The State of Sweet

The sweetener industry would like you to understand that corn syrup isn’t dead. It sees marketers and retailers who have been rushing to swap HFCS from products as following a fad, and not getting a good overall picture of consumer behavior.

According to an intensive study conducted by the MSR Group – on behalf of the Corn Refiners’ Association – the growth of health as a driver of consumer purchases is surpassed only by two other drivers: taste and price. And when those two elements come into play, consumers buy the same old products: sodas, full-calorie teas and juice drinks, and more than enough other products to keep the corn growers in business for years to come.

“People are interested in reducing sweeteners overall, rather than any particular type of sweetener,” notes Sarah Martin, an analyst who worked on the study. They might have heard in the press that they don’t like high fructose corn syrup, they might say they want to avoid it she said, but ultimately “there’s a disconnect between what they say and what they do.”

So what they do, she said, is load their carts with many of the same kinds of products that they always have – but the difference is that they’re loading in fewer packages, smaller packages, but packages nonetheless. If the proportion, the share, isn’t changing, whole pie is getting smaller.

Still, even the sugar lobby can’t ignore that many of the products most closely associated with its chief ingredients aren’t selling as well as they used to. But if the knife is falling, it’s a huge knife – and other blades are hurtling Earthward even faster. Certainly, soda sales have been in decline for a decade – but diet CSDs have been going through an even more drastic change: they’ve dropped 20 percent over the past five years, according to Euromonitor. Example number one is Pepsi Cola finally re-passing Diet Coke as the runner-up to Coke Classic in annual soda sales.

CokePepsiThere are many reasons for this diet drought: concerns about the healthfulness of Aspartame and the press those concerns have recently gotten; manipulative pricing and the development of new package sizes; a generational change that has fewer millennials drinking soda of any kind; underscoring the purchasing power of core CSD consumers; but maybe it’s just plain taste.

It’s with this in mind that the beverage industry continues to search for what many call the “Holy Grail” of sweeteners: zero calories, sugary sweetness and mouthfeel. Meanwhile, it tinkers with the formulations it has. Mid-calorie products are rolling out again, mixing HFCS or cane sugar with Stevia, as with Coca-Cola Life and Pepsi True, and Dr Pepper’s 10 line, which puts sugar in the mix with aspartame.

Stevia blends and mutations are also on the table: one company, Evolva, according to a Bloomberg report, is trying to clone different parts of the stevia leaf via fermentation to create a marketable, affordable next generation. Other ideas, like finding molecules that can enhance mouthfeel and flavors like sweet or salty, are being researched at places like Senomyx.

For now, however, it’s clear that with sweetened beverages, a preference remains for many consumers for cheaper and sweeter: in one case, kids beverage warhorse Capri Sun switched to cane sugar from HFCS and then back again, after it didn’t gain the company any share and cost it more money.

It’s what’s on the increasingly wider margins, however, that has companies scrambling for innovation: for every Capri Sun sale, Honest Kids, a less sweet, organic product, picks up a growing fractional share. Pepsi might be gaining share because it’s bleeding less than Diet Coke, but they’re both losing drinkers: meanwhile trendier CSD brands like Q Tonics, Zevia and Maine Root are gaining sales, growing as brands, using sugar or stevia blends as a sweetener. Other carbonated products, like Kombucha, are also sweetened with stevia, while plain flavored carbonated water, sweet or unsweet, is also a hot category.

How to explain the changes? Despite segmentation, over the long haul, there are two things affecting consumer preferences: time and taste. The companies that follow, in brand news, are the ones trying to keep up with what are unstoppable changes to the latter – before the former runs out.