I. Executive Summary

The Products
• Four Product Categories
• Artificially Sweetened Products Are Core of Market
• Products with No Sugar Added
• Reduced-Sugar Products
• Dietetic Foods
• The Artificial Sweeteners

The Market
• Retail Sales at $6.3 Billion in 1998
• Artificially Sweetened Captures Three-Fourths of Market
• Major Product Segments Are Mature
• Health Trend Continues as Americans "Bust" Sugar
• Diabetic Population Increasing
• New Sweetener Development
• New Product Development
• Retail Sales to Approach $8 Billion in 2003
• Table 1-1: U.S. Mass-Market Sales of Sugar-Substitute and Low-Sugar Foods by Product Category, 1994-2003 (dollars): 4 Product Categories

The Marketers
• Three Levels of Marketers
• Industry Becoming More Sophisticated
• Diet Soft Drinks Claim 75% of Artificial Sweetener Market
• Coke Captures Over 30% of Mass Market
• New Artificial Sweeteners Enter Market
• Best Is Yet to Come
• The Case for Nutritive Sweeteners
• Dietetic Becoming More Mainstream
• Mainstream Expenditures by Major Marketers

Distribution and Retail
• Distribution Follows Standard Channels
• The Role of Distributors
• Distributors vs. Direct Distribution
• Warehousing vs. Direct Store Delivery
• The Mass-Market Landscape
• Supermarkets Expand Selection
• Most Sugar-Altered Foods Priced at Parity
• Private-Label Lineups Increasing

The Consumer
• Consumer Round Up
• Figure 1-1: U.S. Consumer Overview by Selected Artificially Sweetened Products, 1998 (percent): 5 Products
• 43% Use Diet Carbonated Sodas
• Mott's, Apple & Eve, and Welch's in 100% Juices
• Care*Free vs. Trident and Extra
• 13% Use All-Fruit Jams, Jellies, and Preserves
• Sugar-Free Jell-O vs. Royal
• Dannon Light vs. Yoplait Lite

Scope and Methodology
• Market Parameters
• Report Methodology

II. The Product

Scope of Report
• Sugar-Altered Foods and Beverages Sold at Mass Market
• Sugar-Free, No-Sugar-Added, Reduced-Sugar, and Dietetic
• Variety of Products

History of the Market
• Saccharin the First Sugar Substitute
• From Cyclamate to Tab
• Regulatory War Continues
• Congress Sides with Consumers
• Aspartame Arrives on the Scene
• Efforts to Delist Saccharin
• Aspartame Also Subject to Study
• Sucralose Pushes Past Regulators
• Ace-K Approved for Use in 1998
• Sugar-Free Foods Have Staying Power
• New Diet Trend Focuses on Sugar Reduction
• Fifty Ways to Hold the Sugar

Product Definition and Categories
• Four Product Categories
• Artificially Sweetened Products Are Core of Market
• Products with No Sugar Added Are Naturally Sweet or Alternatively Sweetened
• Reduced-Sugar Products Appeal to Dieters
• Dietetic Foods Round Out Options

The Sweeteners
• Saccharin the First Artificial Sweetener
• Aspartame the Current Standard
• Sucralose Heads Next Generation
• PepsiCo Banks on Ace-K
• Neotame in the Wings
• Lactose and Fructose Sweeten Naturally
• Natural Stevia Sweeteners Enhance Flavors
• Sorbitol, Mannitol, and Xylitol
• Increased Production of Lacitol
• Erythritol Enters U.S. Market
• Maltitol Gives Hope to Sugar-Free Chocolate
• African Berries the Next Sugar Substitute?

Packaging and Labeling
• Sugar Content Specified
• Warning Labels for Saccharin
• Advisory Labels for Aspartame
• General Health Positioning
• Red and White Swirl Disappearing

III. The Market
Figure 3-1: Estimated U.S. Mass-Market Sales of Sugar-Substitute and Low-Sugar Foods, 1994-1998 (dollars)

