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Potential Harm to Diet Soda Sales Due to WHO’s Aspartame Decision

Potential Harm to Diet Soda Sales Due to WHO’s Aspartame Decision


The World Health Organization reaffirmed its recommended intake of aspartame Thursday, but the agency’s classification of the sweetener as a possible carcinogen could still scare away diet soda drinkers and lead to new beverage formulas.

Soda consumption has fallen over the past two decades as consumers have switched to drinking more water or picking beverages with less sugar. However, diet sodas have been a bright spot for the category in recent years.

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Although full-calorie options still dominate the soda segment, diet sodas now represent more than a quarter of sales. Coca-Cola’s and PepsiCo’s bets on zero-sugar versions of their namesake sodas have been paying off for both companies. Diet Coke, Coke Zero, Pepsi Zero Sugar and Diet Mountain Dew all contain aspartame.

On Thursday, the International Agency for Research on Cancer, a WHO agency, identified a possible link between aspartame and a type of liver cancer called hepatocellular carcinoma. WHO officials said more research on the potential connection is needed.

The U.S. Food and Drug Administration said in a statement that it disagrees with IARC’s conclusion and its own scientists don’t have safety concerns about aspartame.

“FDA scientists reviewed the scientific information included in IARC’s review in 2021 when it was first made available and identified significant shortcomings in the studies on which IARC relied,” the agency said.

A separate body linked to the WHO and the Union Nations’ Food and Agriculture Organization, the Joint Expert Committee on Food Additives, said in its own report Thursday that the acceptable daily intake of the sweetener is under 40 milligrams per kilogram of body weight, reaffirming prior recommendations. For most adults, that means drinking less than nine to 14 cans of diet soda every day.

While the findings on possible links to cancer may not deter consumers who drink smaller amounts of diet soda, the announcement could at least temporarily hurt sales.

Diet sodas are at least 50% more popular with higher-income consumers than with lower-income people, according to TD Cowen data. Those consumers could be concerned by the WHO’s report, TD Cowen analyst Vivien Azer wrote in a research note last week.

The biggest risk for soda makers is how much attention the announcement garners. CFRA analyst Garrett Nelson wrote in a June 29 note that the news could hurt sales volumes of low-calorie sodas if enough consumers see the headlines.

Likewise, Wedbush analyst Gerald Pascarelli told CNBC he thinks the report could hit sales in the category. But the dip might not last long.

“These companies are quick to pivot and to do what’s necessary to maintain momentum for their brands, and we suspect they’ll do the same thing,” he said.

Dr. Francesco Branca, head of the WHO’s nutrition and food safety division, said manufacturers who use aspartame in their food and drinks should consider making their products without the sweetener.

But PepsiCo Chief Financial Officer Hugh Johnston told Reuters on Thursday that the company has no plans to change its use of aspartame. He added that the company doesn’t include the sweetener in much of its portfolio.

Aspartame was used in Diet Pepsi until 2015, when the company tweaked the formula. After backlash from customers, PepsiCo brought it back a year later. But the change didn’t last long — the beverage giant got rid of aspartame in Diet Pepsi in 2020. It still uses it in Pepsi Zero Sugar.

Coke faces more risk of losing out on sales over aspartame concerns, according to CFRA’s Nelson. The beverage giant currently uses the sweetener in both its Diet Coke and Coke Zero, but could swap it out for another, such as stevia, in the future.

Even so, Edward Jones analyst Brittany Quatrochi said she isn’t expecting a big hit to diet soda sales.

“Consumers may trade into a different sugar-free offering, but this isn’t the first kind of food or beverage product to be labeled a carcinogen,” she said.

For example, the IARC classified red meat as a probable carcinogen in 2018.

Makers of diet sodas aren’t fretting over lost sales yet. The American Beverage Association, which lobbies on behalf of Coke, PepsiCo and Keurig Dr Pepper, took the WHO announcement as further confirmation of the sweetener’s safety.

“With more than 40 years of science and this definitive conclusion from the WHO, consumers can move forward with confidence that aspartame is a safe choice, especially for people looking to reduce sugar and calories in their diets,” ABA interim CEO Kevin Keane said in a statement.

Besides diet sodas, aspartame can also be found in a variety of foods, including breakfast cereals, chewing gum and ice cream. It’s widely used as a sugar substitute because it is 200 times sweeter, meaning it can be used in much lower concentrations.



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