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Strategy Briefing

USA Flag The Sugar Backlash and its Effects on Global Consumer Markets

| Pages: 84

Price: US$1,325

About this Report

Added sugars – in particular fructose - in processed food and drinks play a key part in the growing problems of obesity, diabetes and tooth decay. Consumer demand is forcing manufacturers to reduce sugar content and develop natural alternatives to artificial sweeteners (such as stevia blends) in their products. Our new report studies the impacts of this change on global ingredients; consumer markets such as packaged foods, soft drinks and health and wellness; company strategy and legislation.

Sugar has become public enemy number one in packaged foods and drinks.

As increasing amounts of scientific research link it with obesity and tooth decay, sugar is seen as a health risk by most and as toxic as tobacco by others.

Sugar Tax

Fat is receding as the main problem, as public perception now lays the blame on sugary foods and drinks. In March 2014 the World Health Organization (WHO) stated that cutting intake to 5% (instead of the current 10%) of an adult's daily calories but would have additional benefits.

Governments are increasingly concerned about the rising costs of illnesses such as type 2 diabetes and cancer, which have risen alongside an obesity epidemic. The battle between food companies and governments may only just beginning; if health systems fail under the strain of obesity-related diseases, regulators will act prevent rather than cure them.

Several countries are introducing legislation to help curb intake of sugary foods; health warnings, sales taxes, banning of junk foods in schools, restrictions on advertising to children and reduced portion sizes will become more prevalent. Forms of sugar tax have already been introduced in Denmark, France, Finland, Hungary, Mexico and India.

Cut out sugar products

Sugar, fat and carbohydrate intake is falling, as consumers become aware of the need to maintain a healthy weight to prevent the onset of cardiovascular diseases and diabetes. Euromonitor International's Global Consumer Trends Survey 2013 revealed that over half of consumers are involved in some sort of weight loss or management system, with 23% on a formal diet.

Minimising sugar is high on the agenda for many consumers. Given a list of ingredients they specifically look for on food labels, 42% checked for limited or no added sugar.

Obesity will no longer be a problem limited to rich nations. Latest Euromonitor data shows obesity rates are set to increase in all countries over the forecast period, reaching 46% of the US population by 2018. The data also showed Chinese consumers were most likely to check for sugar content, while, Russian and Japanese consumers were far less concerned.

Health campaigners are also increasingly concerned about the high levels of hidden sugars in many alcoholic drinks – especially in cider, fortified wines and liqueurs.

Sweet Alternatives to Sugar

Many high profile anti-sugar protests highlight the notion that that fructose is a bigger problem than fat; it has zero nutritional value, it can cause liver damage and heart disease, it may help the body retain fat, it cause obesity and type 2 diabetes, it can be “addictive” releasing dopamine in the brain to produce a sensation akin to being rewarded.

The food industry also argues that sugar is an essential component of processed foods because it helps make products more palatable, it’s a bulking agent, texture modifier, flavour enhancer and preservative. There is no one ingredient that can replicate all of these functions in every product.

Until recently, high-intensity sweeteners have suffered from their artificial image, sometimes bitter aftertaste and a lack of consumer trust in synthetic ingredients. Aspartame, in particular, has come under fire, despite a vast number of scientific studies proving its safety.

In the face of the backlash both against sugar and artificial sweeteners, companies have been scrambling to develop naturally sweetened low-calorie formulations. The high intensity sweetener stevia has emerged as a clear winner since being approved for use in a number of markets.

Clearly Labelling the Sugar Content

Currently, companies need only specify the total sugar content in their products but under proposals put forward by the FDA in June 2014, labels would also include the quantity of “added sugars”.

Health campaigners will continue to put pressure on manufacturers to reduce the levels of hidden sugars in products such as bread, ready meals and dairy items, and to be more transparent about the sugar levels in all food and drink products by providing clearer information on nutrition labels.

