Next generation of stevia products to fuel growth
The artificial sweetener industry looks set to experience a number of developments over the next few years, as companies look to bring newer, more innovative products to market.
The artificial sweetener industry looks set to experience a number of interesting developments over the next few years, as companies look to bring newer, more innovative products to market.
Both Coca-Cola (KO) and PepsiCo (PEP) have witnessed sharp drops in their flagship diet cola sales in the past year. As consumer awareness of the dangers to their metabolism sugar and aspartame grows, they are increasingly removing them from their diet.
To put the growth of stevia in perspective, new product launches in 2013 are up more than 400% in the past 5 years, with the lion’s share of that occurring since 2011. In 2012 31% of all product launches were of the non-alcoholic beverage variety.
Coke has been at the vanguard of pushing stevia into the market with its highly successful Truvia, developed in conjunction with Cargill, and its investment, through Cargill into Swiss firm Evolva, who is working on novel production methods. Pepsi has a similar product in PureVia. Both companies, however, are committed to stevia as the successor to aspartame.
Coke’s next step is the introduction of Reb D, a next generation artificial sweetener developed in conjunction with PureCircle, and described by the company itself as having "one of the best sweetness profiles of any steviol glycoside from the stevia leaf." Reb D was recently granted GRAS -- Generally Regarded As Safe -- approval by the FDA. Coke and PureCircle have also developed Reb X, for which they are currently seeking GRAS approval in the US.
Another company, which lies at the forefront of this innovation, would be Stevia First Corp (STVF), which looks to further build on the developments of Reb D and Reb X, through using unique fermentation technologies to convert steviol glycosides derived from by-products, into commercially viable sweeteners. Such innovation is crucial to meeting the growing demand for artificial sweetener as traditional harvesting and extraction methods are expensive and rife with quality control issues.
In addition to its focus on producing a more sugar-like next generation Reb D and Reb X stevia product as part of its "Beyond Reb A" research program, Stevia First is also looking to launch it’s own Reb A product in 2014, with its fermentation based process expected to produce a more natural tasting product.
The company also recently announced the launch of a new initiative focused on developing Sucrolette, a sugar reduction product containing stevia, that’s designed to help individuals completely remove sugar from their diet. Stevia First recently appointed noted food expert and health counselor Alexandra Jamieson as Product Development Advisor, to help move development of Sucrolette along in preparation for commercial release later this year.
The market for artificial sweeteners is growing and is estimated by the WHO to comprise 30% of the $58 billion sweetener market by the end of the decade. With several factors in play and the introduction of Coke Life in South America and Pepsi Next in Australia -- which brought in $100 million in revenue in its first year -- innovative product development by companies like Stevia First will be key to fully unlocking this potential.
As a startup, however, there are major risks of Coke and Pepsi simply leap-frogging them by outspending them.
Coke, in particular, seems well placed with its current supply chain based on Truvia but also its willingness to invest in fundamental research into improving taste. Stevia First has a number of research projects from improved seeding techniques to improving growing methods which still make it an intriguing play on this sector.
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Consumers are very status conscious in Asia, Africa and other emerging-market areas. This is especially true in China.
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