Bitter Competition
BITTER COMPETITION : THE HOLLAND SWEETENER COMPANY VERSUS NUTRASWEET (A)
In the late 1986, the Holland Sweetener Company (HSC), based in Maastricht, the Netherlands, was preparing to enter the European and Canadian aspartame markets. Aspartame, a low-calorie, high-intensity, sweetener, had been discovered in 1965 by G.D. Searle & Co., a U.S. pharmaceuticals company. Having secured a number of patents on its discovery, Searle had gone on to develop markets for aspartame as a food and beverage additive. By 1986, NutraSweet, the operating entity set up by Searle to build the aspartame business, had reached sales of $711 million. Now, NutraSweet’s patents in the European and Canadian markets were due to expire as of 1987, although the U.S. market would remain protected until December 1992.
Winfried Vermijs, president of HSC, reviewed his company’s strategy for competing in the aspartame business. Price and volume forecasts had been prepared for the European and Canadian aspartame markets. On price, two scenarios were being entertained : “normal competition” and “price war”. Vermijs wondered which scenario was the more likely.
Aspartame
High-intensity sweeteners had a long history. Discovered in 1879, the oldest high-intensity still in use was saccharin, a petroleum derivative about 300 times as sweet as sugar (sucrose) of equal weight. In the 1960s Abbott Laboratories developed cyclamate (30 times as sweet as sugar) but, following studies suggesting a link to cancer, the Food and Drug Administration (FDA) banned cyclamate in 1970. In 1977, the FDA tried to ban saccharin as well, but the resulting public outcry had caused Congress to intervene and declare a moratorium. Manufacturers of saccharin were, however, required to place notices on labels, warning consumers of the possible increased cancer risk. Apart form the safety issue, saccharin was found by many people to have a slightly bitter, metallic, aftertaste.
Aspartame was a white powder
In the late 1986, the Holland Sweetener Company (HSC), based in Maastricht, the Netherlands, was preparing to enter the European and Canadian aspartame markets. Aspartame, a low-calorie, high-intensity, sweetener, had been discovered in 1965 by G.D. Searle & Co., a U.S. pharmaceuticals company. Having secured a number of patents on its discovery, Searle had gone on to develop markets for aspartame as a food and beverage additive. By 1986, NutraSweet, the operating entity set up by Searle to build the aspartame business, had reached sales of $711 million. Now, NutraSweet’s patents in the European and Canadian markets were due to expire as of 1987, although the U.S. market would remain protected until December 1992.
Winfried Vermijs, president of HSC, reviewed his company’s strategy for competing in the aspartame business. Price and volume forecasts had been prepared for the European and Canadian aspartame markets. On price, two scenarios were being entertained : “normal competition” and “price war”. Vermijs wondered which scenario was the more likely.
Aspartame
High-intensity sweeteners had a long history. Discovered in 1879, the oldest high-intensity still in use was saccharin, a petroleum derivative about 300 times as sweet as sugar (sucrose) of equal weight. In the 1960s Abbott Laboratories developed cyclamate (30 times as sweet as sugar) but, following studies suggesting a link to cancer, the Food and Drug Administration (FDA) banned cyclamate in 1970. In 1977, the FDA tried to ban saccharin as well, but the resulting public outcry had caused Congress to intervene and declare a moratorium. Manufacturers of saccharin were, however, required to place notices on labels, warning consumers of the possible increased cancer risk. Apart form the safety issue, saccharin was found by many people to have a slightly bitter, metallic, aftertaste.
Aspartame was a white powder