Tate & Lyle Footsie comeback soured

SUGAR giant Tate & Lyle, which is expected to make a triumphant return to Britain's top 100 companies index this week, is unable to keep up with demand for its zerocalorie sweetener in the US and has suspended new sales.

The company is suffering shortages of sucralose, the key ingredient of the sweetener which it sells as Splenda.

Europe's largest sugar cane refiner and whose Silvertown refinery in East London makes about 40% of Britain's sugar, Tate says it will not be selling sucralose to any new food and drinks companies in the US until it doubles the capacity of its Alabama plant - and that is not scheduled before 2006. Such is the demand that Tate is also building a £97m plant in Singapore, to be completed by January 2007.

Sales of sucralose are credited as a major driver of Tate's latest six month profits to £130m, up from up from £110m last year.

The share price, at 495p, is up more than 80% from its year low.

Splenda has also benefited from the low-carb diet fad and is specifically recommended by the influential Atkins company, mainly because of its ability to withstand the high heat of cooking without breaking down or losing flavour.

Unlike its competitors, it is also said to have no after-taste.

Soft-drinks giants such as Pepsi, cereal maker General Mills and Unilever use Splenda in their products - respectively, Pepsi's Edge low-carb drink, reducedsugar Trix cereal and Ben & Jerry's Carb Karma ice cream.

The FTSE steering committee meets on Wednesday to decide on changes to the 100 and, with a market capitalisation now in excess of £2.39bn, Tate is favourite for promotion.

A company automatically joins the blue-chip FTSE 100 if it is one of Britain's 90 biggest stocks by market value when FTSE Group reviews the index every three months.

Index members that fall to 111th place or lower are relegated to the FTSE 250.

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