In Sugar Versus Syrup Fight, Both Sweeteners Face Bitter Reality

Back Bloomberg Oct 8, 2015 By Edvard Pettersson, Michelle Fay Cortez and Shruti Date Singh

After years of bickering, U.S. sugar companies and their rivals, the makers of high-fructose corn syrup, are going to trial over what exactly constitutes a “natural” sweetener.

Big Sugar argues high-fructose corn syrup doesn’t qualify. Big Syrup, predictably, disagrees.

Billions of dollars are at stake. But this legal dispute masks a bitter reality for both sides: Americans are consuming less sugar and corn syrup than they used to. Nutritionists agree with what parents have been telling kids for a long time: Too many sweets are bad for you.

“It’s like comparing Camels versus Marlboro cigarettes,” said Walter Willett, chairman of the nutrition department at the Harvard University School of Public Health.

That might be extreme. But shifting consumer tastes help explain why corn syrup giants like Archer-Daniels Midland Co. and Cargill Inc. have been looking beyond the sugar-or-syrup debate to develop alternative sweeteners and to expand into the market for new flavors.

Cargill, for instance, in 2008 introduced Truvia, a no-calorie sweetener made from the herb stevia. It’s now the best-selling sugar substitute after Splenda, according to data from the Chicago-based market research firm IRI.

Stevia has found its way into top brands. It’s now in Coca- Cola Life, Pepsi True and Celestial Seasonings teas, as well as in sugarless salad dressing, chocolate and chewing gum. Zevia sodas, which use stevia, also include monk fruit, or luo han guo, as a sweetener.

Wild Flavors

ADM last year paid about $3 billion for Wild Flavors GmbH, which develops natural ingredients, including stevia, as flavor and sweetness enhancers. Wild Flavors is also experimenting with ingredients as varied as mint, green coffee and carambola, also known as star fruit.

Cargill said last week that it developed a way to produce molecules found in stevia through fermentation, which may be cheaper and easier than extracting the minuscule amount of useful chemicals in each leaf.

The move toward “clean labels” is being driven by millennials, who value natural products over pricing, said Duncan Fox, a Bloomberg Intelligence analyst.

“This offers opportunities and threats for packaged food companies,” Fox said.

November Trial

Meantime, the battle between sugar and syrup is coming to a head. A coalition of big U.S. sugar growers and refiners sued in 2011 over a Corn Refiners Association advertising campaign claiming corn syrup was as natural as sugar and a nutritional equivalent.

The sugar and corn companies are scheduled to be back in court Oct. 13 to argue over whose expert witnesses will testify. A Los Angeles jury will then hear the case in November over whether to punish the corn association and leading members including ADM and Cargill up to $1.6 billion, the amount sugar companies say the defendants earned by allegedly misleading consumers. That sum includes what the sugar companies said they spent on marketing to counter those claims.

Unlike organic, federal regulators don’t have a strict definition for “natural,” making the debate less clear-cut for the jury.

“From a food science perspective, it is difficult to define a food product that is ‘natural’ because the food has probably been processed and is no longer the product of the earth,” the Food and Drug Administration says on its website.

The plaintiffs in the case include American Sugar Refining Inc., which calls itself the world’s largest vertically integrated cane-sugar refiner and whose nostalgia-inducing labels include C&H and Domino. The company is part of the sugar empire of the Fanjul family, which came to Florida after the Cuban revolution. Other plaintiffs are Boise, Idaho-based Amalgamated Sugar Co., the maker of White Satin, and Sugar Land, Texas-based Imperial Sugar Co.

‘Food Fears’

ADM, Cargill and their co-defendants in turn seek $531 million for damages they say they suffered from the sugar group “preying upon consumers’ food fears.” The corn refiners argue there’s no scientific proof linking corn syrup to obesity, which surged in the 1970s but has continued to increase as corn syrup consumption has fallen.

Neither side is showing any sign of letting up.

“They deliberately tried to hide the truth,” Mark Lanier, a lawyer for the sugar growers, said in a phone interview.

John Bode, president of the Corn Refiners Association, said in a statement: “The sugar association has purposely misled the public to create false health concerns about high-fructose corn syrup – all for the purpose of increasing sugar’s market share.”

Whatever the trial’s outcome, both sides will still have to contend with consumers. And, as Willett at Harvard pointed out, “natural” doesn’t necessarily mean healthy.

“Nature contains some of the most poisonous substances we know,” he said. “And some things are natural, but we consume them in a very unnatural way.”

–With assistance from Jennifer Kaplan in New York.