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How can brands navigate US tariffs on sugar alternatives?

US tariffs on monk fruit and stevia may push food and beverage brands to rethink their sugar reduction strategies.

As cost pressures mount, sucralose, currently exempt from tariffs, may gain ground and shift sourcing strategies in the sweetener industry.

Market research and advisory agency Kline + Company has explored the potential impact of US trade policy on food and beverage brands' sugar reduction efforts, and the role the tariffs could play.

Tariff pressures threaten natural sweeteners such as stevia and monk fruit

Dr Elizabeth Thundow, vice-president of food and nutrition at Kline + Company, told Ingredients Network that new tariffs may start to play a role in brands' sweetener decision-making processes and product reformulation.

“Stevia, for example, has played a key role in the shift from synthetic to natural high-intensity sweeteners in low/no added sugar products, accounting for over 90% of the volumes of natural high-intensity sweeteners used globally and across all products,” she explained.

Yet, in the US, stevia cultivation is limited, with most extracts, such as Reb Z and the increasingly preferred Reb M, being processed in China and India and imported into the US.

While these additional costs associated with sourcing stevia could lead to opportunities for alternatives to enter the market, many natural sweeteners, such as monk fruit, are also imported and would therefore be subject to similar tariffs.

Minimising the impact of additional costs

So, will brands absorb the extra cost, or shift away from natural sweeteners altogether?

Sweetener costs amount to only a fraction of the final price of finished products, and as such, Thundow imagines many brands will seek to absorb the extra cost, at least in the short term.

“However, for the longer term, I’m sure brands are reviewing their sourcing strategies across all ingredients, not just sweeteners, to minimise the impact of additional costs of tariffs as far as possible,” she explained.

Sweet proteins and reformulation

It could be that these tariffs open the door for innovative sweeteners, including sweet proteins like brazzein.

However, as Thundow noted, “reformulation is also costly and tricky, as changing sweetener can have a significant impact on product flavour and mouthfeel”.

But this, she explained, will ultimately depend on the balance between sweetener costs and reformulation costs for existing products.

But for brands that ruled out sweet proteins previously, for example, because of their higher cost, may now be more open to considering these alternative options.

Top tariff tips for food and beverage companies

For brands – in particular, those trying to balance cost, consumer expectations, and supply risk – Thundow offers some practical advice on navigating these tariffs.

• Stay up to date with the tariffs – understand which ingredients and which countries are impacted, and by how much.

• Evaluate ingredients to determine how tariffs will impact final product costs.

• Diversify supply chains and ensure relationships are maintained and/or established with multiple suppliers in alternative low or tariff-free regions. In addition, consider local sourcing where possible, although for many of these ingredients, this isn’t a realistic option.

• Explore cost-effective reformulations but ensure these maintain product quality and align with consumer preferences.

• Ensure alignment across multiple teams, including procurement, R&D, marketing, and finance teams, to make sure that any decisions taken consider cost efficiency, consumer expectations, and long-term strategy.