Sales of sugar and sweeteners have slowed in recent years and are expected to decline slightly going ahead, according to a new report by Mintel.
However, the market researcher suggested that innovation in the sector could contribute to a surge in future sales.
Sugar and Sweeteners - US - November 2007 reveals the retail market for sugar and sweetener products was worth around $4bn this year, an increase of just 2 percent in constant terms since 2002.
Current Mintel estimates place the market in 2012 at $4.3bn, which translates into a 4 percent decrease in constant terms.
Sales of white sugar dropped 16 percent between 2002-2006. Sugar substitutes fared better, increasing sales 22 percent in the period - although this growth slowed in 2007, when sales actually dropped 1.7 percent.
The report suggests that one reason for the difficulties faced by the category is a move away from sugar by diabetics and people watching their weight. In addition, Mintel suggests that the sweetener category has been held back by a lack of variety and innovation.
It forecasts that in the future, manufacturers will tap into this innovation gap with functional sweetener products, ranging from appetite suppression to mood enhancement.
According to an internet survey by Mintel, around half of respondents say they are interested in 'a sugar alternative that offers added health benefits like prolonged energy or immunity boosters' and "a sugar alternative that is enriched with vitamins and minerals such as calcium".
Interest in these items is particularly high among survey respondents aged 18-24 (60 percent and 59 percent, respectively).
Another window of opportunity is the flavored sweetener category, which has already been approached by some manufacturers, but which still holds more scope for examination.
In 2007, Splenda launched a line of sweeteners with 'flavor accents', meant to add certain flavor profiles to coffee or tea. These include cinnamon spice, mocha and lemon flavors for sweetening tea and coffee.
"Mintel believes there are some untapped flavor opportunities in the flavored sugar segment. Perhaps players could find success in special sugars that are meant to be used on the rims of kids' glasses/cups on special occasions, such as for birthday parties," wrote the report.
According to Mintel's research, most retail sales of sugar substitutes come from branded products, with only 5.4 percent of sales accounted for by private label.
This reinforces the importance of branding when it comes to sweeteners, while the majority of sugar consumers remain unconcerned about brands - almost 60 percent of white sugar sales were private label, and price is the main factor behind product choice.
The rising prices of sugar - by 37 cents during - the 2002-2006 period have contributed to a substantial drop in sales.
Mintel forecasts that future innovations including packaging, flavoring, or any possible new sugar substitute could contribute to a surge in future sales, which would likely exceed the forecast amount.
In particular, new functional products that can command a premium price would be most likely to boost sales, it said.