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Food and Nutrition Consumers are engaging with food and nutrition like never before. Our in-depth analysis examines the most important implications across the industry, providing market intelligence, original thinking and key insights.

Where Do Sugar and Sweeteners Stand Today

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In the words of director general of the World Health Organization, Margaret Chan, the obesity and diabetes epidemics represent a “slow-motion disaster”. In 2016 65% of countries researched by Euromonitor International had an overweight and obesity prevalence of over 50%, while in countries such as the US, Venezuela and Mexico the same figure reached over 70%. To put it in a monetary context, in 2008 obesity cost the US an estimated US$147 billion (US$483 per person), while the UK estimated a bill of £61 billion (£259 per person).

Parallel to the growing obesity pandemic sugar has been portrayed by the mainstream media as the number one demon in our food and drink. Supporting this is an ever increasing link between sugar consumption, obesity and diet-related disease. This negative depiction of sugar has reached a point where it is compared to other harmful substances, such as alcohol, tobacco and even certain hard drugs. As Seattle Mayor, Ed Murray, recently said “Sugar is as bad as cigarettes in how we consume it”. Extracting and demonising a single food ingredient might not always be the most productive approach in improving one’s diet, but when its consumption reaches sky high levels, it is certainly a good reason to put it in the spotlight. Tackling sugar is especially important, because it is abundant in food and drinks targeted at children and adolescents.

Today sugar is the enemy of our health and governments’ most recent decisions support this

Euromonitor International’s Passport Nutrition data show that in countries with a higher prevalence of overweight and obesity, there is also a relatively higher intake of sugar from packaged food and soft drinks. This is true in both developed and emerging markets, the latter having previously been associated with malnutrition.

In line with this, in 2015 the WHO has released a statement aiming to limit consumption of free sugar to less than 10% of daily calories, with a 5% share producing additional benefits. For an adult, 10% of calories equates to around 50g of sugars, or 25g using the lower 5%. Further to this, in September 2016, the WHO urged all governments globally to place a minimum 20% excise tax on all sugary drinks. In response to this advice and several government decisions prior to 2016, there are currently 19 countries which place such a tax on sugar or sugary soft drinks, and at least 10 have made a decision to put such tax in place or are currently discussing the possibility of such a legislation.

With all this said, in today’s circumstances, the type of sweetener used in new food and drink and how much sugar the final product contains is key for its future success.

Where does the world’s sugar consumption come from and why?

Passport Nutrition data show that the average global consumer purchased 73g of sugar a day from packaged and fresh food, and soft and alcoholic drink products in 2015. 22% of this – 16g – came from sugar and sweeteners (such as table sugar) alone, followed by 19% – 14g – from fruits (coming from intrinsic sugars), and finally, in third place, soft drinks providing 16% of sugar – 12g per capita per day. The proportion of sugar purchased from soft drinks compared to packaged food varies between regions, but in both North and Latin America soft drinks represent a significant 29% and 23% of sugar purchased, respectively. Fruit, vegetables and dairy also contribute a substantial amount of total sugar, but when speaking of sugar in terms of health and obesity, intrinsic sugars contained in whole fruit or unsweetened dairy are currently considered relatively insignificant. While the sugar contribution from sugar and sweeteners has been dropping, the contribution from soft drinks, baked goods and confectionery has been rising.

While a lot of the anti-sugar movement in the mainstream press has focused on the large amount of sugar in products, the cost of food has largely been left out. Sugar is a relatively cheap commodity and ingredient, which has in part ensured that high-sugar products remain low in cost. While the amount of sugar that can be bought for USD1 varies between different types of food and beverage, depending on other production costs, the average global consumer can buy 30g of sugar if they were to spend that dollar on flavoured yoghurts, 58g if it were sweet biscuits, 72g on juice, 114g on juice drinks and 132g of sugar if they were to spend that dollar on carbonates. With so much sugar bought so easily with so little money, one could argue it is far too easy to exceed the recommended free sugar consumption.

