Tate & Lyle has blamed a failure to penetrate the vast US carbonated diet drinks market for disappointing sales of Splenda, its artificial sweetener.

Iain Ferguson, the chief executive, admitted yesterday that US sales of Splenda, which has been criticised for leaving an aftertaste when added to fizzy drinks, had been “less than we had hoped for” during the year to March 30.

“We have not yet cracked any of the major lines there,” he said.

Tate & Lyle said that sales and profits from Splenda edged only 3 per cent higher this year to £147 million and £70 million respectively. Splenda represents roughly 20 per cent of group profits.

BACKGROUND

• Coca-Cola unveils new challenge to Splenda

• US failure leaves sour taste for Tate & Lyle

• Tate & Lyle shares plunge on profits gloom

• Tate & Lyle shock as Splenda sours profits

• Tate & Lyle close to selling its European starch unit

Sugar comment: Sour taste

Market value has tumbled at T&L and shareholders will need some suger to keep them sweet

Related Internet Links

• Tate & Lyle company information

• Tate & Lyle share price chart

• Tate & Lyle forecast

The sugars and sweeteners group also gave warning that profits growth from the product would be only modest in the current year.

While Splenda has achieved strong sales in low-calorie food and still drinks in the US, it has achieved a slower uptake in carbonated beverages, especially colas such as Diet Coke and Diet Pepsi.

Mr Ferguson added that American consumers were accustomed to diet drinks sweetened with Nutrasweet, one of Splenda’s main rivals.

Shares in Tate & Lyle plunged 40p to 605p yesterday despite the prospect of a cash return to investors as the company gave warning that the coming year would be one of transition.

Sir David Lees, the chairman, said that profits over the next 12 months were likely to be hit by the continuing oversupply of sugar in the EU and low sales of the zero-calorie sweetener Splenda Sucralose.

“A number of factors will impact our profits in comparison with the year to March 31, 2007,” he said. Lower than expected sales of Splenda to major food and drink manufacturers around the world triggered a profit warning in January.

Full-year results showed that pretax profits across the Tate & Lyle business rose 14 per cent to £336 million in 2006, on sales of more than £4 billion.

However, the group admitted that it had missed its target for profit growth from value-added products by a mile. Instead of 30 per cent growth, it achieved 14 per cent.

It expects to raise at least £200 million from the sale of part of its food and industrial ingredients division in Europe, a deal that is expected to conclude by the end of this summer.

Last month Tate & Lyle made a £55 million profit on the sale of Redpath, its Canadian cane sugar refining business.

The value-added ingredients business

—Tate & Lyle was founded in 1921 by amalgamating the sugar refining businesses of Henry Tate and Abram Lyle

—Its companies focus on sugars, wheat and corn milling in Europe and corn milling in the United States

—Tate & Lyle makes corn, wheat and sugar into value-added ingredients for customers in the food, beverage, pharmaceutical, cosmetic, paper, packaging and building industries

—The company has 65 production facilities in 29 countries, mostly in Europe, the Americas and SouthEast Asia Its subsidiaries employ 7,000 people and its joint ventures employ a further 4,800

—The group’s turnover is £3.7 billion

—Tate & Lyle is the world leader in industrial starches and the sole manufacturer of Splenda sweetener

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