Exploring Sugar Alternatives: Sweetness That’s Good for Business and Health

Sugar has become one of the food industry's most wanted “public enemies” in the past few years. It is seeking efficient and affordable solutions to replace it or at least severely reduce the amounts used in food products. Indeed, consumer concerns about sugar's role in obesity, diabetes, and other health issues are increasing.

This was not missed by FoodTech entrepreneurs and investors who are racing to find healthier, more sustainable sweetening solutions. Innovation is booming in that space and heading in multiple directions. 

Why the Growing Demand for Sugar Alternatives? 

The push for sugar alternatives stems from several factors: 

• Health Concerns: With rising rates of obesity, diabetes, and metabolic disorders worldwide, sugar is increasingly seen as a major dietary risk factor. Many consumers are now actively reducing their sugar intake, seeking healthier options that do not compromise on taste. 
   

• Regulatory Pressures: Countries are implementing sugar taxes and strict labelling laws, forcing food manufacturers to reformulate products or face financial penalties. 

1. New natural sweeteners through fermentation 

The simplest approach to creating sugar alternatives has always been to seek natural sweeteners such as Stevia. Here, the innovation ecosystem is highly concentrated on using the monk fruit or Brazzein. However, both plants, if they exist in nature, are quite rare and hard to cultivate. That’s why multiple startups are using precision fermentation to reproduce their sweetener proteins in a lab rather than in nature. 

Precision fermentation, today mostly used for dairy applications, relies on microorganisms (such as yeasts or fungi) genetically engineered to produce a desired protein through fermentation. It is key to understand that the end product itself is extremely close to the “real thing” while it doesn’t contain any genetically modified material. 

In terms of startups, in that space, Oobli could be one of the most interesting examples. It is focusing on Brazzein for applications in baked goods. It recently announced a partnership with Grupo Bimbo, the world’s largest bakery company. Also, if the rest of the alternative protein ecosystem has a hard time moving forward in terms of scale, that is not the case for sugar alternatives. Indeed, in early 2024, an Abu Dhabi-based company revealed a plan to build a $500M hub to produce Brazzein using this technology in the UAE. 

2. Modified Sugar Alternatives: same taste, same recipe by 50% less calories 

Many startups are taking another approach and seeking to modify natural plants or ingredients to reduce calories and glycemic effects. For example, Incredo, an Israeli startup being commercialised in Europe by Südzucker, the sugar giant, has developed a unique “enhanced sugar” that maintains the sweet taste but requires 30-50% less sugar in a recipe. By adjusting sugar’s physical structure to increase its perceived sweetness, the startup can maintain flavour while significantly lowering the sugar content in products. 

Similarly, Resugar is innovating by combining sugar with fibres and plant-based compounds to reduce calorie impact while retaining the familiar taste profile that consumers crave. 

These options offer manufacturers the possibility of keeping “sugar” on the label while minimising its associated health risks, presenting an attractive option for brands wary of losing customers to unfamiliar alternatives. 

What’s next for sugar? 

The benefits of sugar alternatives are clear. They allow food companies to respond to consumer demands for healthier products and reduce their dependence on sugar crops, which are sensitive to price and supply fluctuations. Furthermore, low-calorie alternatives like sweet proteins align well with increasing calls for products that support better metabolic health. 

However, challenges remain. Some sugar alternatives struggle to match the mouthfeel and texture provided by sugar, which is crucial in baked goods and confectionery. Additionally, production costs remain high. 

There are multiple paths forward for these companies, though. One is to grow through partnerships in the food service industry, which could increase their appeal by using these ingredients in products that appeal to consumers seeking natural and guilt-free products.