Further evidence that steviol glycoside Reb A is no longer the only game in town when it comes to delivering high intensity natural sweetness has emerged in PureCircle’s full-year results, which show rebaudioside A accounted for just 40% of revenues in 2012 vs 90% in 2009.
PureCircle, which has seen overall sales slide as it waits for beverage customers to wind down inventories, nevertheless saw strong growth in sales of new blends of steviol glycosides (Alpha and SG95) along with new natural flavors, said chairman Paul Selway-Swift.
He added: “Volume increases were led by sales of the portfolio of proprietary new ingredients introduced over the past eighteen months… Reb A contributed just 40% of revenues in 2012. This portfolio of ingredients will help the Group have a well balanced mix of sales going forward.
“Our recent results have been impacted by the tough decisions we made in 2011 to slowdown Reb A production temporarily to better align inventories to current market demand.
“Results should improve as the evident growth in market usage of our products starts to translate into higher sales.”
We’ve made huge progress, it’s just not showing up in our figures yet…
Speaking as PureCircle posted a 15% drop in fiscal 2012 revenues to $45.4m and a $15.2m operating loss, Selway-Swift said: “Sales levels remained sub-scale and did not reflect the strong growth in end market usage of high purity stevia.”
The sales dip was “principally due to the continued impact of inventory at beverage global key accounts” he added, while 2012 was the “first year in the company's history with no pre-committed ‘Take or Pay’ sales [committed volumes via contract, which topped $54m in 2009, $29m in 2010 and $22m in 2011].
“Our non-Take or Pay high purity sales have increased from $6m in 2010 to $39m in 2012.”
Large scale adoption will be apparent during calendar years 2013 and 2014
Meanwhile, encouraging growth in usage suggested “large scale adoption will be apparent during calendar years 2013 and 2014”, he predicted, citing Datamonitor figures.
“Up to August 2012 food and beverage product launches with high purity stevia are running at a rate of 1,000 new launches for calendar 2012, a 65% increase over 2011.”
Although carbonated soft drinks are the biggest market for stevia (with notable recent launches including the reformulation of Sprite in France in April 2012 and Fanta in China in February 2012), there had also been new launches in confectionery, ketchups and dairy, he said.
And while the USA still accounts for 40% of sales, sales to Europe, China, Mexico and Brazil were growing much faster, he said.
Meanwhile, regulatory approvals from India, Canada, Thailand, South Africa and Canada - expected before the end of June 2013 - would “provide a further 1.6bn new consumers with access to high purity stevia”.
Sales will accelerate when the beverage makers replenish inventories
Chief executive Magomet Malsagov said beverage orders remained “inconsistent”, adding: “We do not expect to see material beverage global key account sales as they continue to wind down inventories.
“Sales will accelerate further when the beverage global key accounts need to replenish their inventories, which itself is linked to the timing and scale of their carbonated soft drink launches.”
But longer-term, the prospects for PureCircle were very promising, he said, noting that higher prices and tightening supplies of sugar and high fructose corn syrup “can only help the future development of mass volume demand” for its products.
Investing for the long-term
Investing in new product development, and shoring up/diversifying supplies by growing stevia in Kenya, Paraguay and USA as well as China would pay off in the long-run, he said.
“Longer term we remain confident that stevia will emerge as a major global industry. Our business model is designed for a mass volume natural sweetener market.
“The investments have been made and we are ready to prosper as sales volumes increase. Reviewing the food and beverage products launched into market that are using high purity stevia, it is clear that PureCircle and our partners continue to secure the major share of market.”