Market Size and Growth
• Methodology of Sales Estimates
• Retail Sales at $6.3 Billion in 1998
• Table 3-1: Estimated U.S. Mass-Market Sales of Sugar-Substitute and Low-Sugar Foods, 1994-1998 (dollars)
• Artificially Sweetened at $4.7 Billion
• No-Sugar-Added Category Regains Momentum
• Reduced-Sugar Category Is Stagnant
• Growth Spurt in Dietetic Category
• Table 3-2: Estimated U.S. Mass-Market Sales of Sugar-Substitute and Low-Sugar Foods by Product Category, 1994-1998 (dollars): Artificially Sweetened Products; No-Sugar-Added/Naturally Sweet or Alternatively Sweetened Products; Reduced-Sugar Products; Dietetic Products, Artificially and/or Alternatively Sweetened

Market Composition
• Artificially Sweetened Captures Three-Fourths of Market
• Figure 3-2: U.S. Mass Market for Sugar-Substitute and Low-Sugar Foods: Share of Dollar Sales by Product Category, 1994 vs. 1998 (percent): 4 Categories
• Food Stores Account for 78% of Mass Market
• Figure 3-3: The U.S. Market for Sugar-Substitute and Low-Sugar Foods: Mass-Market Shares by Retailer Type, 1998 (percent): Food Stores, Mass Merchandisers, Drugstores
• Market Composition Varies Regionally
• Table 3-3: Regional Distribution of Sugar-Substitute and Low-Sugar Food Purchasers by Product Type, 1998 (number and percent): 12 Factors

Factors to Market Growth
• Major Product Segments Are Mature
• Health Trend Continues as Americans "Bust" Sugar
• Diabetic Population Increasing
• Research Reveals Additional Health Attributes for Products
• New Sweetener Development
• New Product Development
• Still Sunny Skies for Sugar
• Downsides of Sugar Substitutes
• Figure 3-4: Projected U.S. Mass-Market Sales of Sugar-Substitute and Low-Sugar Foods by Product Category, 1998-2003 (dollars)

Projected Market Growth
• Retail Sales to Approach $8 Billion in 2003
• Table 3-4: Projected U.S. Mass-Market Sales of Sugar-Substitute and Low-Sugar Foods, 1998-2003 (dollars)
• Artificially Sweetened to Stabilize at 4% Growth
• No-Sugar-Added Category to Accelerate to $2 Billion
• Table 3-5: Projected U.S. Mass-Market Sales of Sugar-Substitute and Low-Sugar Foods by Product Category, 1998-2003 (dollars): Artificially Sweetened Products; No-Sugar-Added/Naturally Sweet or Alternatively Sweetened Products; Reduced-Sugar Products; Dietetic Products, Artificially and/or Alternatively Sweetened Products
• Limited Prospects for Reduced-Sugar Sales
• Dietetic Sales Spawn Mainstream Competition

Marketer Overview
• Several Hundred Companies in the Field
• Three Levels of Marketers
• The Major Mainstream Marketers
• Dietetic and Specialty Marketers
• Table 4-1: The U.S. Market for Sugar-Substitute and Low-Sugar Products: Selected Mass Marketers by Brand Line, Product, and Category

The Competitive Situation
• Industry Becoming More Sophisticated
• Diet Soft Drinks Claim 75% of Artificial Sweetener Market
• Coke Captures Over One-Quarter of Mass Market
• No-Sugar-Added Is Up and Coming
• Ocean Spray Challenged in 100% Juice Segment
• Minute Maid vs. Tropicana in Refrigerated Juices, Frozen Concentrates
• No-Sugar-Added vs. Artificially Sweetened in Bottled Single-Serve Juices
• Kraft in Control in Drink Mixes
• Del Monte and Tri Valley Compete in Canned Fruit
• Smucker Is King in Jams, Jellies, and Spreads
• Mainstream and Specialty Sugar-Altered Syrups
• Crowded Field in Candy, Gum, and Cookies
• Ice Cream and Novelties Headed by Dreyer's
• Dannon Leads in Yogurt
• Mainstreamers Spin Their Lines
• Prices Aligned with Regular Brands'
• Competition Played Out in New Product Releases
• Growth of Private Label

Competitive Profile: Coca-Cola Co
• Company Overview
• No Plans for Ace-K
• Recent Advertising Campaigns Shift Focus
• What's New in the 90s
• Recent Developments
• Litigation Woes
• Coca-Cola Enterprises Expands in New York and Canada
• Minute Maid Co.

Competitive Profile: Dreyer's Grand Ice Cream, Inc.
• Company Overview
• History of the Company
• First to Market Light Ice Cream
• Competing in the Sugar-Free Arena
• But How Does it Taste?

