The World Health Organization (WHO) has recently reaffirmed its endorsement of aspartame as a safe food additive. However, the classification of aspartame as a possible carcinogen by the WHO could potentially deter diet soda drinkers and prompt the development of new beverage formulations.
In the past two decades, there has been a decline in soda consumption as consumers have shifted towards drinking more water or opting for beverages with lower sugar content. Nevertheless, diet sodas have experienced a surge in popularity in recent years.
While regular, full-calorie options still dominate the soda market, diet sodas now account for more than a quarter of sales. Both Coca-Cola and PepsiCo have successfully capitalized on this trend by introducing zero-sugar versions of their flagship products, such as Diet Coke, Coke Zero, Pepsi Zero Sugar, and Diet Mountain Dew, all of which contain aspartame.
However, the International Agency for Research on Cancer (IARC), a subsidiary of the WHO, has identified a potential link between aspartame and a type of liver cancer known as hepatocellular carcinoma. The WHO has acknowledged the need for further research on this matter.
Furthermore, the Joint Expert Committee on Food Additives has stated that the acceptable daily intake of aspartame remains below 40 milligrams per kilogram of body weight, affirming previous recommendations. This implies that for most adults, the consumption of diet soda should be limited to less than nine to 14 cans per day.
While these findings may not discourage individuals who consume smaller quantities of diet soda, the announcement could have a temporary negative impact on sales.
According to TD Cowen data, diet sodas are particularly popular among higher-income consumers compared to those with lower incomes. Therefore, the WHO report could raise concerns among affluent consumers, potentially affecting sales in this demographic.
The main risk for soda manufacturers lies in the level of media attention garnered by the announcement. If enough consumers come across headlines highlighting the potential risks of low-calorie sodas, sales volumes could be negatively impacted.
Nevertheless, experts believe that soda companies are adept at adapting to circumstances and will take the necessary steps to maintain the momentum of their brands. Therefore, any sales dip resulting from the report is likely to be temporary.
Dr. Francesco Branca, head of the WHO’s nutrition and food safety division, has advised manufacturers to consider producing food and drinks without aspartame. However, PepsiCo’s Chief Financial Officer, Hugh Johnston, has stated that the company has no plans to alter its use of aspartame, emphasizing that it is only present in a small portion of its product portfolio.
Aspartame was previously used in Diet Pepsi until 2015, when the formula was modified. Following customer backlash, PepsiCo reintroduced aspartame a year later. However, the use of aspartame in Diet Pepsi was discontinued in 2020, though it is still utilized in Pepsi Zero Sugar.
On the other hand, CFRA analyst Garrett Nelson suggests that Coca-Cola faces a higher risk of sales decline due to aspartame concerns. Although both Diet Coke and Coke Zero currently contain aspartame, Coca-Cola may consider switching to an alternative sweetener, such as stevia, in the future.
Nonetheless, Edward Jones analyst Brittany Quatrochi does not anticipate a significant impact on the sales of diet soda. She points out that consumers may switch to alternative sugar-free options, but the association of food and beverage products with carcinogens is not unprecedented. For instance, the IARC classified red meat as a probable carcinogen in 2018 without causing a substantial decline in consumption.
The American Beverage Association (ABA), which advocates for the interests of major soda companies, including Coke, PepsiCo, and Keurig Dr Pepper, has interpreted the WHO announcement as further confirmation of the safety of aspartame. ABA interim CEO Kevin Keane asserts that with over 40 years of scientific research supporting its safety, consumers can confidently choose aspartame as a sugar and calorie-reducing option in their diets.
Apart from diet sodas, aspartame is commonly found in various other food products, including breakfast cereals, chewing gum, and ice cream. Its widespread use as a sugar substitute is due to its sweetness, which is approximately 200 times greater than that of sugar, allowing for lower concentration levels in food and beverages.
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