THE ARTIFICIAL SWEETENER MARKET IN INDIA

The low calorie sweetener business has evolved rapidly over the last 20 years. Whether this evolution
has been in response to market forces or is more a case of technology push is, perhaps, an arguable
point. Also, the range, composition and quality of products that rely on low-calorie sweeteners,
particularly diet or light soft drinks, have changed dramatically during this time. Today, it really is
possible to deliver, to a significant consumer population products whose acceptability matches or even
exceeds that of their full-sugar equivalents.
The increasing incidence of obesity and consequent growing calorie consciousness has sparked off a
growing consumer base of low calorie products. The key factor driving the low calorie market is the
consumer demand in international markets

On the contrary in India, the consumption of sweeteners has been traditionally fuelled by the increasing
diabetic segment (with usage being restricted to tea/coffee). Till few years, back 90% of the
consumption of sweeteners was by diabetics only for controlling blood sugar. Sugar substitutes/artificial
sweeteners is the smart way to cut on excess calories of sugar (sucrose) and control your calorie intake.
However, with the increasing incidence of lifestyle diseases like cholesterol, obesity, etc. has given rise
to a corresponding awareness for calorie consciousness amongst urban individuals and the growth in
the Indian sweetener market today is essentially being driven on one of the two following factors:

Increasing health and calorie consciousness amongst urban individuals leading sedentary high
pressure lifestyles, characterized by erratic/unhealthy eating habits and dependence on junk
food/high calorie diet.

Increasing incidence of obesity linked lifestyle diseases like cholesterol, diabetes, cardio vascular
diseases, etc., in which in terms has given rise to change in lifestyle and dietary habits creating
the need for adopting a need for calorie control in ones daily diet.


Global scenario
If one looks at the global scenario however, according to ISO (International Sugar Organisation) London,
sweeteners have replaced 13 million tons of refined sugar worldwide and have contributed to a buildup
of 60 million tons of sugar.

Competitive threat to sugar is particularly strong in the case of carbonated beverages compared to
bakery products where the technical problem is replacing the bulk provided by sugar.
Lawsuits and new products are indicators that the tight-knit, closed-lipped sugar-free/low
calorie/artificial sweetener industry will be in for a spell of turmoil.
The industry prefers terms such as "sugar substitutes" or "low-calorie sweeteners," but the product
colloquially referred to as artificial sweeteners, and officially known as non-nutritive high-intensity
sweeteners, are currently used by more than half of the people in the US.
In 1991, about 101m Americans used low-calorie, sugar-free foods and beverages. By 2001, that had
increased to 163m, and by 2007 194m, according to US-based market research firm Packaged Facts,
which also notes that about one-third of US adults are on a weight-loss diet.
Weight-loss efforts around the world pushed the global artificial sweeteners market to $3.1bn (2.3bn),
and Packaged Facts predicts that the global market will grow to $3.2bn by 2012.








Evolution of Artificial Sweetener
For almost a decade, the sugar-substitute market was considered in the thralls of choices between the
"pink, blue or yellow package." That is, Sweet'N Low (saccharin; introduced commercially in 1957), Equal
(aspartame) or Splenda.
Aspartame is also the main ingredient in NutraSweet, and was introduced in tabletop, or package form,
in 1981, and then to carbonated beverages in 1983.
The last major shift in the industry was the introduction of Splenda. Approved by the US Food and Drug
Administration (FDA) in 1999. Splenda is sucralose, developed jointly by US-based McNeil Nutritionals
and UK-based Tate & Lyle (T&L). Sucralose was discovered by T&L researchers in 1976, and is now used
in roughly 4,000 products.
Although "sucralose/Splenda continues to own a majority of the artificial sweetener market," says
Lipson from Packaged Facts, it may be losing ground. In 2004, 415 new products were introduced using
sucralose in food, beverage or personal care. For the first nine months of 2008, only 165 new sucralose
products were introduced.
Also in April 2008, US-based beverage giants PepsiCo and Coca-Cola indicated they were looking to
abandon Splenda for a sweetener they have more invested in rebaudiosides A (Reb-A), developed from
stevia.








Current Indian market overview
The low calorie market stands at around 100 crores and is clocking double digit growth rates. However,
the current category growth rates are no indicator of the potential growth of the industry as till last year
the category was governed by several restrictions on use of low calorie sweeteners in products other
than sugar substitutes among others which affected growth of this category.

Key players in the Indian market
The dominant players in the sweetener market is Sugar Free which dominates the category with market
share of 72% and growing at 20% p a. The others players are Equal and Sweetex from Boots with a
market share of 14% and 10 % respectively, clocking negative growth rates.

Cadila Healthcare Ltd, the flagship company of the Zydus Group headed by Anand Deo, senior vice
president, Cadila's Consumer Division, has been one of the fastest growing integrated healthcare
companies and is today the 5th largest player in the Indian domestic formulations market with a
turnover exceeding Rs 13.1 billion and having a global presence. After an existence of five decades, as
the erstwhile Cadila Laboratories, Cadila Healthcare came into being under the aegis of the Zydus Group,
in 1995.










International trends
Internationally growth in the low calorie dietetic market has been fuelled by sweetener based low
calorie products like diet soft drinks, confectionary, ice-cream and frozen desserts and foods - rather
than direct use of sweeteners. However, in India it's been the opposite with direct usage of sweeteners
(table-top sweeteners) accounting for over 90% of the low calorie market.

However, with the new regulatory mechanism put in place by the government, allowing unrestricted
usage of sweeteners in dairy products, biscuits and confectionary and allowing entry of new molecules -
will completely change the scenario in this category, in the years to come and give a tremendous boost
to the category.

Most leading restaurants today offer low-calorie mocktails or refreshers on their drink menus. Instead of
ordering drinks like smoothies which are laden with sugar, one could order for a drink without the sugar
and use the sachets of Sugar Free available on their tables.
The first manufacturer of Sucralose in India: Virchow commenced production of the artificial sweetener,
Sucralose, for the first time in India in the year 2005. Virchow is currently increasing its production
capacity of Sucralose.

Artificial sweeteners are becoming a big business in India. What will be the health impact of this
business is something regulators are clueless about. For instance, the Coca-Cola Company and Nutra
Sweet Company have applied to the Union ministry of health and family welfare for approval for a new
chemical sweetener, Neotame. The companies say this sweetener is sweeter than aspartame, the
artificial sweetener originally invented by Monsanto.

Tabletop sweeteners are popular in India with high-profile promotional campaigns indulging the health-
conscious to dump sugar and choose its alternatives. Brands such as Equal, a global product from
Chicago-based Merisant, Sweetex from Boots Piramal, Sugar Free TM from Zydus Cadila and Sweet'Nlow
from New York's Cumberland Packaging Corp are popular in India.