Stevia is driving the growth of the intense sweeteners market

Stevia is driving the growth of the intense sweeteners market

With the pull of consumer demand for diet or low-sugar foods and the push of regulatory pressure to reformulate products, food and beverage manufacturers are increasingly looking to intense sweeteners - and the new kid on the block, at least in key markets like the US and Europe - is stevia.

The sweetener has 200 times the sweetness of sugar and, like other intense sweeteners, can be used in a range of low-calorie food and drink products. However, stevia is natural, an attribute stevia suppliers see as crucial, with consumers wary of the safety of artificial sweeteners.

Stevia is widely used in Asia, notably Japan, and in parts of Latin America but its presence in the global intense sweeteners market remains small. According to data from Leatherhead Food Research, sales of stevia, including crude extract and refined products, reached US$79m in 2009 - accounting for just 6% of the market for intense sweeteners. In volume terms, stevia represents just 2% of the market.

However, as Leatherhead notes, stevia is "one of the most dynamic" sectors within intense sweeteners. US regulatory approval for stevia in 2008 has led to more food and beverage manufacturers turning to the product when developing low-sugar products. Stevia's status as a natural sweetener has also increased uptake, with consumers demanding more natural products, the Leatherhead report claims.

In Europe, France and Switzerland have also given the green light to the use of stevia and suppliers are waiting for Brussels to formally rule on its use throughout the EU. In April, The European Food Standards Authority recommended that stevia was safe to use and industry watchers believe a final decision will be given in the first half of next year.

This week, a key stevia supplier, Malaysia-based PureCircle, outlined its ambitions for Europe with the announcement of two ventures that will look to serve markets on the Continent.

PureCircle and French sugar giant Tereos are to team up to develop low-calorie sweeteners for France, Belgium, Italy and the Czech Republic. The stevia supplier will also join forces with German sugar processor Nordzucker to market similar products in northern, central and Eastern Europe. The ventures follow a deal announced in July with Associated British Foods' British Sugar arm to serve the UK, Ireland, Spain and Portugal.

Speaking to just-food yesterday (23 September) PureCircle CFO William Mitchell said the ventures with Tereos and Nordzucker were an "acceleration" of the company's strategy to team up with sugar processors to develop low-calorie ingredients. "This is PureCircle getting our partnerships ready so that we can support major food and beverage company launches in Europe when EU clearance comes through," Mitchell said. "If I talk to specialists in this field, the consistent view I've been briefed on is that it's not a question of if but a question of when EU clerarance will happen."

PureCircle's ventures will use Tereos's and Nordzucker's production and distribution network and its own "very strong research and development pipeline" and "very significant global relationships" with clients, Mitchell said.

"On day one, these will starts as fairly small-scale operations but they are designed to ramp up quickly because the joint ventures will take advantage of two things. In the local region, they will take advantage of the sugar companies' existing infrastructure and distribution systems. On the stevia side, PureCircle has already invested more than $300m to build up a global supply chain. The joint ventures themselves will not be heavy investment vehicles," Mitchell explained.

PureCircle also announced a third venture this week. The London-listed firm said it would team up with German food and drink ingredients group Dohler "to make "natural, low-cal food and beverage formulations".

Dohler designs "full-menu solutions" for food and drink manufacturers, Mitchell explained, and, in practice, would open doors for the low-calorie sweeteners developed by PureCircle and the sugar processors.

"By doing the full menu, [Dohler] does product design and then, if the customer buys into that, [Dohler] says: 'OK, you can source ingredients from PureCircle and partners'," Mitchell said. "It's a complimentary relationship."

While the business building blocks are falling into place, there remains much work to be done on making consumers more aware of stevia. Last month, PureCircle launched a global marketing campaign including a "trust mark" that would be carried on the packaging of "leading manufacturers around the world".

Herbert Eickmeier, a member of Dohler's marketing team, said the venture was a "strategic" move for the company but he said that, while the company's clients in the beverage and dairy sectors, for example, "know what stevia is and what they can expect from stevia", consumer awareness needs to be worked on. "Consumers have to be educated on all aspects of stevia," he told just-food.

The marketing campaign unveiled by PureCircle and the launch of a website to raise awareness about stevia will help. However, for all the product's potential and for all the impetus given to the sweetener from US approval (which will happen again if Brussels gives the green light), consumers and parts of the food and drink sector still need to find out more about the ingredient's properties.

As Leatherhead's marketing intelligence manager Chris Brockman points out, larger brand-owners can be reluctant to change their products' recipes. "Remember that stevia is a new ingredient – it has to win the share from all the incumbents, and major companies generally don't like tampering with the formulation of established brands, which is why stevia use in the US for example has largely been confined to niche brands – it’s being tested," Brockman tells just-food.

Brockman says there is "concern" among consumers about artificial sweeteners that could benefit natural products like stevia, although he insists the outlook is uncertain. "The potential [for stevia] is huge given the concern over artificial sweeteners and the unattractiveness of sugar-laden products, but whether it translates is yet to be seen," he explains.

Brockman also points to a recent UK survey that he suggests shows the anxiety over the products "looks less of an issue". He cites research from the British Nutrition Foundation, which carried a March poll from YouGov that claimed 30% of respondents thought artificial sweeteners "could not be safe" - but, despite those concerns, Brockman says, the "vast majority" consume them.

"Many consumers regard sweeteners with suspicion. In practice, very few actively avoid products that contain them – so are they prepared to pay a premium for a product with a new ingredient that they have never heard of?" Brockman asks. "This is a very complex area depending on that brand and market you are targeting: reduced calories can be more important to many consumer segments than naturalness."

Reformulation is indeed a complex part of NPD but PureCircle, and stevia suppliers like them, are betting big on the potential of the natural sweetener.