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Topic: Splenda Supply & Demand (Read 175 times)

Rhune
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Splenda Supply & Demand
« on: Dec 4^th, 2004, 12:42pm »

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LOS ANGELES (Reuters) - Small U.S. makers of foods and drinks sweetened with Splenda are making contingency plans as big food companies get the lion's share of the popular sugar substitute, which is in short supply.

Small companies are stockpiling the zero-calorie diet food ingredient and considering other ways to sweeten their products after warnings from Splenda maker Tate & Lyle PLC that future supplies will be based on past demand.

Splenda's popularity has soared as dieters following low-carbohydrate regimens like the Atkins and South Beach diets embraced it because of its ability to withstand the high heat of cooking without breaking down or losing flavor.

As consumers have clamored for it, big companies likePepsiCo Inc.
(Research), General Mills Inc. (Research), and Unilever PLC have begun using Splenda in everything from Pepsi Edge, a low sugar soft drink, to reduced-sugar Trix cereal to Ben & Jerry's Carb Karma ice cream.

Britain's Tate & Lyle has said demand for Splenda has far exceeded expectations, and the company is no longer taking on new customers in the United States until new production facilities come online in 2006 and 2007.

The Splenda brand is owned by Johnson & Johnson (Research) unit McNeil Nutritionals Worldwide, but Tate & Lyle is the sole manufacturer of sucralose.

Pepsi, General Mills, and Unilever all said they do not expect to be hurt by tight Splenda supplies, but smaller manufacturers were more concerned.

Betty Jo Steel, president of sugar-free sauces and salad dressings maker Steel's Gourmet Foods in Bridgeport, Penn., said she expects the needs of such formidable companies to come before her own.

"If people are buying on contract, and most of them are, then they are going to be handled first as opposed to people who are just ordering on a regular basis like us," Steel said.

Steel added that she would consider using a combination of sweeteners if her allocation of sucralose is not enough to meet demand.

Another manufacturer said he was not as concerned about a supply disruption as he was about a potential price increase on the sweetener because of tight supplies.

"It could drive the cost up, which would drive up the cost of our products and impact consumers and our business" said Stephen Jones, vice president and general manager of Maple Grove Farms of Vermont, which sells sugar-free maple syrup and salad dressings.

Maple Grove is more fortunate than some other small companies because it is a unit ofB&G Foods Inc. (Research), Jones said, and Splenda allocations can be shifted back and forth depending on which products are in higher demand.

B&G's other products include Emeril's Original seasonings and Polaner fruit spreads.

Other small businesses, however, were concerned that limitations on the amount of Splenda they buy could impact their ability to introduce new products and increase sales.

Baja Bob's, a San Diego, California-based maker of sugar-free drink mixes, recently launched a new line of martini mixes. Its co-founder, Craig Cook, hopes the company will have the funds to stockpile sucralose during times of the year when demand for drink mixes decreases, such as the winter.

"This way if we have a sudden growth spurt we are going to have it available to us," Cook said.

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