Stevia Holds US Sweetener Potential, but Hurdles Remain, says Rabobank Report

Since its U.S. approval, interest in the sweetener has surged, and is being used in products such as fruit juices, enhanced waters and carbonated soft drinks. Reb A would allow food and beverage companies to develop natural, low-calorie products made without artificial sweeteners.

10 Sep 2009 --- A natural sweetener made from the stevia plant could fill a sweet spot in the U.S. food and beverage market. The plant-based sugar substitute is increasingly being used by food and beverage companies, and should continue to gain market share, says a Rabobank report: Stevia and the U.S. Market.

For hundreds of years, the stevia plant has been used as a sweetener in Paraguay, South America. The stevia plant extract which tastes the most like sugar is called Reb A  (steviol glycoside rebaudioside A). In December 2008, the Food and Drug Administration approved Reb A as a food additive in the United States.

Since its U.S. approval, interest in the sweetener has surged, and is being used in products such as fruit juices, enhanced waters and carbonated soft drinks. Reb A would allow food and beverage companies to develop natural, low-calorie products made without artificial sweeteners.

“Because stevia-based sweeteners are plant derived and naturally occurring, they can be incorporated into products with all-natural claims. To date, no other commercially available high intensity sweetener can fill this gap,” said Rabobank analyst Stephen Rannekleiv.

Reb A is increasingly being used in food and beverage applications, and can be expected to continue to gain market share. Reb A is heat, light and pH stable and can be used in applications where other sweeteners cannot. Reb A’s ability to be used in products claiming all-natural is a key point with consumers.

“Consumer concerns regarding obesity and the growing demand for all-natural products bode well for Reb A to quickly gain market share,” said Rannekleiv. “While success seems imminent, and we expect annual U.S. sales of Reb A to reach approximately $700 million within 5 years, numerous hurdles must still be overcome.”

It is still unclear how broadly consumers will embrace the product, given some of the challenges related to price and flavor. Reb A alone does not provide enough sweetness for some soft drinks. And, Reb A cannot be combined with other non-caloric sweeteners to reach full sweetness while maintaining the all-natural claim.

This week the French government has approved the use of rebaudioside A in food and beverages in France. This approval is the first for an EU market and allows the food and beverage industry to formulate with rebiana, high purity rebaudioside A, for the next two years.