Source: WSJ

High fructose corn syrup, the sugar alternative used to sweeten sodas, cookies, condiments and cereals, is beginning to lose some ground in the packaged-food industry.

More big-name food and beverage products—including Kraft Foods Inc.’s Wheat Thins —have begun dropping the ingredient in favor of sugar, despite a big difference in cost, saying they are responding to consumer preferences for ingredients perceived as more natural.

ConAgra Foods Inc. in May will start replacing the sweetener with sugar in its Hunt’s tomato ketchup. “That’s what consumers are looking for—simpler ingredient listings and ingredients they are familiar with,” ConAgra spokeswoman Teresa Paulsen said. ConAgra said consumers preferred the taste of the new product in tests.

In recent months, Kraft has taken high fructose corn syrup out of the recipes for its 100-calorie pack Nabisco cookies, Wheat Thins crackers and most of its namesake salad dressings. With Wheat Thins, Kraft said it saw discussions on its Web site on the subject of high fructose corn syrup and received comments directly from consumers, pushing it to remove the sweetener.

PepsiCo Inc. is in the process of replacing high fructose corn syrup in Gatorade products with sugar and other sweeteners. Pepsi said its research showed many althletes preferred the idea of Gatorade without the syrup.

Many consumers worry that HFCS is worse for them than sugar. Some critics call high fructose corn syrup an artificial sweetener, as it is heavily processed, even though many experts say there is little nutritional difference between it and sugar.

The move away from HFCS, combined with lower consumption of soft drinks, has weighed on U.S. sales of the sweetener at manufacturers such as Archer Daniels Midland Co. and Corn Products International Inc.

Archer Daniels Midland, which declined to comment, doesn’t break out sales of U.S. high fructose corn syrup. On a recent conference call, however, the company said U.S. volumes for the corn-sweetener industry have been lower, reflecting a drop in consumption of carbonated soft drinks. ADM said on the call that it is counting on better sales in markets such as Mexico to help offset declines in the U.S.

Corn Products International didn’t respond to calls on this subject.

Consumption of high fructose corn syrup fell 1.3% in 2009 in the U.S. from a year earlier, according to research firm Euromonitor.

The Corn Refiners Association has been running television ads that try to counter the perception that the syrup is inferior. On its Web site, http://www.sweetsurprise.com, the association says high fructose corn syrup “is simply a kind of corn sugar. It has the same number of calories as sugar and is handled similarly by the body.”

Audrae Erickson, president of the Corn Refiners Association, said, “This is nothing more than a marketing gimmick,” referring to packaged-food companies that switch ingredients. “They’ve switched from one sugar to another,” Ms. Erickson said. She argues that eventually consumers will end up paying more.

Sales of high fructose syrup have been pressured for some years as many Americans have moved away from sodas, which are heavy users of the sweetener. But experts say that the sweetener’s prices have now also come under pressure in the U.S. amid the recent shifts by branded food and beverage makers. In the Midwest, high fructose corn syrup has been selling for 16.75 cents a pound on average, said Ron Sterk, editor of trade publication Milling and Baking News, down three cents from last year.

As they try to hold onto market share, companies shifting to sugar from HFCS say they aren’t raising prices for consumers despite their higher costs for raw materials.

Early this year, the price of sugar in the U.S averaged over $1,000 a ton compared to about $695 a ton for one variety of high fructose corn syrup, LMC International economist Nick Fereday said. He puts annual consumption of sugar at nine million tons in the U.S. and corn syrup at seven million.

In 2009, use of sugar in canned, bottled and frozen foods was flat from a year ago at 427,000 tons in the U.S., according to the U.S. Department of Agriculture.

Years ago, high fructose corn syrup got some bad press. One piece of research in 2004 from the Pennington Biomedical Research Center, Louisiana State University and University of North Carolina raised questions about whether the syrup was playing a role in the national obesity epidemic.

One of the authors of that study, University of North Carolina profes

sor Barry Popkin, said that since then he and other researchers have concluded that regular sugar and high fructose corn syrup “have the same exact effect on obesity and diabetes and on heart disease. It’s not that one is better.”

More consumers are paying attention to sweeteners. Laurie Ledgard, a stay-at-home mother in Suffield, Conn., said she does look at the sugar contents and tries to avoid the syrup.

“If I have to have sugar, I’d rather have the natural sugar than high fructose corn syrup,” she said. Still, she acknowledges that “there is a devil in sugar as well, and you don’t want a lot of that either.”

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