic concerned about blood sugar, specifically Latinos, who are almost twice as likely to have diabetes compared to other ethnic groups, according to the ADA, Mr. Avila set out to create an all-natural, zero-calorie sweetener. In 2005 he launched Zsweet-which has attained GRAS status-blending erythritol, a sugar alcohol already popular in Japan, with natural fruit extracts for flavor enhancement.
Agave is another low-glycemic sweetener ideal for diabetics that is growing in popularity. Extracted from a South American cactus and often referred to as "honey water," the agave nectar or agave syrup is light in taste and color, but sweeter than honey.
While these natural sweeteners offer great promise for consumers, profitability, alongside palatability, currently presents a sizeable obstacle for businesses to overcome.
"Right now there is a huge Grand Canyon gulf between replacing artificial sweeteners with natural, low-calorie, low-glycemic ones because of cost," said Mr. Avila. "Secondary to that, holding up a huge part of innovation are marketers who are not prepared to invest the premium that consumers would ultimately pay for natural sweeteners."
But for health-conscious buyers, natural alternative products look, well, a lot sweeter. Retail sales for natural health and wellness products have reached more than $68 billion per year, according to the Natural Marketing Institute, Harleysville, PA.
"Whatever has been proven to be safe and regulatory allowable in foods is going to move that needle to a more balanced global market," Mr. Avila added.
But that balance will likely take several years and several iterations of product development, he predicted. "I think we're going to have to get through this second generation of natural high intensity sweeteners, which will be dominated by stevia," he said, estimating that it could take about three to five years. "Beyond that you'll see maturation and consolidation of sugar alternatives, driven by cost improvements."
Polyols and the Future of Functionality
Meanwhile, polyols, or sugar alcohols, like erythritol will grow at a faster rate than high intensity sweeteners, according to Freedonia Group. Numerous manufacturers have already registered success with a range of polyols, including BENEO-Palatinit, GmbH, Mannheim, Germany, which developed Isomalt, a beet sugar derivative with half the calories of sucrose.
"Isomalt has a mild sweetness profile similar to that of sucrose, but with a greater scope for flavor development," said Debra Bryant, director of business development and technical services for U.S. subsidiary BENEO-Palatinit Inc., Morris Plains, NJ. "Furthermore, it does not have any cooling effect and is completely devoid of any aftertaste. Isomalt also dissolves somewhat more slowly than sugar-so the sweet taste stays in the mouth longer, resulting in longer enjoyment."
Also characterized by its "tooth friendliness" and low-glycemic impact, isomalt has made an appearance in more than 1700 products, including a host of sugar-free candies.
Ms. Bryant predicts that demand for functional sweeteners will continue to thrive in the future, offering consumers alternatives to sugar that promote overall healthiness.
"With obesity and overweight problems reaching epidemic proportions worldwide, the good news is that more consumers are choosing foods that promote wellness in their lives," said Ms. Bryant. "At the same time, they don't want to give up flavor and texture, which raises the challenge of developing food products that fit into an active, health-oriented lifestyle but do not compromise on taste. Thus, functional carbohydrates like Palatinose and sugar replacers like isomalt will be on the rise because they provide health benefits and great taste at the same time. Whereas isomalt cuts down on calories, Palatinose promotes fat oxidation both in the resting state and during sporting activity. Of course it would be wrong to assume that the mere consumption of Palatinose is enough to reduce the waistline, but it makes it easier to target problem areas."
Palatinose, like sucrose and fructose, is fully digested and absorbed in the small intestine, providing the same total energy as most other sugars (4 kcal per gram). While hydrolysis and absorption are complete in the body, they occur much more slowly in comparison to sucrose, Ms. Bryant said, leading to a lower increase of blood glucose and insulin levels.
Businesses have a great opportunity to turn a profit if they can offer functional products at a reasonable price, said Mr. Altaffer, of RFI Ingredients. "I feel that providing consumers with a cost-viable, wholesome alternative to synthetic sweeteners is a significant leap forward," he said. "It may be that functional claims may arise from some of these sweeteners or there may be associations between the use of these sweeteners and functional benefits. One example of a functional benefit from a sweetener is Xylitol, which has established itself as a product that does not promote tooth decay."
Xylitol, a five-carbon sugar alcohol, is a naturally occurring sweetener found in the fibers of many fruits and vegetables. It can be extracted from corn, birch, raspberries and plums.
"Polyols will continue to benefit from their image as natural products rather than synthetic chemicals, and from continued interest in reducing sugar intake to combat obesity, tooth decay and diabetes," the Freedonia study predicts. "Sorbitol is the largest and most established product, and will register below average growth. Xylitol is expected to register above average advances. It has less than half the calories of sugar, but is equally sweet, making it a desirable tabletop replacement."
While demand continues to rise for alternative sweeteners, sugar remains one of the most actively traded commodities. The world produces about 122,229 metric tons of sugar per year, and its value will likely remain high due to its versatility. Sugar cane ethanol production has fueled a growing economy in Brazil and could play a role in the development of a post-Fidel Castro Cuba.
However, as U.S. healthcare spending is expected to balloon to $4.3 trillion in 2017, consumer focus will likely turn to the alternative sweeteners, as people access more information about their health and wellness benefits. And that will ultimately steer the industry.
"The market trends are being driven by natural and organic consumers," said Mr. Altaffer. "For many of these consumers there is a disconnect in buying natural, wholesome and organic foods that have synthetic additives in them, including sweeteners."