For companies such as Coca-Cola, PepsiCo and Dr Pepper Snapple Group, carbonates are the greatest source of sugar sales among packaged food and soft drinks categories. On the other hand, Mondelez, Mars and General Mills provide most sugar through biscuits and snack bars, followed by sweet and savoury snacks. The remaining top 10 sugar sellers, depend largely on dairy as a channel for sugar sales, though this category also incorporates the intrinsic sugar present in dairy – lactose.

Healthy snacking continues trending in developing markets, and awareness around sugar content takes centre stage

Sweet snacks, such as biscuits, snack bars and confectionery, seem to be the obvious targets in terms of the sugar reduction movement. Jointly contributing over 20g of sugar per capita per day in some of the greatest consuming markets, these categories have been doing poorly according to the latest packaged food data, especially in North America and Western Europe. While still in the age of snacking, there has been a clear shift to “healthier” products. Discrepancies regarding what is perceived to be healthy, along with a growing free-from trend, help companies capitalise on products like Nakd (recently acquired by Lotus Bakeries), Clif and Primal Pantry (part of Cadbury’s recent investments), which have all focused on natural and/or no added sugars. Despite the per 100g sugar content of the average fruit and nut bar being comparable with that of the average chocolate bar, fruit and nut bars win owing to the erroneous consumer perception that what is “natural” is also healthy.

Speciality sweeteners are going strong in Asia Pacific and the Middle East and Africa, but natural is where it’s headed

Consumer perception is a critical factor in a product’s success. Some may choose to avoid sweeteners with alleged negative health impacts, and opt for the more “natural”, such as honey, coconut sugar, agave syrup or brown rice syrup. Many people find the natural element of alternative sweeteners highly appealing. For example, in the past five years, while sales of sucrose have been dropping, sales of its natural counterpart honey, which also allegedly provides invaluable antioxidants and vitamins, have been growing strongly. Factors like low glycaemic index, as is the case for coconut sugar or agave syrup, also promote consumption of natural sweeteners. Nevertheless, despite their natural sourcing, such sweeteners still contribute to calorie intake, and to weight gain and diet-related diseases. Moreover, they are also associated with tooth cavity formation – another significant health problem associated with sugar intake. There is a definite shift towards natural sweeteners; however, from a nutrition and health point of view, they do not provide any additional benefit, nor are they less detrimental to health than conventional beet/cane sugar. Despite increasing attention to sugar, both honey and sugar sales are expected to grow substantially over the 2015-2020 forecast period.

Nevertheless, with sugar increasingly known as an “unhealthy” ingredient, there is a growing trend for sugar-free products. Current demand for natural ingredients puts most speciality sweeteners at a disadvantage, as consumers avoid artificial additives. While demand for speciality sweeteners is declining in the developed regions of Western Europe and North America, growth is expected to continue in emerging regions, particularly Asia Pacific and the Middle East and Africa. In 2015, over 588,000 tonnes of sweeteners made it into conventional snacks, 73% of which was in confectionery products. Future development in sweeteners will focus almost entirely on finding new natural sweeteners, which can follow the success of stevia (which experienced a 39 CAGR% over the 2011-2015 period). There will also be further refinement of stevia, with the goal of providing a sweetener that enables 100% sugar replacement, tastes good and is natural. This will see new manufacturing methods, such as fermentation, increase in prominence.

Sugar’s days are numbered – what will fill its shoes?

There is a clear shift towards more natural and less added sugar products, especially in the developed markets; however, what is even more obvious is that the sweetness preference is still strong. When developing new sweet product, the key question is: how will the producer merry good flavour with low sugar content? Added sugars get increasingly negative consumer perception, while naturally contained sugars remain on the goodie list for now. Nevertheless, shoppers are increasingly more educated and if they follow new governments’ guidelines, natural sugars such as lactose from milk products, or fructose from dried fruit or juice, are also to be avoided. This also goes for natural sweeteners such as brown rice syrup or coconut sugar. Natural, low to no sugar, and providing great flavour are the answer to the successful sugar substitute, but who or rather what will fill its shoes?

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