Market of Sugar Substitutes: Key Indicators in 2005-2007

Sugar substitutes mean substances capable to perform technological functions of sugar in the manufacture of food products as they have a sweetness factor similar to sucrose sweetness, cause no destructive effects on tooth enamel and can be used in the diet of patients with diabetes mellitus. However, these substances are caloric and, thus, there are certain limitations for their use in dietary products.

Sugar substitutes include:

• Sorbitol (sorbite, E-420).
• Mannitol (mannite, E-421).
• Isomaltitol (isomaltit E-953).
• Maltitol (maltitol syrup, Е-965).
• Lactitol (lactite, E-966).
• Xylitol (xylite, E-967).
• Erythrol (erythrite, E-968)
Import of Sugar Substitutes
In 2005-2007, five of seven of the above mentioned substances – sugar substitutes were imported to the Russian Federation (RF). Import dynamics are characterized by high rates of growth of supplied volumes. In 2007, the volume was by 35% higher than in 2006 and by 63% higher than in 2005. The growth rates of supply volumes in monetary terms were higher than their growth rates in physical terms. In 2007, the volume of import of sugar substitutes has more than doubled vs. 2005. 

Structure of import of sugar substitutes in physical terms in 2007 

The largest share in the structure of supply is made up by sorbitol (Е-420), in 2006 about 60% of the volume of imported sugar substitutes falls on sorbitol (in physical terms). The second position (23%) is held by maltitol (E-965) and the third – by isomalt (about 9%). The share of xylitol (E-967) made up 5%, mannitol – approximately 3%.

Rating of Foreign Manufacturers

In 2005-2007, sugar substitutes were imported to the Russian market from more than 40 international manufacturers. A significant portion of supplies was not of systematic nature. Among the major suppliers, 7 leading companies were identified (by supplies in physical terms) whose annual aggregate share in import volume exceeds 95%.

A French company Roquette Frères holds the top position among the leading companies (with regard to supplied volumes). Its share in the structure of supplies of sugar sweeteners is over 60%. During the studied period the volume of supplies has almost doubled.   

The structure of supplies includes four main sugar substitutes. Among them, the highest volumes fall on sorbitol (E-420). In 2007, its share exceeded 62%. Maltitol (E-965) runs second (about 33% in physical terms). The share of mannitol (E-421) is no more than 4% and xylitol – less than the level of statistical significance (1%).

The second position in the rating is held by Cerestar, a division of the Industrial Group Cargill Inc., the main competitor of company Roquette Frères in the world market of starch products and food supplements. In 2007, the share of Cerestar was about 11% of the total volume of import of sugar substitutes. The structure of supplies comprise five main substances (90% of supplies are made up by sorbitol). 

Export of Sugar Substitutes

The overall volume of export of substances – sweeteners and sugar substitutes – in 2007 declined almost by 3 times and made up approx. 34 tons. In 2007 export of sugar substitutes (represented mainly by sorbitol) reduced by 2.3 times vs. 2005-06. The volume of export of intense sweeteners reduced by three times.
In 2005-2006, export of sugar substitutes mainly comprised three substances; their supplies were not systematic or recurrent. In 2007, no sugar substitutes were exported from the RF. The structure of export consists of foreign products imported earlier. The volume of export was insignificant in the context of the Russian market of sugar substitutes.
Consumption of Sugar Substitutes
There are two key sectors within the structure of markets of sugar substitutes and sweeteners:
Service sector is not a market by definition; this category covers the consumption of sweeteners and sugar substitutes by Russian divisions of international companies (Cadbury Adams, Wm. Wrigley Jr.Co., Coca-Cola Inc., Pepsico Inc., etc.).
Technological processes in these companies comply with the uniform international standards under which the list of ingredients and functional additives used in the formulation is regulated and provided by certain manufacturers. The consumption in this sector does not depend on the situation or specific character of the Russian market of the substances.
Commercial sector is a market of substances in its classical interpretations. The market is characterized by a lack of domestic production of the basic sweeteners and insignificant volumes of export of such substances. In the Russian Federation there is no production of sugar substitutes, except sorbitol. The only manufacturer of sorbitol substance is the Open Joint Stock Company “Marbiopharm.”

The volume of consumptions is calculated by summarizing the volumes of import and domestic production less the volume of export. The resulting value will be equal to the market size, i.e. the volume of apparent consumption.
As mentioned above, sorbitol is only sugar substitute produced in the RF. For other substances the market volume will be equivalent to the volume of import less the volume of export.
The production according to Technical Conditions (TU)    9325-021-05800314-04  is performed by the OJSC “Marbiopharm.” The company is producing sorbitol in the form of industrial substance and package for consumer market. The volume of domestic production of sorbitol is no more than 200 tons of with the estimated cost of US$450K. In 2007, the total size of the market of sugar substitutes was in physical terms by 62% higher and in monetary terms   by 121% higher than in 2005. 
 The consumption of sugar substitutes in the RF is mainly related to the service sector. Its share ranged from 65% in 2005 to 76% in 2007. Rates of increment of consumption volumes in this sector reached about 60% in 2006 and 20% в 2007. The commercial sector is less dynamic and a 3-year increment in this sector does not exceed  10%.

The materials are based on research performed by Company Abercade


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