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Sep 29, 2023

The race to replace sugar is on. Which natural sweetener will come out on top?

As consumers grow more distrustful of sugar and the Nutrition Facts panel

As consumers grow more distrustful of sugar and the Nutrition Facts panel deadline looms, manufacturers are pouring R&D into natural substitutes — and the payoff could be pretty sweet.

There is arguably no greater pariah than sugar in today's food and beverage world. Once beloved for its swiss army knife capabilities — helping cakes rise, caramelizing crusts and sauces and of course, delivering mouthwatering sweetness — a growing number of health-conscious consumers are rejecting the staple for nutritious alternatives.

According to a survey by Label Insight, 22% of U.S. consumers want to restrict their sugar intake. Sarah Schmansky, vice president of Nielsen's fresh and health wellness division told Food Dive that one in two consumers plan to do this by purchasing "no sugar added" products this year.

Synthetic solutions are also on the chopping block.

"More than half of consumers were avoiding artificial sweeteners in 2017," she said.

Schmansky said products with a "no artificial sweeteners claim" also grew 9% with a five-year CAGR, and sales of food and beverage items that contained zero-calorie sweeteners and were free from artificial sweeteners jumped 16% in 2017.

"More than half of consumers were avoiding artificial sweeteners in 2017."

Sarah Schmansky

Vice president of fresh, health and wellness, Nielsen

This changing behavior, along with the Food and Drug Administration's inclusion of added sugars to the 2020 Nutrition Facts panel update, is spurring manufacturers to look to nature for their sweetening blends.

In the past few years, solutions ranging from familiar, fully-caloric ingredients like honey and agave nectar to non-caloric solutions like stevia have cropped up on product label claims, each with a unique cocktail of benefits and obstacles for formulators.

As the race to replace sugar kicks into high gear, there is still room for experimentation in the estimated $16 billion to $20 billion sugar alternatives market. But analysts and ingredient producers have identified a few standouts leading the pack of natural sweeteners. The question is, which will achieve market dominance, and why?

Though consumer demand for naturally-sweetened products reached a mainstream fervor in the last few years, manufacturers have been experimenting with stevia since the 1990s.

According to Mintel, the percentage of products launched containing stevia in the second quarter of 2017 jumped more than 13% compared to the year-ago period. As of August of last year, more than a quarter (27%) of products using high-intensity sweeteners contained stevia.

The natural sweetener, sourced from a Brazilian plant, is more than 200 to 300 times sweeter than sugar depending on the grade, and can be used in everything from soft drinks and juices to snack foods.

And though the ingredient has benefited from a first-mover advantage, Thom King, founder and CEO of Icon Foods — a natural, clean label ingredients company — thinks that stevia's long history is actually working to its detriment.

"Stevia has been around for a while, and a lot companies who were early adopters by and large didn't use it properly," King told Food Dive. "So early adopters of stevia formed consumer sentiment that it has a bitter aftertaste."

That off flavor — which has been likened to metal and licorice — is stevia's greatest drawback. Though producers have improved the taste profile of stevia extracts, the ingredient will never be a complete substitute for sugar because of its strong flavor. Instead, manufacturers can use the ingredient to reduce sugar levels, so long as it's mixed with a masking agent such as erythritol (a zero-calorie sugar alcohol) or monk fruit.

"Stevia has been around for a while, and a lot companies who were early adopters by and large didn't use it properly. So early adopters of stevia formed consumer sentiment that it has a bitter aftertaste."

Thom King

Founder an CEO of Icon Foods

Another issue for stevia, King said, is that it doesn't participate in maillard, the chemical reaction between amino acids and sugar that browns and caramelizes food and helps with leavening.

David Thorrold, general manager of sales and marketing at The Monk Fruit Corp. told Food Dive that the bigger problem for stevia is the fact that consumers have grown to associate stevia-sweetened products with a bad aftertaste.

"Consumers are less likely to buy a product that's sweetened with stevia," Thorrold claims.

Still, the ingredient benefits from a well-developed supply chain, low cost and easy sourcing — attributes that many of its competitors are lacking. This flexibility is reflected in R&D by mega-brands across categories, such as PepsiCo, DanoneWave, Kraft Heinz and Nestle.

Late last year, Coca-Cola announced it had developed had created a stevia-sweetened soda that contains zero sugar, zero calories and no bitter aftertaste. The beverage giant said it would introduce the drink in a small market outside of the U.S. early this year.

Investments in stevia by Big Food are likely to continue as producers perfect their blends.

Monk fruit is a natural sweetener — not as sweet as stevia and more expensive to produce — but it's steadily eating up market share. Since the ingredient was approved by the FDA, more than 2,000 products have launched with monk fruit, Thorrold said.

"Monk fruit is going to be a big part of the sugar reduction story for the next decade, if not longer," he said. "Generally, monk fruit is easier to formulate with than stevia. It has an easier sensory profile to work with, and doesn't have the metallic off-taste that some people find with stevia."

