Industry bank Rabobank believes sales of the non-caloric sweetener Rebaudioside A (Reb A) could reach $700 million within five years, though it warns that there are numerous hurdles still to overcome.

Reb A is a non-caloric sweetener derived from the stevia plant.

"Consumer concerns regarding obesity and the growing demand for all-natural products bode well for Reb A to quickly gain market share," said Rabobank Food & Agribusiness Research and Advisory executive director Stephen Rannekleiv.

"However, while success seems imminent, and we expect annual US sales of Reb A to reach approximately $700m within five years, numerous hurdles must still be overcome."

Rabobank said that the potential market for Reb A in the US appears to be considerable. In 2008, the global high intensity sweetener market was valued at approximately $1.3 billion, with the US accounting for approximately 35% ($455m). Each year, the US consumes more than 5m metric tonnes sugar equivalent of high intensity sweeteners.

Since approved by the US Food and Drug Administration, interest in the sweetener has surged, and is being used in products such as fruit juices, enhanced waters and carbonated soft drinks.

Beverage companies have been particularly interested because they are facing lagging sales of full-calorie soft drinks, and soft drinks made with artificial sweeteners because of consumer concerns.

However, Rabobank warned that while market potential for stevia in the US appears attractive, there are challenges to overcome.

"Reb A has been shown to have a similar taste to sugar, but individual tastes can vary substantially, and some consumers still claim to detect a bitter or licorice aftertaste that they find objectionable. Additionally, Reb A alone does not provide enough sweetness for some soft drinks, but cannot be combined with other non-caloric sweeteners to reach full sweetness while maintaining the all-natural claim," Rabobank said.

However, Rannekleiv said: "Most beverage companies appear to be developing formulas that combine Reb A with sugar, which helps to mask any residual aftertaste and allows for a low-calorie, all-natural option."

In addition to taste, Reb A pricing creates an additional hurdle. As demand is still being established and production lacks efficiencies of scale, Reb A costs more than other mainstream sweeteners.

Furthermore, price barriers could potentially become further complicated in the short term once the European Union approves Reb A for use as a food ingredient, which appears imminent, Rabobank said.

"If new product introductions and consumer acceptance in the EU outpace the industry's ability to increase stevia acreage, it could place additional upward pressure on prices in the short term," said Rannekleiv. "However, in the longer term, increased demand for Reb A would be an overall positive for the industry, as it would allow for increased scale and greater efficiencies in extraction and refining."