Coke racing Pepsi to release stevia-sweetened cola

PepsiCo Inc. (NYSE: PEP) is launching a reduced-calorie soda in Australia that uses stevia, marking the first time the beverage maker is using the natural sweetener in its namesake cola, reports The Associated Press.

The world's No. 2 soda company says that Pepsi Next in Australia has 30 percent fewer calories than regular Pepsi.

The rollout follows the launch of Pepsi Next in the U.S. earlier this year. Rather than stevia, that cola has a mix of artificial sweeteners and high fructose corn syrup. The beverage has about half the calories of a regular Pepsi, at 60 calories per can.

As reported previously in the Atlanta Business Chronicle, Atlanta-based The Coca-Cola Co., (NYSE: KO) and New York- based Pepsi, are racing to find the elusive soft drink ‘sweet spot’: a soft drink with no calories, no artificial sweeteners and no funny aftertaste.

Such a combination - the companies hope - would silence health concerns about soda and reverse the decline in consumption of carbonated drinks, an NBC News report said in July, adding that such a formula could still be years away.

NBC said that a natural sweetener getting major attention is stevia.

The product is used in orange juice and bottled teas, but stevia’s aftertaste is harder to hide in colas, the network explained.

Coca-Cola told NBC it is testing additional drinks that use stevia and other natural sweeteners, but declined to give details.

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Pepsi rolls out cola with stevia in Australia

PepsiCo Inc. is launching a reduced-calorie soda in Australia that uses stevia, the first time the beverage maker is using the natural sweetener in its namesake cola.

The Purchase, N.Y.-based company says the drink, called Pepsi Next, is also sweetened with sugar and has 30 percent fewer calories than regular.

The rollout follows the launch of Pepsi Next in the U.S. earlier this year. That version has about half as many calories of regular at 60 calories per can, but uses a mix of artificial sweeteners and high fructose corn syrup.

Although there are no set plans yet, Pepsi says the idea is to eventually expand Pepsi Next to other countries. It says, however, it has no plans to use stevia in Pepsi Next in the U.S.

Pepsi Next was developed to win back lapsed soda drinkers who want to cut back on calories but don't like the taste of diet soda. The Coca-Cola Co. this summer also began testing reduced-calorie versions of its Sprite and Fanta that use a mix of sugar and natural sweeteners such as stevia, which is derived from a South American shrub.

The moves by Coke and Pepsi come as per capita soda consumption in the U.S. has declined over the years. Now the companies are trying to come up with formulas that address concerns about calories and artificial sweeteners, without sacrificing taste.

The challenge is that zero-calorie natural sweeteners like stevia often have a bitter aftertaste that's difficult to mask in sodas.

It's not the first time the companies have taken a stab at mid-calorie sodas. In 2001, Coke rolled out "C2" and Pepsi followed a few years later with "Pepsi Edge," both of which had about half the calories of regular. They were taken off the market by 2006 because of poor sales.

Coca-Cola, based in Atlanta, also introduced a version of Sprite with stevia in the U.S. about four years ago. But that drink has since been discontinued as well.

Earlier this year, Coca-Cola introduced Sprite with stevia in France following its rollout of Fanta with stevia in 2010. Both those drinks are still on the market. The company does not offer its flagship soda with stevia anywhere in the world.

Both Coke and Pepsi use stevia in other U.S. beverages, such as juices and teas.

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3 Companies with promising growth potential from Stevia

Until recently, the natural sweetener stevia was found only on the shelves of health stores but has recently moved into the limelight. Beverage giants Coca-Cola (KO) and PepsiCo (PEP), in their quest for a healthier, non-artificial sweetener for their beverage lines, have started to use stevia. This plant is part of the sunflower family, and originally native to Paraguay. It has been used as a sweetener there for centuries. The sweetener, which has been approved by the FDA, is a refined preparation of steviol glycosides extracted from the plant's leaves. One of these extracts, Rebaudioside A (Reb A), is 100-300 (number varies by source) times sweeter than sugar. The global sweetener market is estimated at around $56 billion, of which 80% is caloric sweeteners such as sugar and high fructose corn syrup, while the other 20% is comprised of non-caloric sweeteners, dominated by artificial sweeteners such as aspartame and Splenda (sucralose). The World Health Organization believes that natural sweeteners could capture up to 20% of this market.