Like stevia, monk fruit also doesn't participate in maillard, but despite their similarities, the fruit benefits from natural positioning and a clean slate.

"We've been in the stevia industry since 1999 and we of course see continued growth, but monk fruit is starting to eclipse stevia," King said. "It's pure market perception — monk fruit is more label friendly… when consumers see monk fruit on a label they expect a sweet flavoring, and don't yet have any hang ups about off flavors."

Nate Yates, business director of natural sweetness innovation at Ingredion, disagrees.

"I think when you look at the challenges with monk fruit it's not so easy to say that it's much better than stevia," he told Food Dive. "I think it may be a little premature to [say] that it's going to pass stevia because it's simply less bitter. There is a place for multiple sweeteners depending on formulations and needs, and placement of the product itself."

The high potency sweetener has an off-taste of its own — one reminiscent of melon rind. This flavor can be masked by sugar alcohols like erythritol or ingredients like honey or agave, though Thorrold said manufacturers avoid these solutions because they will rack up the amount of added sugars on the Nutrition Facts panel.

"Monk fruit is starting to eclipse stevia. It's pure market perception… when consumers see monk fruit on a label they expect a sweet flavoring, and don't yet have any hang ups about off flavors."

Thom King

Founder and CEO of Icon Foods

And though competition certainly exists between the monk fruit and stevia market, the ingredients actually work very well together. When combined, each ingredient masks the other's aftertaste.

"In the U.S., about half of the products that have monk fruit have stevia in them as well," Thorrold said. "Stevia and monk fruit work very well in combination with one another — actually, the monk fruit market would be much smaller without stevia."

He argued that stevia offers manufacturers low cost while monk fruit offers better taste, an enticing combination for manufacturers. But when the ingredients are mixed, their opposing flavors also reduce perceived sweetness.

This issue hasn't stopped major manufacturers for launching products centered around monk fruit, however, which sports a strong health halo. Earlier this week Talenti announced a new line of gelato sweetened with monk fruit juice concentrate and erythritol, catering to consumers seeking better-for-you products and strengthening its health halo.

While both stevia and monk fruit expand across categories and bolster their consumer acceptance, there is another sweetener that's been flying under the radar — but that industry players think could cause a massive shakeup.

Allulose is a rare sugar that's created when fructose is treated with an enzyme or bacteria. It occurs in small amounts in nature, and can be found in figs, raisins, beets and corn. It's only 70% as sweet as sugar, but contains less than one-tenth of the calories, and isn't metabolized by the body, meaning it doesn't raise blood sugar.

Perhaps most importantly, allulose has no aftertaste, boasts the same mouthfeel as sugar and can participate in maillard and is highly soluble — delivering all of the functional benefits of sugar with fewer drawbacks. Price wise, it's less expensive than both stevia and monk fruit.

King said that Icon Foods started working with allulose four years ago when its supply chain was still underdeveloped, and that the price of the ingredient has come down two-thirds since then.

"Allulose is going to be a game changer," King said. "With allulose, you’ll see added sugars go from 23 grams to only one to two grams."

The FDA still currently requires manufacturers to list allulose as an added sugar on their products, so it doesn't boost nutritionals. This has discouraged some producers from using the ingredient.

"Under the regulations at they exist at the moment, [allulose] would be considered a sugar, and that's a drawback for manufacturers, and may be why it's not as popular yet as some of the other natural sweeteners," Yates said.

King suggests that brands utilize front-of-pack to explain how allulose is different from traditional sugar and other sweeteners. But he doesn't think this will be an obstacle for long.

"The word around the campfire is that within the next six months the FDA is going to give [allulose] its own line item [on the Nutrition Facts panel] like polyols or sugar alcohols," he said.

This would have a major impact on the industry, and King expects to see an explosion of allulose formulations if this change occurs. Products could go from having 20 to 25 grams of sugar to only a few with no change in sweetness — a huge boon to manufacturers of traditional and indulgence products.

Research and development of allulose products has begun to pick up in the last few years. In 2015, Tate & Lyle developed Dolcia Prima, an allulose that can be derived from corn, beet and sugar cane.

Tate & Lyle has also petitioned the FDA to keep allulose from being listed as a carbohydrate, sugar or added sugar on the Nutrition Facts panel, claiming that "the general public will not only be confused but misled by the current proposed labeling approach," Storms told Food Navigator.

Dr Pepper Snapple Group has also been testing the natural sweetener to see how it performs in soft drinks, teas, waters and juices, a company spokesman told The Wall Street Journal.

Whether or not the FDA gives allulose a line item on the Nutrition Facts panel remains to be seen, but King believes that manufacturers should prepare for its moment in the sun, which he argues is just around the corner.

Though he agrees allulose could give manufacturers much greater freedom, Yates doesn't think that any one ingredient will usurp sugar as a dominant sweetener.

"Allulose is another tool in the toolbox for formulators, just like stevia and other ingredients are," Yates said. "It just depend on what the formulator's ultimate goals are...[their] price point and what makes the most sense for their products."