NutraSweet Co. is launching an assault on the tabletop
By Mike Hughlett
August 11, 2007
Chicago Tribune
NutraSweet is one of the most recognized names in the
artificial sweetener world, but for years the Chicago-based company hasn't
actually marketed a product under that name. That's changing, and in a big
way.
NutraSweet Co., known primarily for imbuing diet pop with sugariness, this
month launched its first offensive into another big sugar-substitute market:
tabletop sweeteners -- the little packets that coffee and tea drinkers dump
into their beverages.
It's a bold gambit. The rough-and-tumble tabletop sweetener business is
already highly competitive -- just ask Chicago-based Merisant Worldwide
Inc., NutraSweet's crosstown rival. Merisant is the maker of Equal, a brand
that has taken a beating from Splenda, the faux sweetener trade's rising
star.
Plus, NutraSweet is rolling out a unique strategy:
affixing its famous brand to sweeteners made from different chemical
compounds. That may not sound too radical, but sweetener brands tend to be
associated with the stuff they're made of, as well as the color of their
packaging.
Splenda is made from sucralose and comes in yellow packets. Equal is
composed of aspartame and is packaged in blue -- and so on.
NutraSweet launched an aspartame or "blue" sweetener earlier this month and
has plans for a "pink" saccharin-based product, and a "green" natural-based
sweetener. A "yellow" sucralose product could follow.
"That's a whole new approach and it will be interesting to see how it
works," said Marcia Mogelonsky, a food industry analyst for Mintel
International Group. But she added, "The biggest challenge [NutraSweet]
faces is Splenda."
When Splenda was launched eight years ago by a subsidiary of Johnson &
Johnson, the business was dominated by aspartame and saccharin sweeteners.
But by 2003, Splenda led the market with a 38 percent share, compared with
24 percent for Equal, according to Information Resources Inc.
Now, Splenda's share is about 61 percent, while Equal and Sweet'n Low each
have about 13 percent of the market.
Splenda's rise has hurt Merisant: Its annual sales fell 16 percent between
2002 and 2006, according to a federal securities filing.
Merisant has long claimed that Splenda's success has been abetted by
misleading advertising that implies Splenda is healthier and more natural
than its rivals. Merisant sued Johnson & Johnson over the matter and came to
a settlement -- which hasn't been disclosed -- in the spring.
The settlement was one of several big events in the sugar-substitute
business this year. Another: NutraSweet got back the rights to its brand
name from Merisant.
Shared history
The two companies have a shared history.
Until 2000, both were part of Monsanto Co., which landed the sweetener
siblings as part of its 1985 acquisition of Skokie-based G.D. Searle & Co.,
where aspartame was invented. Monsanto sold its tabletop business to one
private-equity group, and its aspartame production operation to another.
The former is now Merisant, the latter NutraSweet, which employs around 400
and has annual revenues of at least $100 million. Until this year the two
companies continued to have strong ties.
Merisant was allowed to use the NutraSweet brand for one of its own tabletop
sweeteners. In return Merisant had to buy at least 200 tons of raw material
annually from NutraSweet, which has a big plant in Georgia. NutraSweet, one
of the world's largest aspartame-makers, was Merisant's sole supplier.
Last year, though, Merisant opted to buy aspartame from several sources to
cut costs and reduce its dependency on just one supplier.
"The benefits of the multisourcing strategy far outweighed the benefits of
keeping [the NutraSweet] brand," said Scott Bartlett, Merisant's vice
president of global supply.
NutraSweet was a relatively minor brand for Merisant, a "value" product
priced roughly 40 percent less than Equal, Bartlett said. It had only a 1
percent share of the tabletop market last year.
As of July 1, the name formally migrated to NutraSweet Co.,
and its chief executive Craig Petray used the term "ecstatic" to describe how he
felt. "We've been waiting for this for a while. We think it's a spectacular
opportunity for us."
Petray's plans hinge on repositioning NutraSweet as a premium brand. Its taste,
he said, has been improved through a new recipe. Now the company plans an
ambitious marketing campaign -- Petray won't divulge its cost -- to capitalize
on NutraSweet's name and its trademark swirl logo.
The name and the logo became famous in the 1980s after aspartame became the
leading sweetener in diet sodas. "People still equate NutraSweet with
sweeteners," Petray said. "People still know the swirl."
http://www.chicagotribune.com/business/chi-sat_nutrasweet_0811aug11%2C0%2C1911143.story