Coca-Cola and Cargill have filed 24 U.S. patents relating to stevia, and the FDA has approved Truvia, a Reb A sweetener developed jointly by the two companies. Coca-Cola has added Truvia to over 30 products globally, including Diet Coke in Japan where stevia has roughly 40% of the sweetener market. Cargill has marketed Truvia to consumers in individual packets, and is now the number two sweetener behind Splenda. Not to be left behind, PepsiCo has developed a competing stevia-based product, PureVia, jointly with Chicago based Merisant's subsidiary, The Whole Earth Sweetener Company. PureVia can now be found in such beverages as zero calorie beverage Sobe Lifewater, and Trop50, Tropicana's fruit juice beverage with 50% less sugar and calories than regular orange juice. PureVia is also available in grocery stores, competing with Truvia for the sugar substitute market.

Clearly there is an enormous market potential for stevia-based sweeteners, and any food that uses a sweetener should be considered to have growth potential for the product. However, neither Coca-Cola nor Pepsi or their partners actually grow stevia themselves. For the stevia market to develop in an organized fashion, reliable suppliers are required who can produce quality plants with high Reb A content consistently. At this time, most of the available stevia has been grown in places like South America, China and Vietnam. The diversification of growth conditions and differing cultivars of stevia plants grown has led to problems with costs, consistency in taste, and reliable supply, particularly in a broad market such as the U.S.

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Stevia makes a splash in beverages

Beverages ceased being about mere thirst ages ago. Although not without their share of controversy, beverages have become a preferred delivery system for energy and sustenance — so much so that the hand naturally reaches for a beverage when the body feels a lack of vigor.

Let's focus on that moment of controversy though: Research has uncovered evidence the body perceives calories taken in liquid form in a different fashion than it does those from solid food. Specifically, the calories are not "counted" as readily. So while a sugary drink might deliver 140 calories, our internal accountant dismisses that energy and seeks more to fill the need – even though the need is no longer there.

With the needle of the obesity compass pointing toward this, beverage makers stepped up to the plate — or bottle, as it were — and set R&D to the task of creating functional drinks that not only satisfy taste and other cravings but act as aids to weight and energy balance instead of hindrances.

New research from Cargill Inc. (www.cargill.com), Minneapolis, indicates three key factors affect the taste experience of beverages: sweetness, flavor and mouthfeel. These factors must be examined in relation to each other because any time one is modified; it affects the way the others are perceived.

"When producing calorie-reduced beverages, manufacturers typically lower the sugar content of their product, a move that affects the sweetness of the beverage and impacts mouthfeel and thus the total taste experience," says Andy del Rosal, leader of Cargill's North American beverage applications group of scientists. "To compensate for the reduction of sweetness, zero- or mid-calorie sweeteners are added and often combined with taste-masking and enhancing flavors. Although this combination effectively addresses the loss of sweetness, the beverage is still likely to deliver a ‘thinner' mouthfeel and a different taste profile."

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Honest Tea Cuts the Sugar

Sweet tea may be sweet because it’s loaded with sugar, but Honest Tea thinks there’s a market for the popular beverage that goes easy on the sugar load.

The Bethesda-based company, acquired by The Coca-Cola Co. last year, has started a national rollout of “Not Too Sweet” Tea, a traditional sweet tea it says has 40 percent less sugar and calories than other leading sweet teas.

A 16.9-ounce bottle has 25 grams of sugar and 100 calories. The sweetness comes from a combination of organic cane sugar and organic stevia, the company said.

Honest Tea, founded in a Maryland kitchen in 1998, sold a 40 percent stake to Coke in 2008. Coke bought the company outright one year ago.

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