Sweet’n Low’s Profits Still Fat Despite Competition and Warning Labels

At the Brite Spot restaurant on Sunset Boulevard, coffee drinkers often ask for a sugar-free sweetener that is infrequently advertised and contains an ingredient linked to cancer.

“All they ask for is Sweet’n Low,” said restaurant manager Antonette Venetos of the saccharin sweetener contained in familiar pink packets. “I have never had customers ask for anything else,” she said. “I think it’s sort of a habit.”

It is a habit that has kept the family-run company that makes Sweet’n Low in business. By relying on its well-known name and by keeping its price lower than that of competitors, Sweet’n Low has managed to overcome health concerns and maybe even a greater threat to its survival: Equal, the fast-growing and heavily advertised sugar substitute made with Nutrasweet.

After Equal was introduced in 1981, “it was predicted that we would lose one third of our business,” said Marvin Eisenstadt, president of Brooklyn-based Cumberland Packing Co., which makes Sweet’n Low. “It didn’t happen. The people who use Sweet’n Low stayed with us.”

Sweet’n Low is used by an estimated 30 million people, Eisenstadt says. The product is sold under licensing agreements in 30 nations, manufactured in five and a plant will open soon in Bombay, India. And at Cumberland’s flagship Brooklyn plant, 500 workers produce 50 million of those pink packets each day. Sweet’n Low is sold almost entirely in one-gram individual packets.

“Basically what’s happened is that Sweet’n Low had the franchise sooner,” said James H. Wilbur, a securities analyst at Smith Barney, Harris Upham & Co. “It’s based simply on (consumer buying) habits.”

Sweet’n Low was introduced in restaurants in 1958 as a sideline for Cumberland. Eisenstadt’s father, Benjamin, founded the firm after World War II as the first company to sell sugar in tiny paper packets to restaurants. The firm packaged its sugar substitute in pink packets so it would stand out in sugar bowls.

Like the company that makes it, Sweet’n Low is an extension of the Eisenstadt family. The product is named after Benjamin Eisenstadt’s favorite childhood song. The treble clef and bar design that became the Sweet’n Low logo was created by Marvin Eisenstadt’s wife.

Sales began to take off in the 1960s when Americans became increasingly diet conscious. Thin was in, and full-figured models of the 1950s were replaced by models such as Twiggy.

Then in 1969, Cumberland was forced to undertake a costly reformulation of Sweet’n Low after cyclamate--the artificial sweetener used by Sweet’n Low and other dietetic products--was found to cause cancer in laboratory animals and banned. As a result, Sweet’n Low--which previously used a combination of cyclamate and saccharin--reformulated the product to use only saccharin, a compound made from coal tar.

About a decade later, however, studies found that the consumption of huge amounts of saccharin by laboratory rats also caused cancer. As a result, each Sweet’n Low packet bears a U.S. government cancer warning, much like those found on cigarette packs. But the warning has had little impact on sales, Eisenstadt said.

The most serious threat for Sweet’n Low appeared to be the introduction of Equal. Produced by a subsidiary of Monsanto, Equal is sweetened with aspartame--the generic name for Nutrasweet--that is made from two amino acids. Equal also bears a warning for individuals suffering from phenylketonuria, a hereditary brain disease. Aspartame contains a substance that is connected with the disease.

“Up to that point, we had no competition,” said Michael Pedone, president of Pedone & Partners, Cumberland’s advertising agency. “This was a major assault against that marketplace.”

Since its introduction, Equal has quickly become the top-selling sugar substitute. Sweet’n Low and Equal together command an 80% share of the $220 million in annual retail sales of sugar substitutes, according to SAMI/Burke, a marketing firm that tracks sales. Equal has a larger share, according to a SAMI/Burke spokesman, who declined to say how much a lead Equal had over Sweet’n Low.

Still, Eisenstadt argues that Sweet’n Low sells 4 billion packets a year to Equal’s 3 billion. Restaurants remain a stronghold for Sweet’n Low, which claims an 85% share of sales made to coffee shops and restaurants.

Equal and Nutrasweet have “opened up the market--more and more sugar users began to use more sweeteners,” Eisenstadt said. “Our sales have increased since aspartame (the generic term for Nutrasweet) has been on the market.” He estimates annual sales of Sweet’n Low at $70 million.

After the introduction of Equal, Sweet’n Low surveyed its customers to find out how they felt about the new competitor. The surveys found that customers still preferred the taste of Sweet’n Low, Pedone said.

