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Sickly sweet: Drinks makers turn the anti-sugar tide in their favour
THE market for lower-sugar drinks is set to boom in Singapore as the war on sugar continues - even though consumers here still have a dangerous appetite for sugary goods. Not to be left behind, players up and down the value chain are looking to ride the waistline-friendly, anti-sugar wave.
"In recent years, there has been a greater variety of reduced-sugar and unsweetened beverages in the market, and, while still relatively small, they are growing faster than the overall soft drinks market," says Gabriella Karnadi, an analyst at market research firm Euromonitor International. She traces the consumption trend to 2016, when public health authorities declared a "war on diabetes".
To be sure, the shift in dietary habits has been a long time coming.
Since 2001, the Health Promotion Board (HPB) has offered an easy rule of thumb with its Healthier Choice Symbol (HCS) framework, which now caps the total sugar of sweetened drinks at six grams for every 100g, or seven grams for carbonated products.
But, while Saw Swee Hock School of Public Health dean Teo Yik Ying believes the scheme has spurred manufacturers to tweak formulas for compliance, he adds that "it is clear there is room for more improvements".
After all, the average Singaporean guzzles a whopping four teaspoons of sugar a day from pre-packaged drinks, according to HPB's last National Nutrition Survey in 2018.
Sugary drinks that don't meet the cut for HCS labelling and contain an average of five teaspoons of sugar per serving also still made up half of all pre-packaged sweetened drink sales here in 2018, according to industry data commissioned by HPB.
Gordon Eng, Asia-Pacific general manager for taste at ingredient and flavour supplier Kerry Taste and Nutrition, notes that consumers in markets such as Thailand, Indonesia, Malaysia and Singapore prefer sugar levels that are 10 to 20 per cent higher than what their European counterparts can stomach.
Yet, tastebud preferences may be moving from tooth-rotting to bland.
Euromonitor estimates that reduced-sugar products now make up around 12 per cent of the Singapore soft drink market, led by lower-sugar or artificially sweetened fizzy drinks and a growth in bottled water sales.
Meanwhile, the overall market for reduced-sugar beverages, which also includes hot drinks such as instant coffee, grew from S$41.7 million in 2015 to S$65.5 million last year.
Brands take heed
"Asia's rapidly ageing population and increasingly health-conscious individuals will create more demand for healthier F&B products with reduced or no sugar," says Bernice Tay, director of food manufacturing at business agency Enterprise Singapore (ESG), pointing to market opportunities in Asia and other affluent regions.
Health and wellness is a priority under the multi-agency FoodInnovate scheme for industry, while ESG works with experts and trade groups to develop products and processes and update food manufacturers on new trends, ingredients and regulations.
Indeed, three in four consumers are actively avoiding higher-sugar drinks, and more than one-third also cut down on sweetened beverages altogether, Nielsen found in late 2019.
This bears out data from supermarket operator FairPrice, which has seen the sales of healthier drinks up by more than 20 per cent year on year, in the four months to end-April.
Director of grocery Peter Teo tells The Business Times that HCS-certified drinks sales picked up across both national and house brands, while sales of other tipples "have stagnated".
"For example, for coffee products, we see consumers switching from sweetened coffee options to offerings that are labelled as 'less sugar', 'reduced sugar', or 'no sugar'," he says.
The chain's top-selling sugar-sweetened beverages are coffees, teas and carbonated soft drinks.
Similarly, home-grown drinks manufacturer Yeo Hiap Seng (YHS) has told shareholders that more than 80 per cent of Yeo's beverage sales in Singapore are from HCS products - "and we have more in the pipeline for HCS application", a spokesperson says.
When it comes to sugar, it's increasingly urgent for drinks companies to keep up with both stricter rules and changing customer preferences.
From end-2021, advertising beyond the point of sale will be banned for all pre-packaged drinks containing more than 10g of sugar per 100g.
In announcing the tighter regime for sugary drinks this March, the Ministry of Health (MOH) said manufacturers will have enough time to adjust.
"We expect to see reformulation and introduction of healthier drinks over the next one to two years before the measures come into effect in end-2021," it added at the time.
"We would urge clients to take the long view," says Jacob Wright, chief strategy officer at BBH Singapore, when asked what advice the advertising firm would give to industry.
"As with tobacco in the past, the regulatory climate is clear and regulations will continue to be tightened until governments see a reduction in consumption of these products.
"However, no one is looking to eliminate them completely and they will have a long-term role as occasional treats, so brands need to find a way to build a sustainable business around less frequent consumption."
Players that have kept an eye on the regulatory climate for sugar are no strangers to this approach. Four-fifths of food companies here were already reformulating their products in 2018, according to a poll commissioned back then by industry group Food Industry Asia (FIA).
FIA executive director Matt Kovac says the impetus for product development is "the strong commercial incentive of meeting consumer demand for healthier products".
Indeed, the "sugar footprint" of Fraser and Neave (F&N) products has fallen by 40 per cent in 14 years, chairman Charoen Sirivadhanabhakdi told shareholders in the mainboard-listed drinks maker's latest annual report.
