Sluggish Splenda is a cause for concern
Fears that Tate & Lyle's moneyspinning sweetener Splenda sucralose may not be the long-term cash cow that investors had been led to believe intensified after the company admitted sales were running below expectations.
Tate & Lyle confirmed that Cadbury Schweppes had stopped using Splenda in its Diet 7 Up brand and returned to aspartame, which is cheaper. General Mills had also withdrawn two lines of cereals using Splenda.
Full-year sales and profits of Splenda would only modestly exceed those of the previous year, said the company. While volumes to the US carbonated soft drinks sector had not met expectations, sluggish uptake in other categories was down to timing, said a spokeswoman. "We have an extensive development pipeline with customers, but the reformulation process has taken longer than expected."
Graham Jones, an analyst with Panmure Gordon, said Tate & Lyle was unlikely to maintain its margins on Splenda, which accounted for almost a fifth of its profits on just 3.5% of its turnover. He said recent investment in extra capacity was "a bit of a concern".
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