Outside the Beltway

Dieters May Face Splenda Shortage

James Joyner · Friday, December 3, 2004 · 3 comments

Dieters May Face Splenda Shortage (AP)

Dieters hoping for a slew of new products with the sugar substitute Splenda may be disappointed next year. That’s because the maker of sucralose, the key ingredient behind the increasingly ubiquitous no-calorie sweetener, is having trouble keeping up with demand. Tate & Lyle PLC, the world’s only manufacturer of sucralose, said interest has so outpaced expectations the company won’t take on new U.S. customers until it has doubled production at it’s plant in McIntosh, Ala., sometime in early 2006. The company also plans to open a second plant in Singapore, according to a written statement.

Buoyed by a surge in anti-sugar diets such as Atkins and South Beach, Splenda has enjoyed sweet success since its introduction in 2000, appearing in everything from soda and ice cream to candy and jams. Splenda, which won fans with its sugar-like sweetness and stability in baking, now dominates the $337 million U.S. retail market for sugar substitutes, beating out aspartame sweetener Equal, made by Chicago-based Merisant Corp.

US Sugar-Free Industry Braces for Splenda Shortage (Reuters)

Small U.S. makers of foods and drinks sweetened with Splenda are making contingency plans as big food companies get the lion’s share of the popular sugar substitute, which is in short supply. Small companies are stockpiling the zero-calorie diet food ingredient and considering other ways to sweeten their products after warnings from Splenda maker Tate & Lyle Plc that future supplies will be based on past demand.

Splenda’s popularity has soared as dieters following low-carbohydrate regimens like the Atkins and South Beach diets embraced it because of its ability to withstand the high heat of cooking without breaking down or losing flavor. Unlike other sweeteners, Splenda, whose chemical name is sucralose, is also said to have no aftertaste.

As consumers have clamored for it, big companies like PepsiCo Inc. , General Mills Inc., and Unilever Plc have begun using Splenda in everything from Pepsi Edge, a low sugar soft drink, to reduced-sugar Trix cereal to Ben & Jerry’s Carb Karma ice cream.

Wow. The girlfriend’s not gonna be happy about this one.

Interestingly, this comes in the wake of a backlash by competitors:

Equal fights to get even as Splenda looks sweet (Chicago Tribune, Dec. 2)

Unable to ride the growth in the popularity of artificial sweeteners, the Chicago-based distributor of Equal finds itself in a desperate fight to regain lost market share, resuscitate falling sales and come out strong against its competitors in new markets.

Low-calorie sugar substitutes now make up 17 percent of the U.S. tabletop sweetener market, and Merisant Worldwide Inc. had enjoyed a solid piece of that segment since Equal’s launch in 1981 until about 2000, when formidable competitor Splenda secured approval in the United States. Since then, the market for Merisant’s little blue packets has skidded to just 20 percent of sales to U.S. retailers and coffee shops, down from 40 percent before Splenda’s arrival. In four years, Splenda’s yellow packet has captured 48 percent of the U.S. tabletop market, taking much of it from Equal.

The market share woes and a more than 15 percent drop in U.S. sales during the last four years have caused significant reverberations throughout Merisant–which last month replaced its chief executive and withdrew plans for a public stock offering.

And last week, Merisant filed a lawsuit against Splenda-maker McNeil Nutritionals, a unit of Johnson & Johnson, alleging its rival’s advertising is false in stating that it’s “made from sugar, so it tastes like sugar.” Some viewed the suit as an overdue counter to Splenda’s success, built upon a multimillion-dollar marketing and advertising program.

Now’s their chance, I guess. Making a superior product would be another way to go, of course.