Consumer awareness of sugar content in soft drinks continues to grow and play a key role in product innovation and portfolio management. At the same time, suppliers are under increasing pressure to re-evaluate the various sweetening methods for soft drinks amid supply chain shortages and inflationary pressure. In this piece, we’ll look at how and why it’s important for ingredient suppliers to not just monitor their own commodity prices but the prices and availability of the end user products their ingredients go into. We’ll examine how select artificial sweeteners are performing in the US over a 2-year period by way of the carbonates market within soft drinks. Using Via, Euromonitor International’s e-commerce tracking tool, a variety of data metrics for product categories by sweetener ingredient can be easily tracked and provide insights such as:
- Carbonates with stevia still only represent 5% of online stock keeping units (SKUs) in January 2023 compared to 29% of SKUs with sugar listed as a sweetener
- Stevia SKUs had the highest unit price and saw prices rise significantly during the first half of 2021
- Consumer satisfaction with stevia products remains low with only an average rating of 4.24 compared to a 4.55 rating for those SKUs with aspartame and acesulfame potassium
Sugar remains a popular sweetener within carbonates by digital share of shelf
Before looking into how end product prices for carbonates in the US are comparing across the selected sweeteners in our sample of SKUs, it’s important to track availability and how the use of these products by sweeteners has changed in our sample over our observation period of two years. Rather than focusing on the amount of sugar in each product, we’ll be looking at the presence of sweeteners in this category. To start off, of all the sweeteners tracked in our sample, products that listed sugar as a sweetener had the highest digital share of shelf at 29% of all SKUs in January 2023, much higher than our low- and no-calorie sweeteners we are comparing. Despite increasing consumer awareness of the negative impact of sugar, it remained the most prevalent sweetener within this sample due to its recognisable sweetness to the consumer, but also likely due to the relative ease of sourcing the sweetener during a challenging economic environment in the past two years with inflation and supply chain disruptions. Products with aspartame and acesulfame potassium had little change in presence. Products with these sweeteners faced many challenges in the past two years; for example, one of the first disruptions Coke observed during the pandemic was the supply of aspartame which is sourced from China.
End product prices for carbonates fluctuate heavily for all sweetener types
There are a variety of factors that can contribute to changes in end product prices. However, by monitoring end product prices by sweetener type, we can see how inflation impacted these various products as well as chart the volatility. Overall, we can first see the glaring difference in the price positioning of these products, with SKUs with stevia having a significant higher unit price in carbonate products versus those with sugar, aspartame or acesulfame potassium. Stevia has several strains that can be used: strains such as rebaudioside M, or Reb M, closely replicate sugar but are expensive as an input, but even older strains such as Reb A are cheaper but not as sweet and, often, manufacturers have to balance out the taste with other sweeteners, which drives up the cost. The other high-intensity sweeteners are generally cheap and profitable, and we can see the low unit price average they have compared to SKUs with the more traditional sweetener of sugar.
Monitoring the growth of unit prices gives close insight into the cause-and-effect relationship of ingredients supply and the impact on end product prices. In the case of stevia, there was a drastic increase in unit price of these SKUs from March to June 2021 and this was due to inadequate farm labour during COVID restrictions as well as the lowest yields of stevia leaves in six years. The end product price has levelled off, but there is still inadequate raw production to meet demand; overall, the unit price of these SKUs increased by 40% during January 2021 to January 2023. SKUs with sugar, however, increased the highest during this time period growing by 56%. This was much higher than the commodity price of sugar which rose by 25% during the same period, according to Euromonitor’s Economies and Consumers database. These products have been especially impacted by cost-push inflationary pressures as well as increased competition from highly-priced artisanal carbonates.
Stevia products receive significantly lower consumer satisfaction ratings
Consumer engagement and satisfaction of products by sweetener can provide direction on new product development and formulation decisions. In the case of our sample of carbonates SKUs, those products with sugar, aspartame and acesulfame potassium all had high average ratings above 4.47, indicating strong consumer satisfaction. However, those carbonate products with stevia as a sweetener had significantly lower ratings as well as number of ratings. This highlights a key hurdle for these products to overcome and why stevia has struggled in terms of widespread adoption. A lot of this negative perception is shaped by poor reactions to older strains of stevia, but even with newer blends closer to sugar without the bitterness, consumers still do not rate these products as those with other sweeteners. However, with stevia products still having low penetration in the market while commanding a high unit price at the retail level, there still remain opportunities granted companies can crack the flavour code and provide a more favourable-tasting beverage for consumers that is worthy of higher reviews.
As consumers and companies struggle to adjust to new cost-push and demand-pull drivers behind inflationary pressures, monitoring online prices for select categories and baskets of goods provides key insights on how price increases are manifesting themselves across categories, companies and pack sizes. Companies need to track these changing prices closely from a variety of perspectives in order to track competition and look for pricing advantages and opportunities. Learn more about how Via can support your business and help you unlock key strategic and tactical insights with its standardised online product coverage across 80 countries, 1,500 online retailers and 11 consumer goods industries.
Note: Sample based on SKU prices found in Euromonitor’s e-commerce tracking tool, Via, with data extracted in February 2023. Please note that due to ongoing improvements to the AI-led product matching of SKUs to categories, suppliers and brands, data and SKU counts can be revised based on system updates. SKU counts used for change in availability analysis and unit prices: SKUs with Sugar (Jan 2021 – 1,409, Jan 2023 – 1,756), SKUs with Aspartame (Jan 2021 – 573, Jan 2023 – 681), SKUs with Acesulfame Potassium (Jan 2021 – 490, Jan 2023 – 596), SKUs with Stevia (Jan 2021 – 200, Jan 2023 – 283). SKU counts used for reviews: SKUs with Sugar, Jan 2023 – 549, SKUs with Aspartame, Jan 2023 – 229, SKUs with Acesulfame Potassium, Jan 2023 – 169, SKUs with Stevia, Jan 2023 – 142. SKU information extracted from the following e-commerce retailers: Amazon, CVS, Giant Eagle, GNC, Harris Teeter, H-E-B, Kroger, Meijer, Pavilions, Publix, Safeway, Target, Thrive Market, Walmart, Wegmans, Wholefoods.