Competitive Profile: Hain Food Group, Inc
• Company Overview
• Company History
• Brands not Buildings
• Labels and Alliances
• Rice Cakes and Acquisitions
• Estee Line Continues to Expand

Competitive Profile: Nabisco Holdings Corp.
(RJR Nabisco Holdings Corp.)
• Company Overview
• Reorganization Efforts
• A Sugar-Free Push

Competitive Profile: Nestlé USA, Inc. (Nestlé S.A.)
• Company Overview
• From Infant Food to World Leader
• The Past Two Decades
• 1997 a Year for Change
• New Packaging for Quik

Competitive Profile: Northland Cranberries, Inc
• Company Overview
• Company History
• Recent Purchases
• Introducing a 100% Juice Line
• A Company that Does it All
• The Northland and Ocean Spray Battle

Competitive Profile: PepsiCo, Inc.
• Company Overview
• Company History
• Competitive Maneuvers Against Coca-Cola
• Pepsi One Is First Soft Drink with Ace K
• Advertising Campaigns Target Youth
• Keeping New Products Coming
• Pepsi Acquires Tropicana Products
• The Tropicana Lineup

Competitive Profile: Philip Morris Cos., Inc./ Kraft Foods, Inc.
• Company Overview
• Emergence as a Leader
• Brand Recognition
• Brands Competing in Sugar-Free Arena
• New Line for Crystal Light

Competitive Profile: J.M. Smucker Co
• Company Overview
• Smucker Sees Importance of Health-Conscious Brands
• Smucker a Brand Innovator in Reduced Sugar
• Acquisitions Lead to Worldwide Growth

Competitive Profile: Wm. Wrigley Jr. Co
• Company Overview
• Advertising Pays Off for First Wrigley
• Begrudging Entry Into Sugar-Free
• Competition Leads to Worldwide Expansion
• Market Leader in Sugar-Free
• Future Looks Bright for Wrigley

Marketing and New Product Trends
• New Artificial Sweeteners Enter Market
• Best Is Yet to Come
• Beyond Diet
• The Case for Nutritive Sweeteners
• Dietetic Becoming More Mainstream
• Wider Product Range
• Line Extensions in New Flavors
• Size Matters
• Putting it in Plastic
• More Juice, More Exotic
• An Organic Trend
• Table 4-2: The U.S. Market for Sugar-Substitute and Low-Sugar Foods: Selected New Product Introductions, 1997-1998

Consumer Advertising and Promotion
• Promotion vs. Piggyback Sales
• TV Spots Used Most Often
• The Radio and Print Alternatives
• Mainstream Expenditures by Major Marketers
• Diet Coke and Looking Good
• For Pepsi, Taste Is It
• Naturally Good
• Copy-Intensive Advertising
• Celebrity Advertising
• Corporate Citizenship
• Convenience at the Core
• Taking a Shot at Competitors
• Coupons Most Popular Promotion Tool
• Consumer Information
• The Internet Connection
• Giveaways and Rebates
• Not for Kids and "Win Nothing" Sweepstakes
• Sports Sponsorships
• Environmental Efforts
• Samples of Consumer Advertising and Promotion

Trade Advertising and Promotion
• Products on Parade
• Most Promotions Are Standard
• The Role of Trade Shows

V. Distribution And Retail

At the Distribution Level
• Distribution Follows Standard Channels
• Regional Distribution
• Apple & Eve Goes West
• The Role of Distributors
• Cola and UnCola Lineups
• Distributors vs. Direct Distribution
• Northland Goes from "Marsh to Market"
• Maintaining the Cold Chain
• Warehousing vs. Direct Store Delivery
• Advantages of Warehouse Delivery
• Disadvantages of Warehouse Delivery
• Advantages of Direct Store Delivery
• Disadvantages of Direct Store Delivery
• Smaller Marketers Frequently Work Through Brokers

