Sweetener Is Good News for More Than Its Maker
NEW YORK (AP) _ NutraSweet has been a boon to more than its creator, G.D. Searle & Co.
The low-calorie sweetener also has been a plus for the makers of a growing number of consumer products.
NutraSweet has given an added kick to products that already were doing well, such as diet soft drinks. It has rejuvenated stagnant products, such as powdered soft drinks. And it is making possible new products.
″This is big news in the food industry,″ says Robert Seelert, group vice president for General Foods Corp. ″There are a lot of people being successful using Nutrasweet in the food business.″
Emanuel Goldman, a consumer products analyst with the investment firm Montgomery Securities Inc. in San Francisco, says, ″NutraSweet is going to be one of the products of the eighties.″
Strong demand for NutraSweet products comes from aging baby boomers who are concerned about their weight and health, analysts say.
And another large group - mothers - likes NutraSweet because it doesn’t promote tooth decay.
NutraSweet, which is patented under the generic name aspartame, was first introduced in 1981 in Searle’s tabletop sweetener Equal. Now, it is available in more than 60 products, including hot cocoa, gelatin, pudding and custard, chewing gum, cold milk flavorings, and tea and coffee preparations.
Besides General Foods, Searle’s clients include such giants as Coca-Cola Co., PepsiCo Inc, Seven-Up Co., Borden Inc., Carnation Co., H.J. Heinz Co. and Procter & Gamble Co.
Searle and its customers are seeking approval from the Food and Drug Administration for use of NutraSweet in other product categories, says Timothy Healy, vice president for marketing of Searle’s NutraSweet group.
One is the juice and juice drink category, both frozen and refrigerated, which Healy says is an $8 billion-a-year industry.
FDA petitions should be filed within the next 12 months for frozen dairy products and yogurt, he says.
At the moment, you cannot bake with NutraSweet because high heat removes its sweetness. But one day, consumers may be able to buy cookies and cakes that are sweetened with aspartame, which is 180 times sweeter than sugar and is made from protein components.
″We have a pretty extensive R-and-D effort under way to make it a baking product. The baking industry is huge; that would be an attractive area for us to get into,″ Healy says.
The most visible NutraSweet users now are the soft drink companies. Last fall, the top three announced they were going to sweeten some of their diet soft drinks with 100 percent NutraSweet instead of with a blend that uses saccharin.
Pepsi-Cola led the pack. Its president, Roger Enrico, said at that time, ″The reformulation to 100 percent NutraSweet will accelerate the tremendous sales momentum being experienced by Diet Pepsi in 1984.″
Indeed, Diet Pepsi sales shot up about 33 percent last year to 181.5 million 192-ounce cases, Goldman says. He has doubled his estimated gain for this year from 15 percent to 30 percent.
Diet Coke sales rocketed 70 percent in 1984 to 425 million cases, Goldman says, and he expects growth of at least 25 percent in 1985. Diet 7-Up sales rose 10 percent to 90.9 million in 1984 and will gain 15 percent this year, the analyst says.
″That (industry growth) may not be sustainable but we do know there has been a stimulus to the diet segment that already was growing at a good clip,″ Goldman says.
Another large user is General Foods, which currently offers NutraSweet in powdered beverages, desserts and coffee and is testing it in cereal.
″The results on all of these things have really been very excellent for General Foods. This has become a very substantial business area for the company,″ Seelert says.
General Foods, which first introduced NutraSweet in its products in the summer of 1982, says that in its next fiscal year it plans to sell $425 million worth of NutraSweet products and $1 billion worth five years down the road.
There’s excitement at other companies, too.
″NutraSweet has really helped the powdered soft drink business,″ says Jon Hettinger, senior group vice president for the consumer products division of Borden.
Borden says it introduced NutraSweet in its sugar-free Wyler’s nationally in 1983 and in its Lite-Line powdered drinks in 1984.
Before NutraSweet, the category industrywide represented $600 million in sales; in 1985, sales will be near $1 billion, Hettinger says.
Sales of powdered soft drinks had been essentially flat for five years, according to Searle.
When brands sweetened 100 percent with NutraSweet entered the hot cocoa mix market in August 1983, sales of the total diet market segment grew 154 percent and now account for 25 percent of the entire cocoa market, Searle says.
In the cold milk mixes category, NutraSweet products were introduced on grocery shelves in early 1983. By the end of the year, the category’s sales tripled to $23 million, the company says.
The strong demand for NutraSweet has created some supply problems, the analysts say. Searle has a patent, which runs out in 1992, so there currently are not any other producers, although competitors, such as Johnson & Johnson, are developing their own sweeteners.
″There simply is not enough NutraSweet around,″ Goldman says. ″Some of these products are going to have to wait their turn. There’s a NutraSweet line. This is going to be tight for at least a couple of more years.″
Searle spokesman Thym Smith says, ″We haven’t entered any contracts we haven’t been able to honor.″
There are other concerns, too.
Standard & Poor’s Corp.’s food analyst, George Pierides, thinks NutraSweet- sweetened products will ″cannibalize″ other products. He also notes that, in certain liquid forms, NutraSweet has a limited shelf life.
In addition, NutraSweet is also more expensive than other sweeteners. And some consumers have reported side effects.
Still, Searle managed to sell $585 million worth of aspartame in 1984, vs. $13 million in its first year.