Stevia First Corporation (OTC: STVF) is betting big that consumers will soon start shifting from high-calorie sugar to turn to natural, zero-calorie sweeteners.
In fact, the shift is already taking place. Major beverage companies such as Coca-Cola Co. and PepsiCo have started using stevia in their drinks to cut the calorie value by more than 30%. Do not confuse between Stevia First and stevia. The former is a company while the latter is a plant that contains several sweetening molecules.
Why Care About the Stevia Plant?
Stevia is a plant found mostly in South America and China. The natives of Paraguay have used it in raw form as a natural sweetener for centuries. Its leaves have medicinal purposes, and they contain 12 sweet-tasting compounds, commonly called steviol glycosides. Rebaudioside A compound is 300 to 400 times sweeter than sugar. It can be used as a sweetening agent and flavor enhancer in beverages, food products, and tabletop sweetener. Other sweeteners, Reb D and Reb X, that are found in small quantities, are considered the next generation of natural sweeteners.
Unlike sucralose or saccharin, stevia compounds are plant extracts so they are considered natural. In 2008, the FDA approved the commercial use of stevia extracts. That brought stevia to a large population that is health-conscious and avoids artificial sweeteners.
Stevia First’s Foray Into the Future
Stevia First founder Robert Brooke started the agricultural biotech firm to produce stevia on an industrial scale. Stevia First owns the patent on steviol synthetase, an enzyme that can boost the production of steviol glycosides without any bitter aftertaste. The company has taken the academically-proven fermentation process to pilot stage that will enhance the production of marketable steviol glycosides. Since desirable steviol glycosides, such as Reb A, Reb D, and Reb X, are found in very small quantities in the stevia leaf, mass production through the fermentation process will help meet the rising demand.
The company is also improving its farming methods, such as pelletizing the seeds, and is providing the necessary conditions to grow the originally South American plant in California. Stevia First is also studying how various growth conditions affect the production of steviol glycosides.
Major Beverage Producers Prefer Stevia
There is an ongoing movement against the use of sugar in food products and beverages as people become more health-conscious. Therefore, soft drink makers Coca-Cola Co. (NYSE: KO) and PepsiCo (NYSE: PEP) have shown interest in zero-calorie, natural sweeteners such as stevia.
In March 2013, Coca-Cola Co. started using stevia in Sprite for the British market, cutting the calorie value by 30% in the drink. Now Coke uses stevia in over 20 products around the world. PepsiCo is doing the same thing with Pepsi Next in countries like Australia. Coca-Cola Life is sweetened using a mix of sugar and stevia, and has 60% less calories than the normal Coca-Cola.
Both soft drink makers, along with other food product companies, are committed to using stevia in their products going forward. The supply of stevia sweeteners is limited. But Stevia First Corp. has the capability to produce it on a large scale using its fermentation process.
Future Growth Prospects
According to the World Health Organization, stevia will increase its share in the global alternative sweetener market to 20% or about $15.5 billion by 2016. Analysts say that if Stevia First captures even 5 to 10% of total stevia sales, that will still amount to over a billion dollars.
Two groups of people paying attention to stevia are diabetics and those suffering from obesity. They both want to cut down on sugar. Reb A sweetener extracted from the stevia leaf doesn’t stimulate a glycemic response in diabetics. In fact, the use of stevia leaves in the U.S. was actually pioneered by diabetics in 1990s, well before PepsiCo launched Pure Via.
Diabetics prefer stevia because it has zero calories and no glycemic load. Experts say people who crave for some sweetness in a tabletop sweetener or a drink without the risks would prefer stevia. It also helps prevent diabetes because caloric intake has been linked to adult-onset diabetes.
Stevia First is planning to launch a zero-calorie tabletop sweetener by the end of this year. The company has a huge growth potential as it uses its patented enzyme and fermentation process to address the rising demand for low-calorie food products and beverages.
Stevia First has a market value of about $20 million today, but the potential return for investors could be immense as it enters the large sweetener market. The high upside potential is due to Stevia First’s low valuation and rapidly growing alternative sweetener market.
Of course, with so much potential comes risk. Stevia First, which currently trades on OTC pink sheets exchange, is yet to prove itself in the market. So, I recommend you to evaluate the company and its growth potential before making a final investment decision.
What are your thoughts on Stevia First? Are sweeteners poised for growth or buyouts?
Editor’s Note: Stevia First not right for you? Read some additional great investment blogs and you might find a good pick!
Vikas is a professional financial journalist and value investor with more than four years of investing experience. Vikas spends most of his time reading investment books, writing about finance and looking for stocks that have significant growth potential.