By Mike Esterl And Tripp Mickle
PepsiCo Inc. said Friday it would remove the sweetener aspartame
from Diet Pepsi, to address consumer concerns about the artificial
additive and reverse slumping diet soda sales.
PepsiCo said it would switch to sucralose, a less controversial
but still artificial sweetener. The beverage giant said the
change--the boldest soda reformulation since Coca-Cola Co.'s New
Coke fiasco--was in response to consumer surveys showing aspartame
as the No. 1 reason Americans are shunning diet colas.
Diet Pepsi volumes fell 5.2% in the U.S. last year, according to
industry tracker Beverage Digest, while U.S. volumes of the
market's leading diet cola, Diet Coke, plunged 6.6% last year.
In addition to trying to stem the free-fall, Diet Pepsi is
taking direct aim at rival brand Diet Coke. In announcing the
change, PepsiCo repeatedly described the new Diet Pepsi as
"aspartame-free." In a statement, Seth Kaufman, a senior vice
president of PepsiCo North America Beverages, said: "Diet cola
drinkers in the U.S. told us they wanted aspartame-free Diet Pepsi
and we're delivering."
A payoff from the substitution is hardly guaranteed. Not only is
it likely to change the taste of Diet Pepsi, it also comes at a
time when consumers are showing preferences for natural foods.
Pepsi is swapping one artificial sweetener (sucralose, better known
as Splenda) for another (aspartame, known as Equal and Nutrasweet).
That said, sucralose hasn't come under as much consumer fire as
aspartame because of worries about health effects.
The new sweetener is a blend of sucralose and acesulfame
potassium that will be used in Diet Pepsi, Caffeine Free Diet Pepsi
and Wild Cherry Diet Pepsi in the U.S. beginning in August. The new
sweetener formulation "was developed after extensive research and
testing with U.S. diet cola drinkers," the company said.
Until a few years ago, diet soda was the industry's great hope
as weight-conscious Americans dialed back on full-calorie soft
drinks. But longtime drinkers have been switching to bottled water.
Last year, U.S. diet soda volumes fell 5.9% while full-calorie soda
volumes rose 0.9%, according to Beverage Digest.
Diet Pepsi has the added challenge of being runner-up. It had a
U.S. soda market share of 4.3% last year, barely half of Diet
Coke's 8.5%.
"The big question is does Coke follow, because that's the big
brand, but they would be following in Pepsi's footsteps. There's
tension involved, " said Dean Crutchfield, an independent branding
consultant.
The move appeared to catch Coca-Cola by surprise. Coke Chief
Executive Muhtar Kent was appearing on CNBC when the news was
announced Friday morning. When asked about it, he didn't say
whether the company would also consider removing aspartame from
Diet Coke.
"I'm not here to defend aspartame," he said during the
interview, but then cited a recent report by the European Food
Safety Authority saying aspartame is one of the most "researched
ingredients in the world and safe."
Later Friday, Coca-Cola issued a statement saying it didn't have
any plans to change the sweetener in Diet Coke.
Changing formulas is risky business as Coke found when it
announced it was changing its flagship brand in 1985. In an epic
marketing failure, diehard Coke consumers rebelled against the new
Coke and the company had to bring back the old one.
The Center for Science in the Public Interest, a public health
group and soft drink critic, said Friday that, while consumers
should still avoid acesulfame potassium, more commonly known as Ace
K, sucralose is "likely" a safer sweetener than aspartame. It cited
past studies suggesting aspartame had caused tumors in rats, and
said tests in the 1970s flagged Ace K as a potential cancer
risk.
PepsiCo said it continues to stand behind the safety of
aspartame and will keep using it outside the U.S. and in other diet
offerings, including Diet Mountain Dew and Pepsi Max, a diet cola
marketed more aggressively to males.
Aspartame "doesn't even hit top 10" among concerns of Pepsi Max
drinkers, Mr. Kaufman said in an interview. He said aspartame
"remains an important sweetener option for us."
Aspartame, developed by a G.D. Searle & Company researcher
in 1965, has been under suspicion almost from its inception. But
federal authorities in the U.S. and Europe have repeatedly found
aspartame to be safe.
The Food and Drug Administration in 2007 discredited a study by
the European Ramazzini Foundation of Italy that labeled aspartame
as a carcinogen. The European Food and Safety Association in 2013
completed a full review of aspartame and ruled out any associated
risk of genetic damage or cancer. It also determined it doesn't
harm the brain or developing infants during pregnancy.
The American Heart Association and American Diabetes Association
said in 2012 that artificial sweeteners, including aspartame, "when
used judiciously...could facilitate reductions in added sugar" and
help with weight loss.
But criticism--particularly in social media--flared up last year
due in part to a study in the journal Nature. The study, published
in September, indicated zero-calorie sweeteners such as saccharin,
sucralose and aspartame can change bacteria in the gut and trigger
higher blood glucose levels, a risk factor for diabetes.
Major aspartame makers include Japan's Ajinomoto Co., Inc.,
Korea's Daesang Corp. and a host of Chinese companies such as
SinoSweet Co., Ltd. and VitaSweet Co. Ltd.
The NutraSweet Company, which is based in Augusta, Ga., made the
sweetener a popular brand in the U.S. The company, owned by
Boston-based private-equity firm J.W. Childs Associates LP, last
year announced it would stop making aspartame and close its Augusta
plant. The plant currently is idle, NutraSweet chief executive
William DeFer said on Friday.
Volumes for artificial sweeteners, an estimated $2 billion
market, have been declining in the U.S. and Western Europe since
about 2008. From that time, aspartame, the third-largest artificial
sweetener in the world by volume has seen its volumes decline 2%
annually in North America, according to IHS Chemical, an analytics
firm.
IHS Chemical Director of Specialty Chemicals Research Marifaith
Hackett said that much of that volume decline is attributable to
declines in diet soda consumption.
The top two sweeteners are sodium cyclamate, popular in China
but banned in the U.S.. and saccharin, known as Sweet 'N Low.
Sucralose, also one of the largest sweeteners by volume and best
known as Splenda, is made by U.K.-based Tate & Lyle PLC. The
company last year reported a 5% increase in sweetener volumes. Its
competitors include Chinese companies like Niutang Chemical Plant
Co. Ltd. and JK Sucralose Inc.
This week, Tate & Lyle announced it planned to restructure
its sucralose division by shuttering a Singapore plant and
consolidating production into a McIntosh, Ala., plant. It said it
aims to make Splenda a "low-cost and sustainable business."
Coke and Pepsi have both been trying to solve the diet sweetener
problem for years. Pepsi tweaked Diet Pepsi a couple of years ago
to a blend that retained aspartame but mixed it with acesulfame
potassium.
They have both spent heavily in recent years trying to develop
zero-calorie sweeteners that can be marketed as natural, not
artificial. Each has placed bets on stevia, which is derived from a
plant but can leave a bitter aftertaste.
Coke and Pepsi rolled out cola variations sweetened with stevia
in the U.S. last year, but mixed in sugar, turning them into
mid-calorie colas instead of diet colas.
Write to Mike Esterl at mike.esterl@wsj.com and Tripp Mickle at
Tripp.Mickle@wsj.com
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