Controversial healthcare reforms championed by US president Barack Obama could present a substantial opportunity for makers of sugar substitutes by leading to a "fat tax" on fizzy drinks, Evolution Securities has said.

The City broker said that a tax on food and drink containing "excessive" amounts of added sugar represented an obvious way for Mr Obama to help meet the $900bn bill for his shake-up, which would spread healthcare insurance to all Americans.

Cuts by the American Heart Association, a respected pressure group, to its guidelines for sugar consumption "increases the chance of a so-called fat tax", a report from Evolution analyst Alex Sloane said.

"Clearly such a tax would provide significant incentives for food and beverage producers to reduce refined sugar in their products."

Alternatives to become mainstream? 

Manufacturers of low calorie alternatives to sugar – a $50bn market - include Tate & Lyle, the sugar-to-ethanol group which has developed its Sucralose sweetener.

However, Evolution highlighted Reb-A, a sweetener refined from the stevia plant, a relative of the sunflower, of which the UK's PureCircle is the leading supplier and Cargill a major competitor.

"Developments since the summer have increased our confidence Reb-A will become a mainstream ingredient in the medium term," Mr Sloane said, also highlighting high prices for sugar, and the approval of the sweetener by French food regulators.

"Although EU-wide approval is not expected until at least autumn 2010, we expect a number of major markets, including the UK, could follow France's lead and independently fast track regulatory approval for Reb-A."

Into Canada 

Nonetheless, Evolution cut to 280p, from 340p, its target for PureCircle shares, citing "limited visibility" how much Reb-A the company will sell next year.

"The pace and scale of new product development of food and beverage customers is very hard to precisely predict," Mr Sloane said, while retaining a "buy" rating on PureCircle shares.

The note came as the sweeteners group revealed that PepsiCo, one of its customers, had expanded into Canada its range of drinks containing Reb-A.

Peter Milsted, PureCircle's sales and marketing director, said: "Consumer acceptance of stevia sweetening in purchasing behaviour is making it easier for global brands to lead the way."

PureCircle shares closed 0.5p lower at 199.5p in London.

Tate & Lyle shares ended down 4.4p at 468.6p.