Table of Contents

EXECUTIVE SUMMARY

Demand factors

Consumer attitudes

Trends in ingredients

  • Chart 1 Global High Intensity Sweeteners Market by Type 2013

Consumer market trends

Company strategy

Outlook

INTRODUCTION AND DEFINITIONS

The demonisation of sugar

Definitions

Types of sweetener

Bulk sweeteners

  • Summary 1 Types of Sugars and Bulk Sweeteners

High Intensity Sweeteners

  • Summary 2 Types of High Intensity Sweeteners

Fact versus opinion

The facts about sugar

Arguments of the anti-sugar lobby

Arguments of the sugar lobby

  • Summary 3 Arguments For and Against Sugar Reduction

DEMAND FACTORS

The obesity pandemic

A burden on healthcare systems

The US has highest levels of obesity

  • Chart 2 Obese Population in Key Markets 2008/2013

Increasing incidence of type 2 diabetes

Turkey and Germany suffer highest rates of diabetes

Alarming prospects for young Americans

  • Chart 3 Prevalence of Diabetes in Key Markets 2008/2013

Tooth decay

Sugary drinks are the main culprit

Incidence highest in emerging markets

  • Chart 4 Children’s Dental Health in Key Markets 2013

Health awareness

Life expectancy increases

Obesity linked to low incomes

  • Chart 5 Life Expectancy at Birth in Key Markets 2008/2013

Regulatory guidelines and legislation

WHO stands firm

The difficulties in calculating added sugar

New lobby group puts pressure on sugar industry

Consumer pressure groups

Legislative measures

Mexican government takes drastic action

Taxing sugar

Food labelling changes

Sweeteners also affected by labelling regulations

Developments in low-calorie sweeteners

Stevia benefits from its natural origins

Removing bitter aftertaste

Advantame gains approval in US and EU

Replacing sugar’s other functions

CONSUMER ATTITUDES TOWARDS SUGAR

Consumers are better educated about nutrition

“Weight watching” more popular than actual dieting

Indians reveal highest rates of diabetes

  • Chart 6 Dietary Restrictions by Country 2013

Almost half of women seek products with limited or no added sugar

Concerns about HFCS highest in Brazil and China

Fewer than a third seek low-calorie foods

  • Chart 7 “Which of the following factors or ingredients do you look for on food labels and food ingredient labels?” by Country 2013
  • Chart 8 “Which of the following factors or ingredients do you look for on food labels and food ingredient labels?” by Age Group 2013
  • Chart 9 “Which of the following factors or ingredients do you look for on food labels and food ingredient labels?” by Gender

Attitudes towards low-calorie soft drinks

  • Chart 10 “Which of the following phrases would you use to describe low calorie soft drinks” 2012?

MARKET TRENDS

Ingredients

Gradual shift towards high intensity sweeteners

Sucrose still forms bulk of sugar sales

Erythritol enjoys strong growth

Consumers still mistrustful of aspartame

Sucralose sales double

Stevia revolutionises the market

  • Table 1 Global Sales of Sugar and Sweeteners as Ingredients by Category 2008/2013

US still dominates the market for stevia

  • Chart 11 Leading Markets for Stevia 2013

Beverages

Regular carbonates laden with sugar

Latin America sees rise in cola consumption

  • Chart 12 Per Capita Consumption of Regular Cola Carbonates in Leading Markets 2008/2013

Consumers mistrust artificial sweeteners

Norwegians prefer low-calorie colas

  • Chart 13 Per Capita Consumption of Low-calorie Cola Carbonates in Leading Markets 2008/2013

Eliminating aspartame

Mid-calorie carbonates create new category

  • Summary 4 Mid-calorie Carbonate Launches 2012-2014

Fruit juice also comes under fire

RTD tea enjoys strongest growth

Flavoured water benefits from health trend

  • Table 2 Global Sales of Reduced-sugar and Regular Soft Drinks by Category 2008/2013
  • Chart 14 Reduced-sugar Soft Drinks as a % of Total Soft Drinks by Category 2008/2013

