Topics: NutraSweet, Monsanto, Robert B. Shapiro Pages: 7 (1941 words) Published: April 1, 2013
Nutrasweet's Bitter Fight
Published: November 19, 1989

For a company with such a sweet product, the Nutrasweet Company plays a tough game of corporate hardball.

Under the mantle of patent protection, the inventor of aspartame has made hundreds of millions of dollars selling the low-calorie sweetener. Now those patents are beginning to expire, opening the door to competitors. But the company has quickly established itself as a formidable defender of the $700 million-plus market for its only product.

But its aggressiveness in the marketplace should come as no surprise since it has long been known for its abrasive treatment of its own customers, the big food and beverage companies that use aspartame.

Chairman Robert B. Shapiro acknowledges that NutraSweet's brash manner has given it a reputation for arrogance. ''Under the pressure of trying to develop this business quickly,'' he said, ''I'm sure that there were times when we were rude or inconsiderate and that we said things we shouldn't have said, or failed to say things we should have said.'' But, he added, ''I know we've changed . . . to some degree.'' One-Product Company


It remains to be seen to what degree Nutrasweet is refining its aggressive style, now that its customers have other choices. But clearly this is a critical time for a company that was built around a single product.

To help blunt the impact of losing its monopoly, the company, which is based in Deerfield, Ill., is trying to bring to market a second product: Simplesse, a fat substitute it developed that is expected to have broad applications as an ingredient in ice cream, salad dressing and a host of other foods.

But some industry analysts doubt that even such a promising product can compensate for the impact of losing the aspartame monopoly. And even in these early stages of product development, there are signs of tension with some potential customers of the fat substitute.

In 1992 the aspartame patent will expire in the United States, which claims 60 percent of total sales. And based on the experience in Europe, where patents began to expire in 1987, Nutrasweet will be ready to spar.

The company, a division of the Monsanto Company, has managed to keep rivals at bay in Europe. ''It is a bloody fight and everybody's losing money,'' said Systse T. Kuipers, marketing manager for the Holland Sweetener Company in the Netherlands, Nutrasweet's major rival. ''They go for the last kilo even if they have to give the product away.'' Holland Sweetener is a joint venture between two chemical giants, the Toyo Soda Manufacturing Company of Japan and DSM of the Netherlands.

Prices in Europe dropped by two-thirds when Nutrasweet's patents expired, to the current $27 a pound. In the United States, Nutrasweet charges its largest customers $55 a pound and smaller ones, $90.

Mr. Kuipers maintains that Nutrasweet has cut prices in Europe to an unrealistically low level ''with the sole intent of chasing competitors out of the marketplace.'' Five producers have already retreated, he said.

Still, Mr. Shapiro claims Nutrasweet is making money in Europe. Of Holland Sweetener's complaints, he said: ''If they don't like the pricing, maybe the problem is their cost structure.''

Nutrasweet remains extremely profitable. In 1988, the company reported operating income of $154 million on sales of $736 million. But industry analysts said Nutrasweet's profits were actually closer to $330 million last year. For accounting reasons related to its 1985 acquistion of G.D. Searle & Company and its Nutrasweet division, Monsanto is taking an annual $175 million charge against Nutrasweet's earnings.

Mr. Kuipers also claims that Nutrasweet executives are spreading rumors that Holland Sweetener's aspartame factory is barely functioning and that the company's future is questionable. ''They don't play fair,'' he said. ''They are trying to burn...
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