Pepsico's (PEP) $30 million development deal with the ingredient company Senomyx (SNMX) to develop newfangled flavor enhancers will, if successful, help the beverage giant cut sugar and calorie levels in sodas and other drinks by 25% or more, as the company has promised. But the best part of the arrangement is that, unlike popular sweeteners like sucralose or stevia extract, these new ingredients won't have to be specifically declared on packages. They can simply be tucked into the opaque and generic "artificial flavors" or "natural flavors."
It's a potential double win for Pepsi -- lower calories and a "clean label" free from weird-sounding chemicals consumers are increasingly leery of. Because Senomyx's powerful compounds are used in such small quantities, they are categorized as flavors, not additives, and they don't have to suffer through the arduous FDA additive approval process. Instead, they are tracked through the more lenient and less time consuming process of GRAS (Generally Recognized As Safe).
Under the deal, Pepsi is giving Senomyx $30 million upfront with another $32 million possible over the next four years for the development of flavor technology that will intensify the taste of sugar and high fructose corn syrup in Pepsi's beverages, thus enabling the company to use less. Senomyx's products don't have flavor in and of themselves, but instead trick our taste buds to registering sensations like sweet and salt as being sweeter and saltier than they really are.
There's enormous potential here for food companies trying to cut back on dietary demons like sugar, salt and MSG. Which helps to explain why a who's who of big food companies ranging from Kraft, Coca-Cola, Campbell Soup (CPB) and Nestle have or had development deals with Senomyx.
It will be some time before Senomyx has any "novel flavor ingredients" ready for inclusion into Pepsi products. But the company already has an established track record for coming up with sweet enhancers. The charmingly named S6973 can reduce sugar by up to half in various foods and beverages and is actively being sold by the large Swiss fragrance and flavor company Firmenich.
So far, the only products containing Senomyx's flavor enhancers are being sold outside of the US. Nestle is using an MSG reducer in its Maggi brand soups, sauces, condiments and instant noodles, and the Japanese company Ajinomoto is using a similar ingredient in products for the Chinese market.
Image by FranUlloa