The company has outlined a three-pronged strategy to build up its stock of healthier products: reformulating recipes for lower sugar, offering more bottled water, and "expanding sugar-free options for key variants".
These include the debut of sugar-free F&N Orange Zero and Sarsi Zero in 2018, as well as the limited-edition F&N Ice Cream Soda Zero last year.
Jennifer See, managing director of F&N Foods Singapore, also points to sports-themed branding for isotonic drink 100PLUS: "We have also introduced 100PLUS Zero and continued our efforts in encouraging Singaporeans to lead active lifestyles through sporting events and partnership with local sporting fraternities," she tells BT.
Local manufacturer Faesol, which supplies hotels, eateries and caterers with ready-to-mix powdered drinks under the low-sugar iLite brand, has also seen the writing on the wall.
Since Singaporean consumers increasingly demand higher-quality products, food services players must avoid cheap, high-sugar options, says executive director Jonathan Cheah. As such, Faesol replaced fruit punch, a buffet staple, with a "grapefruit pomelo (Himalayan pink salt)" drink that has 1.6g of sugar in every 100g.
With Faesol using sweeteners like stevia to bring sugar levels to 4 per cent or lower, Dr Cheah adds that iLite has worked with HPB and local trade groups since mid-2018 to introduce healthier-choice beverages to food services companies.
Clarence Lew, director of own brand and food solutions at NTUC FairPrice, notes that the reformulation process incurs extra costs from testing, tasting and package redesign.
"But we will ensure our range of house-brand products continue to be priced at least 10 per cent cheaper than comparable brands," he says.
He adds that FairPrice will grow its house-brand range "to stay relevant to our customers' changing lifestyles while supporting various national initiatives to promote a healthy lifestyle".
Sour on sugar?
The reformulation drive is an opportunity for companies like Kerry, which provides companies with a line of industry solutions called "TasteSense". Mr Eng tells BT that these solutions, which are meant to recreate the taste and mouthfeel of sugar in reduced-sugar products, are mostly for clients in drinks manufacturing.
Even traditional sugar suppliers are ramping up sugar-free offerings.
Besides sugar, agri-food multinational Cargill's sweetener portfolio includes additives from the stevia plant and sugar alcohols such as sorbitol.
Cargill also consults on product reformulation, with sugar reduction in drinks among the more than 100 projects at an innovation centre that opened in Singapore in June last year.
It works with clients to develop recipes and introduce ingredients "with minimal to no impact on texture and cost", according to Franck Monmont, Cargill's Asia managing director for starches, sweeteners and texturisers.
"We have various projects in our pipeline on sugar reductions - from energy drinks to condensed milk to an acidified dairy drink. Unfortunately, Covid-19 has delayed the product launches of some of these."
Meanwhile, industry stalwart John Cheng tells BT that Cheng Yew Heng - the family business where he is a director - is already distributing sugar alternatives such as allulose and a zero-calorie sweetener made with monk fruit or luo han guo. A "healthier sugar" line-up, which includes red and black jaggery sugar, is also slated for launch in late 2020 or early 2021.
"The next step will be to work on our other sugars and create new products," he adds, pointing to plans for brown sugar teas, and new cupcake mixes and rock sugar sticks.
Cheng Yew Heng is also working with food and drink reformulation startup Hoow Foods "to find solutions for our business-to-business customers", he adds. Hoow Foods is backed by Innovate360, Cheng Yew Heng's startup incubator and one of ESG's accredited mentor partners.
To be sure, new sweeteners don't come cheap. Mr Cheng says they can cost five to 100 times as much as plain old sugar for the same amount by weight, although he adds: "Should demand increase substantially, price will definitely come down."
And Dr Cheah estimates that as much as 15 per cent of Faesol's revenue is invested in research and development. Turnover was S$959,000 for the year to June 30, 2018, according to the most recent corporate records.
But, while substitutes cost more than the real deal, he says "the cost is offset by the number of times in sweetness", as 5kg of stevia can pack the same punch as a tonne of sugar.
"Sugar is not as bad as the media portrays," Mr Cheng says, quipping that taking in too few calories could "kill joy" and lead to "no energy".
But Prof Teo says "the impact to individuals and public health with a decrease in added sugar intake has always been clear", when it comes to the benefits of less weight gain, and lowering risk of chronic diseases such as diabetes and cancer.
And the regulatory crackdown on sugar shows no signs of abating. The MOH plans to eventually extend labelling and advertising rules to as-yet undefined "large chains" that sell freshly prepared drinks such as bubble tea, coffee and tea, and juices - a move that Prof Teo supports.
"There is a need for policies to keep up with individual and social practices, and equally important for policy makers to continue to monitor sugar intake and the sources at the population level," he says.
"This will allow additional policies to be designed when necessary, including that of a sugar tax which many countries have implemented."
