NutraSweet is one of the most recognized names in the artificial sweetener world, but for years the Chicago-based company hasn't actually marketed a product under that name. That's changing, and in a big way.

NutraSweet Co., known primarily for imbuing diet pop with sugariness, this month launched its first offensive into another big sugar-substitute market: tabletop sweeteners -- the little packets that coffee and tea drinkers dump into their beverages.

It's a bold gambit. The rough-and-tumble tabletop sweetener business is already highly competitive -- just ask Chicago-based Merisant Worldwide Inc., NutraSweet's crosstown rival. Merisant is the maker of Equal, a brand that has taken a beating from Splenda, the faux sweetener trade's rising star.

Plus, NutraSweet is rolling out a unique strategy: affixing its famous brand to sweeteners made from different chemical compounds. That may not sound too radical, but sweetener brands tend to be associated with the stuff they're made of, as well as the color of their packaging.

Splenda is made from sucralose and comes in yellow packets. Equal is composed of aspartame and is packaged in blue -- and so on.

NutraSweet launched an aspartame or "blue" sweetener earlier this month and has plans for a "pink" saccharin-based product, and a "green" natural-based sweetener. A "yellow" sucralose product could follow.

"That's a whole new approach and it will be interesting to see how it works," said Marcia Mogelonsky, a food industry analyst for Mintel International Group. But she added, "The biggest challenge [NutraSweet] faces is Splenda."

When Splenda was launched eight years ago by a subsidiary of Johnson & Johnson, the business was dominated by aspartame and saccharin sweeteners. But by 2003, Splenda led the market with a 38 percent share, compared with 24 percent for Equal, according to Information Resources Inc.

Now, Splenda's share is about 61 percent, while Equal and Sweet'n Low each have about 13 percent of the market.

Splenda's rise has hurt Merisant: Its annual sales fell 16 percent between 2002 and 2006, according to a federal securities filing.

Merisant has long claimed that Splenda's success has been abetted by misleading advertising that implies Splenda is healthier and more natural than its rivals. Merisant sued Johnson & Johnson over the matter and came to a settlement -- which hasn't been disclosed -- in the spring.

The settlement was one of several big events in the sugar-substitute business this year. Another: NutraSweet got back the rights to its brand name from Merisant.

Shared history

The two companies have a shared history.

Until 2000, both were part of Monsanto Co., which landed the sweetener siblings as part of its 1985 acquisition of Skokie-based G.D. Searle & Co., where aspartame was invented. Monsanto sold its tabletop business to one private-equity group, and its aspartame production operation to another.

The former is now Merisant, the latter NutraSweet, which employs around 400 and has annual revenues of at least $100 million. Until this year the two companies continued to have strong ties.

Merisant was allowed to use the NutraSweet brand for one of its own tabletop sweeteners. In return Merisant had to buy at least 200 tons of raw material annually from NutraSweet, which has a big plant in Georgia. NutraSweet, one of the world's largest aspartame-makers, was Merisant's sole supplier.

Last year, though, Merisant opted to buy aspartame from several sources to cut costs and reduce its dependency on just one supplier.

"The benefits of the multisourcing strategy far outweighed the benefits of keeping [the NutraSweet] brand," said Scott Bartlett, Merisant's vice president of global supply.

NutraSweet was a relatively minor brand for Merisant, a "value" product priced roughly 40 percent less than Equal, Bartlett said. It had only a 1 percent share of the tabletop market last year.

As of July 1, the name formally migrated to NutraSweet Co., and its chief executive Craig Petray used the term "ecstatic" to describe how he felt. "We've been waiting for this for a while. We think it's a spectacular opportunity for us."

Petray's plans hinge on repositioning NutraSweet as a premium brand. Its taste, he said, has been improved through a new recipe. Now the company plans an ambitious marketing campaign -- Petray won't divulge its cost -- to capitalize on NutraSweet's name and its trademark swirl logo.

The name and the logo became famous in the 1980s after aspartame became the leading sweetener in diet sodas. "People still equate NutraSweet with sweeteners," Petray said. "People still know the swirl."

The new NutraSweet's packaging is dominated by a bold red swirl, a snappy departure, Petray maintains, from the "medicine cabinet" look of other sweeteners.

Food industry analysts agree the NutraSweet brand still has its luster, even though it has been used for years primarily to sell a second-tier coffee sweetener.

"The brand name is extremely strong," said Mintel's Mogelonsky. "The thing is how [NutraSweet] delivers on taste and aftertaste."

That's far from NutraSweet's only challenge. "The biggest challenge for them is that they are not a consumer-products company," said Merisant's Bartlett. "They are going to have to transform, which is not an easy thing to do."

That transformation involves creating the capacity to manufacture and distribute sweeteners, not just bulk ingredients. Petray says NutraSweet has tackled both issues through a partnership with Domino Foods, a major sugar refiner and distributor. Domino and NutraSweet will split both profits and costs stemming from the new product.

NutraSweet's first sweetener is an aspartame product currently available in some Wal-Mart Supercenters, mostly on the East Coast. A national rollout is slated for October. The company plans to launch saccharin-based and natural sweeteners next year.

The overall saccharin sweetener market "isn't really going anywhere," said Mike Richardson, a food industry analyst at the Freedonia Group. But the natural sweetener field, now only in a nascent stage, "has enormous potential," he said.

Health fears

Fears of health risks have long dogged artificial sweeteners. Hence a no-calorie sweetener made from natural ingredients -- and one that tastes good -- could prove very popular. Merisant already has a natural sweetener in the market, though like others in its niche it is considerably more expensive than artificial sweeteners.

As the price comes down, natural diet sweeteners will become more attractive to consumers, Richardson said.