Sucralose war looms as Wal-Mart takes the shine off T&L's Splenda

Tate & Lyle has shrugged off the latest threat to its money-spinning Splenda sucralose business as a minor irritation while it ramps up production in Alabama and prepares to open a new plant in Singapore.

Commenting on moves by Wal-Mart to introduce a sucralose-based sweetener called Altern at a 30% discount to Splenda in 250 US stores, Tate & Lyle said: "We have always said it is not difficult to create small batches of sucralose in the lab or the kitchen. The difficult part is ramping this up to full-scale industrial production.

"The quantity of sucralose required for a single table-top product, such as Altern, is extremely small and the supply of sucralose to the table top sector is only a minor part of our business."

It added: "Work is still being carried out to see if Altern infringes our patents and if it meets Food and Drug Administration specifications."

Even if Altern were launched on a national scale, it would "not have any material effect on the results of Tate & Lyle's sucralose division", it insisted.

The sucralose in Altern is understood to have been made in China, said Investec Securities analyst David Lang.

"The problem is, that in some parts of the world, Tate & Lyle's patents are just being used as blueprints. Wal-Mart is basically sticking up two fingers to Tate & Lyle. It's a pretty provocative act. My feeling is that Tate & Lyle will focus on the purity issue on this one rather than going to war over the patents."

While there were probably dozens of manufacturers in China and India able to create small quantities of sucralose, rumours spreading over the last couple of weeks suggested that one Chinese manufacturer was commissioning a plant capable of making sucralose on an industrial scale, he said.

With Bangalore-based Pharmed Medicare also claiming to be building a factory capable of producing commercial quantities of sucralose, investors were watching developments in this area like hawks, added another analyst.

"Talk is cheap," he said, "but investors are watching this market very closely indeed."