Nielsen analysts thus advise manufacturers to invest in health-related marketing and "innovative flavours to attract consumers", with products such as green tea, dairy or vitamin water "a substitute for high-sugar flavoured drinks".
YHS, which is behind brands such as Yeo's, H-TWO-O and Justea, has already gone down this road. New product launches last year included a range of teas - such as chrysanthemum and lychee pu'er, osmanthus green tea and elderberry black tea - which its annual report said contains "no or very low level of sugar".
Similarly, F&N's Ms See points to an expanded F&N Nutrisoy range of soya bean drinks, as well as the addition of sparkling water to the Ice Mountain bottled water portfolio.
Mr Wright, from BBH, adds that local brands could be winners in the new low-sugar climate "and there are many strong pre-packaged tea, soya milk and coffee brands already in the market that could capitalise on this" here and abroad.
"The more regulation pushes people away from colas and sugary soft drinks, the more new products and marketing spend we are likely to see in this sector. Indeed, a well-designed and marketed oolong tea brand, for example, could easily be a global export success," he says.
Mr Monmont, from Cargill, adds that clients are moving beyond just drinks, to "sugar reduction in all kinds of products", including dairy items such as ice cream, flavoured milk and yogurt.
FIA's Mr Kovac also notes that players in the F&B industry must keep working closely with governments on a "collaborative, multi-stakeholder approach" to policies and regulations.
But, with sugar consumption a growing concern regionally, "product reformulation will continue to be a priority for manufacturers", he adds.
Go easy on all types of sweeteners, say experts
COCA-COLA Stevia, launched here in early 2018, is among the reformulation success stories highlighted by Food Industry Asia on its website.
It contains a mix of sugar and stevia, taking its sugar content to 65 per cent that of a regular Coke.
Another example is Coca-Cola Singapore's reduced-sugar Sprite, which uses a sugar-sucralose blend to bring the drink's sugar level down to 45 per cent of the original recipe.
But reformulated drinks will never taste the same as the original, Ruzaini Hashwam, a food process technologist at Singapore Polytechnic's Food Innovation and Resource Centre (FIRC), tells The Business Times.
While a popular technique is to replace sugar with other ingredients that contain fewer or no calories, Gordon Eng, regional general manager for taste at Kerry Taste and Nutrition, notes that lower sugar levels come with increased sourness and bitterness and a change in viscosity.
That's why manufacturers have tricks to fool the tongue: ingredients added to recreate the familiar flavour.
Sugar replacements fall into two groups: nutritive and non-nutritive.
Nutritive sweeteners, such as sorbitol, mannitol and xylitol, contain calories and contribute texture and mouthfeel. Zero-calorie, non-nutritive sweeteners, on the other hand, are not metabolised by the body, while contributing high sweetness intensity. These include aspartame, acesulfame-K, saccharin and sucralose.
"With more manufacturers producing low sugar or sugar-free beverages using non-nutritive sweeteners, there will be greater availability of such products in the market," says Carolyn Stephen, a nutritionist at FIRC. "Today's consumer has more beverage choices which can be incorporated into their individual dietary goals than many years ago."
Drinks makers must also take sweeteners' chemical properties into account, adds Mr Ruzaini. "For example, aspartame would not be suitable for use in acidic drinks that will be thermally treated, as it will degrade easily under those conditions, producing an undesirable taste."
Production line changes and product shelf life are other factors that go into reformulation, notes Geeta Bansal, from Ngee Ann Polytechnic's School of Life Sciences and Chemical Technology. "Major consideration goes in the R&D of new product development, where a substantial amount of resources in terms of professionals and lab infrastructure is required."
Sweeteners in food products here are generally safe for adults, and are regulated by the Singapore Food Agency, a trio of nutrition experts from Temasek Polytechnic tells BT.
"Still, clear and proper messages need to be delivered in terms of safe concentrations to be used by food manufacturers and also to consumers," says Dr Bansal. "For instance, polyols are used as sugar replacers but above a certain dosage, these could exhibit laxative effects."
Also, aspartame can be dangerous for people with genetic disorder phenylketonuria, warn Temasek Polytechnic senior lecturer Loh Win Nie, lecturer Wong Weng Wai, and food, nutrition and culinary science diploma programme manager Johanna Tan. That's as the body converts aspartame to phenylalanine, which disease sufferers struggle to process.
Another concern is that "sweeteners may condition our palates to demand for sweet food and drinks in our diet" - the reason that the Health Promotion Board gives for its decision to block drinks with non-sugar sweeteners from eligibility for its Healthy Meals in Schools Programme.
"Switching from sugar-sweetened beverages to products with sugar substitutes may help reduce the intake of the empty calories," the Temasek Polytechnic team says in an e-mail.
"However, it is still crucial to educate consumers to make a wiser decision to go for unsweetened beverages and beverages with the Healthier Choice Symbol," they add.
Similarly, Ms Stephen says: "Consuming beverages with non-nutritive sweeteners should be done in moderation, and is not a complete solution for weight loss or healthier living."