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Tate & Lyle fights to preserve status in sucralose market

By Anthony Fletcher , 03-Oct-2005

Tate & Lyle's ice cream sweetening system has been named as one of the finalists at a forthcoming trade show competition, though the company may soon face a struggle to protect its valuable sucralose patent.

The company has been nominated at the forthcoming Fi Europe event for its new Ice Cream Rebalance 004, a sweetening system that includes Splenda sucralose for use in no-sugar-added ice cream formulations.

This is just one of hundreds of recent product formulations to contain sucralose. Analyst Mintel reported that nearly fifty per cent of the total 942 food and drink product launches for January to June 2005 with sweeteners in their formulations contained only sucralose.

 

By comparison, 300 products (32 percent) were made with the amino acid sweetener aspartame, and 184 (about 20 percent) products with the high intensity sugar replacer Acesulfame K, roughly 200 times sweeter than sugar.

 

"Tate & Lyle's strength is that they're the only sucralose product out there with the necessary production capacity and client base," New York-based LMC senior economist Nick Fereday told FoodNavigator-USA.com.

 

It all sounds perfect. Tate & Lyle is currently the world's sole mass producer of sucralose, the only sweetener derived from sugar, and with demand for artificial sweeteners spiraling due to rising concerns over obesity, sales look likely to increase. Indeed global sales expanded by 63 per cent last year, compared with 8 per cent growth in the broader artificial sweetener market.

 

But while customers - and the industry - give their approval and the web of patents that surround the firm's production of sucralose should ensure that the company is in a great position to exploit current eating and spending trends, there is growing concern within that new imitations could significantly undermine the firm's position.

 

With important patent expiry dates in 2006 and 2009, the company is suddenly facing a struggle to maintain its monopoly. According to the UK's Financial Times, Chicago-based NutraSweet said that it was looking for potential partners in China and India in order to produce sucralose-like sweeteners without violating patents.

 

However as Fereday pointed out, potential competitors will still find it difficult to muscle in on the sucralose market.

 

"It's not a problem to make sucralose in the lab as such," he said. "It is in scaling up production that things become a bit more complex. More patents would need to come off before production could become viable.

 

"Chinese production is certainly not a threat just yet."

 

Indeed Tate & Lyle has expressed confidence in its product, and is keen to highlight the difficulties that any potential newcomers may face. Industry experts point out that it costs time, patience and expenditure to be able to meet the high specification required at realistic volumes to make production profitable.

 

The sweeteners industry has been fraught with patent disputes since the invention of saccharine at the turn of the century. More recently, when US company NutraSweet's patent over aspartame expired, profit margins were initially driven down from 75 per cent to 15 per cent.

 

Tate & Lyle's concern is that if the sweeteners market is flooded with sucralose imitations, the product will become another commodity. And clearly, it is in NutraSweet's interests to diversify from aspartame production.

 

"NutraSweet knows what happens when ingredient patents expire," said Fereday.

 

Tate & Lyle draws about 20 percent of its profits from sucralose, and plans to triple capacity by 2007 through expansion in Alabama and the construction of a second plant in Singapore. The company could soon have a fight on its hands to maintain both sucralose prices and market share, but it is clearly preparing to defend its position.

 

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