New York, August 03, 2006 - With the threat of private-label competition rising, Splenda is looking to defend its turf with a number of creative new products that expand its presence beyond the sweetener aisle.
"I think that anybody who is selling consumer packaged goods today is looking to diversify and get out of their traditional aisle," said Debra Sandler, worldwide president of Johnson & Johnson's (JNJ) McNeil Nutritionals LLC unit, which owns the Splenda brand, in an interview Thursday.
McNeil is attempting to grab extra shelf space in the supermarket by coming up with new packages and varieties that help take Splenda, a sucralose-based sweetener, out of the baking aisle, where sweetener products are typically found.
Splenda Flavor Blends for Coffee, a box of 30 tubes of flavored Splenda sweetener, is the company's latest effort. The item, which will be available nationally this fall at a suggested retail price of $3.99, will be shelved next to the creamers in the coffee and tea aisle. The flavors will be French vanilla, hazelnut and mocha.
"I think it is an important strategy for Splenda," said Ken Harris, an analyst at Cannondale Associates, a food industry consulting firm in Evanston, Ill. He said McNeil needs to get the Splenda name out in front of consumers whenever it can.
"They are coming up with some creative packages," Harris added.
McNeil hopes Flavor Blends will boost sales by tapping into the growing trend of consumers adding flavor to their coffee, according to Sandler.
"There are flavored creamers and they have become very popular," Sandler said. She also noted the growing usage of flavored syrups that can be added to coffee.
The placement of Flavor Blends is important because it gives consumers another chance to see the Splenda brand and buy it on impulse when they visit the grocery store.
"When I shop, I go down specific aisles. I don't have time to wander around the store each time I go," Sandler said. She expects most people have similar time constraints and are focused on the specific items on their shopping list.
McNeil has already had some success with this type of strategy. Earlier this summer, Splenda muscled its way into the beverage aisle by forming a partnership with with Kraft Foods Inc. (KFT), maker of Kool-Aid drink mixes.
In select U.S. markets, mostly in the South, McNeil sold Splenda Quick Packs, a pouch that offers the equivalent of one cup of sugar without the 770 calories that regular sugar contains. Although the Quick Packs can be used with any unsweetened drinks, the product was designed to work specifically with Kool-Aid.
"This association with Kool-Aid allows us to give moms a different option for their kids this summer," Sandler said. The effort also is on trend with the increased concern about the calories kids are consuming amid rising rates of childhood obesity.
As part of this initiative, Kraft even changed the instructions on the Kool-Aid packets to remind users that either Splenda or sugar can be used to make the drink.
Sandler declined to provide sales statistics for Quick Packs. However, the effort has been so successful, the company expects to expand it to additional markets next year, she said.
These latest additions are part of a steady stream of products Splenda has brought to market in recent years.
"If we weren't innovating, we're not sure the category would be growing as much," Sandler said.
Since its introduction in 2000, Splenda has unseated Equal as the top-selling tabletop sugar substitute in the U.S. and it continues to gain market share. In June, Splenda had a 60% share of the sales in the low-calorie sweetener market, according to market researcher Information Resources Inc. In the total sweetener category, which includes sugar, Splenda had a 16% market share during the same period.
Despite this growth, Sandler doesn't want to grow complacent.
Wal-Mart Stores Inc. (WMT) and other retailers have begun marketing a rival sucralose-based tabletop sweetener product at a lower price. At the moment, these products are providing Splenda with "healthy competition," Sandler said.
"This is not unanticipated," Sandler added. "We knew this day would come."
Tate & Lyle PLC (TATE.LN), a British food ingredient company that supplies the sucralose used in Splenda, has sued Hebei Sukerui Science & Technology Co., a Chinese manufacturer, and six importers responsible for the rival sweeteners, claiming they infringed on Tate & Lyle's patents for manufacturing the product.
Sandler declined to comment on these lawsuits.