GENEVA, Switz. — The World Health Organization (WHO) has classified aspartame, an artificial sweetener commonly used in low- and zero-sugar food and beverages, as possibly carcinogenic.
This classification could particularly affect non-alcoholic beverage companies that use aspartame in some of their low- and zero-sugar beverages, although larger beverage companies including PepsiCo Inc. and The Coca-Cola Company should be less affected than their smaller counterparts. While the WHO acknowledged that its classification is based on limited evidence, all companies that use aspartame are faced with unfavourable publicity and an increased threat of litigation over its possible carcinogenic properties.
However, the product diversity of global beverage companies, such as Pepsi and Coke whose portfolio include water and juices, could cause consumers to seek additional beverages. Additionally, large beverage companies have already heavily invested in reducing sugar content in drinks as part of their Environmental, Social and Governance (ESG) commitments. Coke, for example, has invested more than $100 million in sugar-reduction research and sweetener innovation since 2008, which helped lead to the development and use of stevia, a natural sweetener. Lastly, larger companies have the financial resources to raise awareness about safe-to-consumer products or the changes they have made to products to mitigate some negative publicity related to the classification.
Conversely, the classification could negatively affect the operating performance and credit-risk profiles of smaller manufactuers that use aspartame in their products, companies with a narrow product offering and those without the financial resources to invest in product innovation.
