A sweet Asian fruit tempts the troubled soft drink industry

A sweet Asian fruit tempts the troubled soft drink industry
Monk fruit (also known as Luo Han Guo in Chinese) cooked in water.

NEW YORK - An obscure melon once cultivated by Buddhist monks in China to sweeten tea could give the US$8 billion (S$10.1 billion) US diet soda industry a shot at winning back consumers concerned about artificial ingredients.

You won't find monk fruit in any of the soft drinks at your local convenience store. So far, shaky supplies and limited demand have kept the expensive melon on the sidelines of the sweetener industry.

But some experts think the fuzzy green fruit, which ripens to the size of an apple, could be the ingredient soda makers have sought for decades: a natural product with great taste and no calories.

When "someone figures this out and gets a taste that is low-calorie and natural, it could really be a silver bullet that catapults that company ahead," said Ali Dibadj, an analyst at Bernstein who follows the soft drink industry.

Soft drink makers are increasingly desperate for just such a miracle ingredient. Once a booming sector, diet soda has become a laggard. In the United States, consumption fell about 7 percent this year and could shrink by 20 percent through 2020, according to Nielsen data.

Consumers, increasingly wary of the health risks of artificial sweeteners, are ditching diet sodas for juices, teas and naturally sweetened lemonades, according to a recent Wells Fargo analysis. "We believe we are seeing a fundamental shift in consumption behavior as diet drinkers leave the category altogether," said Bonnie Herzog, an analyst at Wells Fargo Securities.

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Beverage companies have struggled to hold on to customers amid fears about the safety of FDA-approved aspartame, which has sweetened diet soda for 30 years.

The aspertame debate continues to rage on the Internet, even though the American Beverage Association says the artificial sweetener is safe for consumption.

Five years ago stevia, a low-calorie sweetener made from the leaves of a Paraguayan plant, was heralded as an ideal natural sweetener. But it has had only limited success in the marketplace.

Coca-Cola Co uses stevia in 45 products in 15 countries, including in Coke Life, a low-calorie alternative available in Chile and Argentina. PepsiCo uses stevia in Pepsi NEXT, a low-calorie drink it sells in Australia and France. But customers have complained that stevia's bitter aftertaste alters the sodas' flavors.

Now, some beverage manufacturers are pinning their hopes on monk fruit, which is already used in protein shakes, snack bars and brownies.

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