Shares in PureCircle slipped 4% after the sweeteners group dampened hopes for the take-off of its key sugar substitute, citing the dent left by the global economic downturn in customers' product plans.

The champion of stevia plant, a relation of the sunflower from which a low-calorie sweetener can be refined, restated its confidence in the sugar substitute supporting a "major new global industry", which some analysts have estimated at $10bn.

"Growing concerns about consumer obesity, the safety of artificial sweeteners and the unpredictability of sugar prices can only support and encourage the development of the market," chief executive Magomet Malsagov said.

However, launches of food and drinks companies of products containing PureCircle's core Reb A sweetener would "inevitably be tougher to programme against the current economic backdrop".

"It will be calendar 2010 and 2011 before the real step changes in activity occur," Mr Malsagov said, adding that sales growth "may be volatile" in the meantime. 

Tate threat

The company also revealed that its revenues for the year ending June 30 had missed a target of $62m by nearly $2m, thanks to an accounting change which pushed the revenues into 2010.

Earnings were, at $11.1m, in line with forecasts made in July, and more than three times those of a year before.

PureCircle shares closed down 12p to 269p in London, despite upbeat comments from analysts including Warren Ackerman at Evolution Securities, who termed PureCircle's gross margin of 42% "impressive".

Tate & Lyle, the sugar company which has developed its own low-calorie alternative, "has underestimated the threat from PureCircle", Mr Ackerman said.

Huge potential 

Sweeteners made from stevia extracts of the stevia plant have taken about 10% of America's consumer market for so-called table top sugar substitutes since being approved by US health officials nine months ago.

Some analysts, including Mr Ackerman, estimate the total market at $10bn eventually, with Reb A a substitute for sugar as well as other low-calorie sweeteners.

"This point is poorly understood," he said.

PureCircle clients added over the year include Pepsi and Merisant.

Coke this year launched a Green Sprite drink flavoured half with sugar and half with Reb A.