Artificial Sweeteners

Caitlyn Fitzgerald Courtney Spalding

Caitlin Steiner

Why Sugar Substitutes?

• It is a good substitute for some people when dieting, with diabetes, and preventing cavities. It’s cheaper than some natural sugars

• Total market sales: $606,156.1 • According to market analysts Mintel, a total of 3,920

products containing artificial sweeteners were launched in the U.S. between 2000 and 2005. In 2004 alone, 1,649 artificially-sweetened products were launched. According to market analysts Freedonia, the United States artificial sweetener market is set to grow at around 8.3% per year to $189 million in 2008.[4]

Depth: Category Audit Findings

• 15 retailers • 21 brands • 63 SKUs • HARPS on Crossover and Marvin’s IGA had a

greater variety of SKUs • Wal-Mart’s PL is very competitive with

Splenda (packaging, facings, prices were lower)

Category Demographics

• Ages: 55-64 • Income: $100,000• Family- life cycle: No children under 18• There were a few private labels in audit (Great

Value and Best Choice being the larger PLs)• Most of the GM were over 50% in category• Small category • Retailers differentiated with SKUs

15 Stores Audited

N Percent N Percent N Percent

Harp's GM% (Wed) * Manufacturer 32 .5 31 .5 63 1.0

Walmart's GM% (MLK) * Manufacturer 19 .3 44 .7 63 1.0

Walmart-NM GM% * Manufacturer 17 .3 46 .7 63 1.0

Walmart GM% (Mall Ave) * Manufacturer 23 .4 40 .6 63 1.0

Walmart GM% (Thomp) * Manufacturer 22 .3 41 .7 63 1.0

Walgreens' GM% (MLK) * Manufacturer 7 .1 56 .9 63 1.0

Target's GM% * Manufacturer 0 .0 63 1.0 63 1.0

Marvin's IGA GM% * Manufacturer 35 .6 28 .4 63 1.0

Harp's GM% (Cross) * Manufacturer 32 .5 31 .5 63 1.0

Walgreens GM% (TS) * Manufacturer 8 .1 55 .9 63 1.0

Walgreens GM% (Mission) * Manufacturer 9 .1 54 .9 63 1.0

Walgreens GM% (Joyce) * Manufacturer 9 .1 54 .9 63 1.0

Walgreens GM% (Thomp) * Manufacturer 10 .2 53 .8 63 1.0

Pricecutter GM% * Manufacturer 28 .4 35 .6 63 1.0

Case Processing Summary

Cases

Included Excluded Total

Category Role

• Sales volume: $606,156.1• Household penetration: 29.6• Suppliers are in control based on facings and

gross margins• GM: see next slide

Gross Margin % by SupplierWalmart's

GM% (MLK)

Walgreens' GM% (MLK)

Harp's GM%

(Cross)Pricecutter

GM%

Mean .646 .646

N 2 2

Mean .369 .369

N 2 2

Mean .912 .892

N 3 1

Mean .377 .534 .647 .584

N 2 2 5 5

Mean .892 .892

N 4 4

Mean .444 .563 .604 .570

N 10 4 11 10

Mean .500 .703 .750

N 1 5 3

Mean .952 .960 .960

N 1 1 1

Mean .471

N 1

Mean .452 .452

N 1 1

Mean .332

N 2

Mean .529 .542 .665 .638

N 19 7 32 28

Private Label

Stadt Holdings Corp.

Walmart Distributing

Total

Report

Manufacturer

Alberto-Culver USA Inc.

Associate Wholesale Grocers Inc.

Cargill Inc.

Cumberland Packing Corp.

Heartland Sweetners LLC

McNeil Nutritionals LLC

Merisant US Inc.

Morse Co. Inc.

Strength of Leading, Competing Brands

• Dominating Brands– Cumberland Packing Corp.= Sweet n’ Low– McNeil Nutritional= Splenda– Merisant US Inc.= Equal– Walmart Distributing= Great Value

Walmart's Facings (MLK)

Walgreens' Facings

(MLK)Target's Facings

Marvin's IGA

FacingsPricecutter

Facings

% of Total Sum

.1 .3 .2 .1 .2

% of Total N

.1 .3 .1 .1 .2

N 2 2 1 5 5

% of Total Sum

.5 .6 .5 .3 .4

% of Total N

.5 .6 .6 .3 .4

N 10 4 4 10 10

% of Total Sum

.0 .2 .1 .1

% of Total N

.1 .1 .1 .1

N 1 1 4 3

% of Total Sum

.2

% of Total N

.1

N 2

Manufacturer

Cumberland Packing Corp.

McNeil Nutritionals LLC

Merisant US Inc.

Walmart Distributing

SKUs and Market

• Splenda (individual 200 packets) were found in 14/15 stores

• Estimated GM for brands were consistent with “role” for the category– Would categorize as cash machine based on yearly

sales volume and gross margins– Small category- larger gross margins- consistent with in

store audit (see GM chart on next slide) • Surprise losers? Equal and Sweet n’ Low were not

as present as Splenda in the stores with facings and shelf space

GM estimates for manufacturers Manufacturer Walmart's GM%

(MLK)Walgreens' GM%

(MLK)Harp's GM%

(Cross) Pricecutter GM%Alberto-Culver USA Inc.

Mean     .646 .646N     2 2

Associate Wholesale Grocers Inc.

Mean     .369 .369N

   2 2

Cargill Inc. Mean .912   .892  N 3   1  

Cumberland Packing Corp.

Mean .377 .534 .647 .584N 2 2 5 5

Heartland Sweetners LLC

Mean     .892 .892N     4 4

McNeil Nutritionals LLC

Mean .444 .563 .604 .570N 10 4 11 10

Merisant US Inc.

Mean .500   .703 .750N 1   5 3

Morse Co. Inc. Mean .952   .960 .960N 1   1 1

Private Label Mean   .471    N   1    

Stadt Holdings Corp.

Mean     .452 .452N     1 1

Walmart Distributing

Mean .332      N 2      

Total Mean .529 .542 .665 .638N 19 7 32 28

Strength of Private Labels

• Wal-Mart Great Value:– is the leading private label – Facings Competitive with Splenda in Wal-Mart – Wal-Mart is very committed to their PL

• HARPS – Least dependent on Private Labels – They had a large assortment of SKUs– Best Choice GM was relatively small (31%)

PL presence in the category

• Wal-Mart PLs were increasing– they used the same color scheme as Splenda

• Helps marketing of Great Value by mimicking the Splenda packaging which makes consumers see them as the same

– Offered similar SKUs as Splenda – Splenda and Great Value had equally the largest

allotted display space – PL is becoming more dependent based on

comparison between GM% and SKUs from previous audits

Recommendations to Retailers

• All retailers had SKUs that were related to location and consumer preferences

• Recommend Wal-Mart MLK– Evaluate Splenda granulated w/ Fiber 14oz

(GM 5.8%) may want to drop this SKU• Marvin’s IGA- keep the same amount of

National Brands and SKUs, there are great GMs on all SKUs