The World Health Organization’s verdict on aspartame might harm diet soda sales or lead to new drink formulae.

The World Health Organization maintained its recommendation for aspartame use on Thursday, but the sweetener’s designation as a probable carcinogen may still frighten away diet soda enthusiasts and lead to new beverage formulae.

Soda consumption has declined over the last two decades as people have turned to consuming more water or choosing less sugary beverages. Diet sodas, on the other hand, have been a bright light for the category in recent years.

Although full-calorie alternatives continue to dominate the soda market, diet drinks now account for more than a quarter of sales. Coca-Cola and PepsiCo’s wagers on zero-sugar versions of their respective brands have paid off for both firms. Aspartame is included in Diet Coke, Coke Zero, Pepsi Zero Sugar, and Diet Mountain Dew.

The International Institution for Research on Cancer, a WHO institution, uncovered a probable relationship between aspartame and hepatocellular carcinoma on Thursday. WHO experts stated that additional investigation into the potential link is required.

The FDA stated in a statement that it disagrees with IARC’s assessment and that its own scientists do not have safety concerns regarding aspartame.

“FDA scientists reviewed the scientific information included in IARC’s review when it was first made available in 2021 and identified significant shortcomings in the studies on which IARC relied,” according to the agency.

The Joint Expert Committee on Food Additives, a separate body affiliated with the WHO and the Food and Agriculture Organization of the United Nations, stated in its own report Thursday that the acceptable daily intake of the sweetener is less than 40 milligrams per kilogram of body weight, reaffirming previous recommendations. For most individuals, this implies consuming no more than nine to fourteen cans of diet soda each day.

While the research on suspected cancer risks may not prevent people who drink less diet soda, the news may momentarily affect sales.

According to TD Cowen research, diet drinks are at least 50% more popular among higher-income customers than among lower-income consumers. According to TD Cowen analyst Vivien Azer in a research note last week, these customers may be alarmed by the WHO findings.

The greatest danger for soda manufacturers is how much attention the news receives. In a June 29 note, CFRA analyst Garrett Nelson stated that if enough customers notice the headlines, it might harm sales volumes of low-calorie beverages.

Similarly, Wedbush analyst Gerald Pascarelli told CNBC that he believes the study would boost sales in the sector. However, the downturn may not stay long.

“These companies are quick to pivot and do what’s necessary to maintain momentum for their brands, and we suspect they’ll do the same thing,” he added.

According to Dr. Francesco Branca, chief of the WHO’s nutrition and food safety section, businesses that use aspartame in their goods should consider manufacturing them without the sweetener.

PepsiCo Chief Financial Officer Hugh Johnston, meanwhile, told Reuters on Thursday that the business had no intentions to stop using aspartame. He also stated that the sweetener is not widely used in the company’s portfolio.

Diet Pepsi used aspartame until 2015 when the firm changed its composition. PepsiCo reinstated it a year later after a customer outcry. However, the alteration was short-lived; aspartame was removed from Diet Pepsi in 2020. It’s still in Pepsi Zero Sugar.

According to CFRA’s Nelson, Coke is more likely to lose sales due to aspartame worries. The sweetener is now used in both Diet Coke and Coke Zero, although it might be replaced by another, such as stevia, in the future.

Despite this, Edward Jones analyst Brittany Quatrochi believes diet drink sales will not suffer significantly.

“Consumers may switch to a different sugar-free offering,” she added, “but this isn’t the first type of food or beverage product to be labeled a carcinogen.”

In 2018, the IARC categorized red meat as a possible carcinogen.

Diet soda manufacturers aren’t worried about lost sales just yet. The American Beverage Association, which represents Coke, PepsiCo, and Keurig Dr. Pepper, saw the WHO declaration as evidence of the sweetener’s safety.

“With more than 40 years of science and this definitive conclusion from the WHO, consumers can move forward with confidence that aspartame is a safe choice, especially for people looking to reduce sugar and calories in their diets,” said ABA interim CEO Kevin Keane in a statement.

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Aspartame can be present in a range of foods, including breakfast cereals, chewing gum, and ice cream, in addition to diet drinks. It is extensively used as a sugar replacement because it is 200 times sweeter than sugar, allowing it to be utilized in much lower quantities.

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