At the Retail Level
• The Mass-Market Landscape
• Figure 5-1: U.S. Market for Sugar-Substitute and Low-Sugar Foods: Mass-Market Shares by Retailer Type, 1998 (percent): Food Stores, Mass Merchandisers, Drugstores
• Supermarkets Expand Selection
• TheSugar Busters! Effect
• Mass Merchandisers Weigh In
• The Cross-Promotion Option
• Driving up Drugstore Sales
• Leveraging the Healthcare Focus
• Securing the Spontaneous Sale
• New Products for Nonfood Outlets
• Most Sugar-Altered Foods Priced at Parity
• Price Promotions
• Merchandising Strategies for Sugar-Altered Products
• The Claim on Shelf Space
• A Crossroads for Dietetic Sections
• Integrating Sugar-Free Candy
• In and Out of Bulk Bins
• Hard Choices in Soft Drinks
• Coke and Pepsi Make It Tough for the Rest
• Schweppes' Freedom of Choice—And Alliance
• Point-of-Purchase Support
• Private-Label Lineups Increasing

VI. The Consumer

Consumer Overview
• Notes on Simmons Market Research Bureau Data
• Simmons Data on Sugar-Altered Foods
• Market Round Up
• Table 6-1: The Market for Sugar-Substitute and Low-Sugar Foods: User Overview by Selected Product Type/Brand, 1998 (percent): 33 Product Types/Brands

Consumer Use by Product Type
• 43% Use Diet Carbonated Sodas
• Crystal Light vs. Country Time and Kool-Aid
• Lipton vs. Nestea in Diet Iced Tea Mix
• Under 3% Use Sugar-Free Instant Coffee Mix
• Mott's, Apple & Eve, and Welch's in 100% Juices
• Care*Free vs. Trident and Extra
• BreathSavers vs. Certs
• 13% Use All-Fruit Jams, Jellies, and Preserves
• Sugar-Free Jell-O vs. Royal
• Dannon Light vs. Yoplait Lite
• Table 6-2a: Demographic Characteristics Favoring Use of Diet Carbonated Soft Drinks, 1998 (U.S. Adults)
• Table 6-2b: Demographic Characteristics Favoring Use of Diet Carbonated Soft Drinks by Brand Lines, 1998 (U.S. Adults): Diet Coke Products, Diet Pepsi Products, Other Diet Soda Brands
• Table 6-3: Demographic Characteristics Favoring Use of Artificially Sweetened Soft Drink Mix by Brand, 1998 (U.S. Adults): Crystal Light Low-Calorie, Country Time Lemonade, Sugar-Free Kool-Aid
• Table 6-4a: Demographic Characteristics Favoring Use of Artificially Sweetened Diet Instant Iced Tea Mix, 1998 (U.S. Adults)
• Table 6-4b: Demographic Characteristics Favoring Use of Artificially Sweetened Diet Iced Tea Mix by Brand: Lipton vs. Nestea, 1998 (U.S. Adults)
• Table 6-5: Demographic Characteristics Favoring Use of Sugar-Free Flavored Instant Coffee Mix, 1998 (U.S. Adults)
• Table 6-6: Demographic Characteristics Favoring Purchase of 100% Juice/No-Sugar-Added Fruit Juices by Brand, 1998 (U.S. Adults): Mott's, Apple & Eve, Welch's
• Table 6-7a: Demographic Characteristics Favoring Use of Sugar-Free Gum, 1998 (U.S. Adults)
• Table 6-7b: Demographic Characteristics Favoring Use of Sugar-Free Gum by Brand, 1998 (U.S. Adults): Care*Free, Trident, Extra
• Table 6-8a: Demographic Characteristics Favoring Use of Sugar-Free Hard Candy/Breath Mints, 1998 (U.S. Adults)
• Table 6-8b: Demographic Characteristics Favoring Use of Sugar-Free Mints by Brand: BreathSavers vs. Sugar-Free Certs, 1998 (U.S. Adults)
• Table 6-9: Demographic Characteristics Favoring Purchase of Jams, Jellies, and Preserves by Selected Types, 1998 (U.S. Adults): All-Fruit/No-Sugar-Added, Light/Reduced-Sugar, Diet
• Table 6-10: Demographic Characteristics Favoring Use of Sugar-Free Gelatin Mix by Brand: Jell-O vs. Royal, 1998 (U.S. Adults)
• Table 6-11: Demographic Characteristics Favoring Use of Artificially Sweetened Light Yogurt by Brand: Dannon Light vs. Yoplait Lite, 1998 (U.S. Adults)

Appendix I: Examples Of Consumer Advertising And Promotions

Appendix II: Addresses Of Selected MarketersAnd Promotions