Today, the $5 million in Sweet’n Low television and print advertising--compared to the $25 million for Equal--is aimed at those loyal customers. How does the company deal with the cancer concerns? “We don’t deal with it,” Pedone said. “I think it’s become less of a worry to people.”

Sweet’n Low has also benefited from its relatively low price, which is generally about half as much as Equal. “Economics certainly plays a factor in our success,” Eisenstadt said.

In addition, Cumberland has branched into other diet fields. It is introducing a cholesterol- and fat-free butter substitute called Butter Buds.

Eisenstadt also looks forward to the introduction of new artificial sweeteners free from the cancer concerns associated with saccharin--including archrival Nutrasweet. In Canada, where the patent on Nutrasweet has expired, a Sweet’n Low licensee is using the artificial sweetener instead of saccharin in a version of the product.

In the United States, the patent on Nutrasweet expires in 1991, and at that time Cumberland will decide whether to use the sweetener in Sweet’n Low, Eisenstadt says.

“These will give us that many more tools to work with,” Eisenstadt said.

Lottery Turns to Soviet Film to Draw Attention

Chances are the 1945 Soviet film “Ivan the Terrible” is not playing at a theater near you and copies are usually scarce at the neighborhood video store. But thanks to the California Lottery, the film has a three-week run on television as a commercial.

The lottery decided to use clips from the film after the ongoing Hollywood writer’s strike prevented the use of live actors in a commercial to promote a current instant-win game.

“We know that if we don’t advertise our product, sales go down dramatically,” said Martha Baker, a California Lottery marketing manager. “We also did not want to go against the strike--many of our players are union people.”

So, the lottery’s ad agency used clips from “Ivan the Terrible” with nonsensical English language subtitles instead. The clips feature Ivan the Terrible’s Court Jester or Joker, whose image is used on the lottery tickets.

Besides selling lottery tickets, the commercial may prove a shot in the arm for the Soviet cinema. “One lady called me this morning to find out where she could buy the whole film,” Baker said.

Jostens Aims for Sales Among Latinos, Asians

Jostens Inc., the nation’s largest maker of school class rings, will spend $500,000 to boost sales of its rings among Latino and Asian high school students in California. But the campaign won’t be aimed at students--it will be targeted at their parents.

Many Latino and Asian parents who attended school outside the United States probably “did not likely purchase a ring in their home country,” said Charles Walsh, senior account executive at Bermudez Associates, a Los Angeles ad firm that specializes in the Latino market. As a result, the Jostens campaign must instill the tradition of purchasing a class ring among Latinos and Asians, he said.

Saatchi & Saatchi Buys L.A. Consulting Firm

The growing British marketing and advertising firm Saatchi & Saatchi has snapped up a Los Angeles real estate consulting firm.

Corporate Planners & Coordinators advises corporations on real estate and office space matters, says President Nicholas Costa, 55, who founded the firm in 1971. For example, the firm will help a company decide if it’s worth extending a current lease or moving.

Costa, who will remain president, and three other partners will receive $11 million up front from Saatchi. However, depending on the firm’s future financial performance, the partners stand to receive up to $42 million.

Saatchi, which has recently been acquiring consulting firms, plans to expand the firm nationally and internationally, says Costa, whose firm currently has branch offices in New York, Houston and Denver. The firm posted sales of of $8.2 million during its last fiscal year.

Westside Will Be Focus of Angeles Magazine

The people at California magazine have decided to target the Westside of Los Angeles. Angeles, a monthly magazine, will debut in August and will feature articles on Westside personalities and homes. Joanne Jaffe, former editorial director of Architectural Digest, will serve as editor of Angeles.

The magazine is expected to begin with a circulation of 75,000 in posh Westside communities stretching from West Hollywood to Santa Monica. Angeles will also feature buying guides on art, antiques, home furnishings, consumer products and services.

TOP 10 ADVERTISING AGENCY GROUPS

Income Billings Agency City ($ millions) ($ billions) Dentsu Tokyo $884.5 $6.78 Young & Rubicam New York 735.5 4.91 Saatch & Saatchi London 693.6 4.61 Baker Spielvogel Bates New York 600.7 4.07 BBDO New York 537.0 3.66 Ogilvy & Mather New York 528.6 3.66 McCann-Erickson New York 512.5 3.42 J. Walter Thompson New York 483.0 3.22 Lintas New York 417.9 2.79 Hakuhodo Tokyo 383.4 2.90

Source: Advertising Age