Although times have been tough for store brand alternative sweeteners, the category’s natural side is a potential bright spot.
They’re good for sweetening a cup of coffee or tea, but alternative sweeteners have seen some rather sour sales performance in recent times. According to data from Information Resources Inc., both private label sugar substitutes and the larger total category saw dollar and unit sales declines during the 52 weeks ending Dec. 1, 2013 (see the table, p. 60).
However, retailers need not lose heart over this bleak news. David Rigg, senior director of marketing with Carmel, Ind.-based Heartland Food Products Group, believes retailers have a great opportunity to turn around sales of alternative sweeteners by focusing on the natural products side of the category.
“While artificial sweeteners still hold 60 percent of total category sales, the gap between [the] artificial and natural sweetener segments will continue to narrow,” he says. “By 2015, the natural segment is expected to capture 37 percent of total category sales, while the artificial segment will drop to 53 percent.”
Sweet spot for store brands
Looking specifically at store brands, sales of all-natural zero-calorie sweeteners are increasing quickly, Rigg adds, though consumer adoption took some time.
“For example, private label stevia is growing at a rate of almost 35 percent versus 12.5 percent for national brands,” he explains. “Share of natural sweeteners for private label is underdeveloped — slightly less than 10 percent — versus [about] 22 percent of artificial zero-calorie types. So there is a lot of headroom for retailers in the natural segments, mainly [in] stevia,” he explains.
Peter Sokoloski, private label manager with NOW Foods, Bloomingdale, Ill., also sees strong sales potential in stevia, with many large retailers adopting store brand versions of the product. In addition, he points to erythritol, a naturally occurring sugar alcohol found in various plants that contains virtually no chemicals, as another product retailers should consider private labeling.
Other areas of opportunity lie in monk fruit and agave nectar, Rigg adds.
And for those seeking a solution that doesn’t require them to completely give up traditional sugar, retailers might want to consider product development centered on blends. Jennifer Alli, sales development manager, national accounts with Westchester, Ill.-based Ingredion, notes that she’s seeing more brands offering blends of high-potency sweeteners with nutritive sweeteners, which offer consumers “a mid-calorie sweetening solution.” She points to a sucrose-stevia blend as an example.
Granulated or liquid?
Whether it’s stevia, sucralose or another alternative sweetener variety, Sokoloski and Rigg agree that most consumers prefer granulated options. And both agree that packaging type is important to winning the sale.
Sokoloski notes that several major retailers — including Trader Joe’s, Whole Foods and Kroger — carry their own-brand granulated stevia in single-serve packets, a packaging type favored strongly by many consumers today.
“Retailers need to get packet versions of sweeteners on their shelves,” he states. “Consumers are looking for convenience above all. Packets provide this convenience, whether you’re talking about sugar, stevia or artificial sweeteners.”
For his part, Rigg points to bigger pack sizes as an area of opportunity.
“In the sucralose segment, large 9.7-ounce granulated SKUs are the top private label items,” he states. “And now we are starting to see that with stevia granulated pouches for retailers introducing the item. In fact, at one large retailer, the private label stevia pouch is already the number-one private label offering in natural [alternative sweeteners].”
Still, some are looking beyond granulated with their alternative sweeteners. Alli notes that she has seen several brands introducing alternative sweetener concentrates with added flavors in liquid format. These sweeteners are packaged in squeezable bottles that consumers can carry in their pockets or purse.
According to the Global New Products Database of global market researcher Mintel, at least two retailers recently launched alternative sweetener liquid concentrates in squeezable bottles under their own brands: ALDI with its Sweet Additions Zero Calorie On the Go products (including stevia and sucralose) and Safeway with its Safeway Kitchens items (including stevia, sucralose and monk fruit varieties).
Make a pretty pack
Whether it’s a squeezable bottle, a pouch or a carton of single-serve packets, retailers need to make sure a package’s messaging is designed to grab shoppers’ attention.
According to Rigg, retailers are using designs that offer “stronger appetite appeal” to drive sales.
“Fresh berries and appealing cups of hot beverages side by side not only indicate possible usage, but also inject color and appeal into the packages,” he states. “Kroger is one customer that already has taken packaging to a higher level, but other leading retailers are improving food photography, as well.”
Rigg adds that retailers should color the background of each package with its respective sweetener’s associated color: yellow for sucralose, green for stevia, pink for saccharine, etc. Doing so helps shoppers easily find their preferred variety of sweetener.
Proper front-of-pack claims also should be added to boost awareness of the contained product, Alli states.
In addition, packaging should sport verbiage aligned with whatever product message the retailer wants to communicate to its customer base, Sokoloski says.
“Are they selling a value brand and need to show the similarity between the leading national brand versus their store brand? Or are they presenting a lower-calorie or enhanced flavor alternative that they can merchandise in a prime location?” he asks. “They need to clarify their brand position and base packaging and marketing decisions on this.”
Turning to merchandising, retailers need to make sure to position their alternative sweeteners adjacent to their sugar, as consumers expect to find them in that spot, Rigg points out.
“From a promotional and merchandising standpoint, however, off-shelf merchandising events really work well,” he adds. “Baking display units or ‘new year, new you’ weight-loss themes are examples.”
Retailers also could secondarily place their own-brand alternative sweeteners in the nutrition section, Sokoloski states.
And if the private label sweetener is all-natural, Alli suggests retailers to secondarily place the product in their natural and organic section, if they have one.
Do consider introducing more natural alternative sweeteners, which are growing in demand.
Don’t be afraid to go beyond granular; consider offering store brand alternative sweetener liquid concentrates.
Do think about offering products such as sugar-stevia blends to appeal to shoppers who might not like pure non-sugar sweeteners.
Don’t limit merchandising activity to the shelf — consider using special baking displays to promote store brand alternative sweeteners.