"What's in a name? That which we call a rose by any other name would smell as sweet."
When William Shakespeare penned those lines for "Romeo and Juliet," he didn't have sugar in mind. And he certainly wasn't thinking about Splenda, the non-caloric sweetener made by British conglomerate Tate & Lyle (OTC: TATYY.PK). Yet the blush of truth in those petals of prose would surely apply to the high stakes lawsuits wending their ways through the courts in pursuit of the answer to this question: Is a sugar substitute derived from sugar allowed to say it is like sugar?
Splenda, which is marketed here in the U.S. by McNeil Nutritionals, a unit of Johnson & Johnson (NYSE:JNJ), is being sued by competitors for deceptive and misleading advertising. On Monday they were joined in a press conference by a powerful coalition of sugar interests and political advocacy groups to challenge Splenda's motto that it is "made from sugar, so it tastes like sugar."
The U.S. Sugar Association, the National Grange, and the Center for Science in the Public Interest mounted a spirited attack on Splenda -- producing a poll showing that only 8% of respondents knew the sugar substitute came from sucralose, which is made by chlorinating sucrose, that is, sugar. They claim a wide swath of the public is being deceived, and they point out that 47% of the 427 people polled thought Splenda was natural.
Left out of the assault on Splenda was the opponents' own self-interested agenda. Since its introduction in 2000, Splenda has swept to the forefront of the sugar substitute industry, owning 51% of the $350 million market as sales grew by 50% last year. Competitor Equal, which is made by Merisant, commands about 20% of the market, and J.W. Childs' Nutrasweet trails the pack. Both are made from aspartame, a primary ingredient in the diet formulations of Coke (NYSE:KO) and Pepsi (NYSE:PEP), though both will soon be adding Splenda to new drinks. The other well-known brand, Sweet 'N Low, is made from saccharine, and its pink packets are seemingly found in every restaurant and diner across the country. Primarily on the coattails of Splenda, the entire sugar substitute market grew by 12% last year.
Sales of real sugar fell by 5% in 2004 -- a fact that might, in part, be the impetus behind the lobbying organization's outcry. As would the fact that Splenda has sued the Sugar Association in Delaware for making false claims about the product. The association has posted questions about Splenda's safety on its website.
Splenda goes out of its way to say it is not sugar, but rather starts as sugar. Even though all substitutes seemingly leave some sort of chemical aftertaste, Splenda says its "taste profile" is far more similar to sugar than the taste profiles of other substitutes. An added benefit that has helped propel the sweetener is its stability at high temperatures, which allows it to be used in cooking, as well as the fact that it holds its sweetness longer in storage.
When your sales wilt like yesterday's Valentine's roses, some businesses think the best recourse is to win in court what they can't win in the marketplace. Ultimately, of course, they won't be able to sugar-coat their results to investors.
Read more about Splenda and the other sugar substitutes in Splenda Is Splendid.
Fool contributor Rich Duprey can't sugar-coat that he prefers Coors Light to most beer. He does not own any of the stocks mentioned in the article.