Sweet packaged foods

Sales of sweet foods hold up well, despite sugar backlash

Indians acquire a taste for chocolate

  • Table 3 Sales of Sugary Foods by Type 2009/2014

Brazil has the sweetest tooth

Indians aspire to sweet foods

  • Chart 15 Per Capita Consumption of Sugary Packaged Foods by Country 2014

Better For You (BFY) foods

Reduced-sugar category still niche

Low-fat foods are deceptively sugary

Consumers favour natural foods

  • Chart 16 Global Sales of BFY Packaged Food by Type 2009/2014

Sugar-free gum dominates reduced-sugar confectionery

Meeting demand for taste and texture

Developments in stevia

  • Table 4 Global sales of Reduced-Sugar Packaged Foods by Category 2009/2014

Hidden sugars

Sugars have replaced fats in processed foods

German study reveals very high sugar levels in children’s cereals

  • Chart 17 Sugar Content of Breakfast Cereals in Germany 2012

Sugar in bread

Alcoholic drinks

KEY MARKET TRENDS

Australia

Anti-sugar campaigns hit home

Low-calorie carbonates stride ahead

  • Chart 18 Australia: Obesity 2008-2018

Indulgence versus calorie control

  • Table 5 Australia: Sales of Sweet Packaged Foods and Drinks 2009/2014

Brazil

A nation of sugar lovers

Obesity levels soar

  • Chart 19 Brazil: Obesity and Diabetes 2008-2018

Middle classes fuel growth in sweet processed foods

Ice cream sales boom

  • Table 6 Brazil: Sales of Sweet Packaged Foods and Drinks 2009/2014

China

Childhood obesity on the rise

  • Chart 20 China: Obesity and Diabetes 2008-2018

Rising incomes drive demand for indulgence foods...

...but health-orientated drinks are gaining traction

China is the home of stevia

  • Table 7 China: Sales of Sweet Packaged Foods and Drinks 2009/2014

Germany

Obesity and diabetes reach dangerous levels

  • Chart 21 Germany: Obesity and Diabetes 2008-2018

Palates adjust to low-sugar drinks

Confectionery consumption remains high, but consumers downsize

  • Table 8 Germany: Sales of Sweet Packaged Foods and Drinks 2009/2014

Mexico

Government takes drastic action

  • Chart 22 Mexico: Obesity and Diabetes 2008-2018

Sugary drinks tax could boost demand for low-calorie beverages

Nation’s sweet tooth goes beyond sugary drinks

  • Table 9 Mexico: Sales of Sweet Packaged Foods and Drinks 2009/2014

UK

Leading Europe in the obesity stakes

Tooth decay on the rise

  • Chart 23 UK: Obesity and Diabetes 2008-2018

Sources of added sugar vary by age

Increasing awareness of “hidden nasties”

  • Chart 24 UK: Daily Added Sugar Intake by Age Group
  • Chart 25 UK: Sources of Added Sugar by Age Group

Children warned to cut down on fruit juice

Stevia is well received

  • Table 10 UK: Sales of Sweet Packaged Foods and Drinks 2009/2014

US

The world’s largest nation

Sugar banned from schools

  • Chart 26 US: Obesity and Diabetes US 2008-2018

Most added sugars come from soft drinks

  • Chart 27 US: Sources of Added Sugar by Age Group

Carbonates lose share to healthier drinks

Consumers ambivalent towards stevia

Zero-calorie liquid concentrates see surprise growth

  • Table 11 US: Sales of Sweet Packaged Foods and Drinks 2009/2014

COMPANY STRATEGY

Sugar reduction by stealth

Educating consumers’ taste buds

Dannon cuts down in the US

Mondelez more reluctant

Stealth or health

Portion control and calorie caps

Countlines made smaller

“Handbag size” Coke

Voluntary schemes and health campaigns

UK’s Responsibility Deal Calorie Reduction Pledge

CFBAI adopts category-specific nutrition criteria

Retailers take action

The switch to natural sweeteners

Disassociation from artificial ingredients

Stevia may not be the magic bullet

FUTURE OUTLOOK

Anti-sugar movement to gain momentum

More research required

The world will continue to become fatter

  • Chart 28 Forecast Obesity Rates in Key Markets 2013/2018

The need for government intervention

More sugar taxes on the cards

The need to make food labelling more transparent

The role of industry

The future of sweeteners

  • Table 12 Forecast Sales of Sugar and Sweeteners as Ingredients by Category 2013/2018

Searching for the ideal sugar replacement

Avoidance versus indulgence

Soft drinks trends

  • Table 13 Forecast Sales of Soft Drinks 2013-2018

A growing preference for NH foods

  • Chart 29 Forecast Sales of Selected Health and Wellness Packaged Foods 2014-2019

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