3 Companies with promising growth potential from Stevia

Until recently, the natural sweetener stevia was found only on the shelves of health stores but has recently moved into the limelight. Beverage giants Coca-Cola (KO) and PepsiCo (PEP), in their quest for a healthier, non-artificial sweetener for their beverage lines, have started to use stevia. This plant is part of the sunflower family, and originally native to Paraguay. It has been used as a sweetener there for centuries. The sweetener, which has been approved by the FDA, is a refined preparation of steviol glycosides extracted from the plant's leaves. One of these extracts, Rebaudioside A (Reb A), is 100-300 (number varies by source) times sweeter than sugar. The global sweetener market is estimated at around $56 billion, of which 80% is caloric sweeteners such as sugar and high fructose corn syrup, while the other 20% is comprised of non-caloric sweeteners, dominated by artificial sweeteners such as aspartame and Splenda (sucralose). The World Health Organization believes that natural sweeteners could capture up to 20% of this market.

Coca-Cola and Cargill have filed 24 U.S. patents relating to stevia, and the FDA has approved Truvia, a Reb A sweetener developed jointly by the two companies. Coca-Cola has added Truvia to over 30 products globally, including Diet Coke in Japan where stevia has roughly 40% of the sweetener market. Cargill has marketed Truvia to consumers in individual packets, and is now the number two sweetener behind Splenda. Not to be left behind, PepsiCo has developed a competing stevia-based product, PureVia, jointly with Chicago based Merisant's subsidiary, The Whole Earth Sweetener Company. PureVia can now be found in such beverages as zero calorie beverage Sobe Lifewater, and Trop50, Tropicana's fruit juice beverage with 50% less sugar and calories than regular orange juice. PureVia is also available in grocery stores, competing with Truvia for the sugar substitute market.

Clearly there is an enormous market potential for stevia-based sweeteners, and any food that uses a sweetener should be considered to have growth potential for the product. However, neither Coca-Cola nor Pepsi or their partners actually grow stevia themselves. For the stevia market to develop in an organized fashion, reliable suppliers are required who can produce quality plants with high Reb A content consistently. At this time, most of the available stevia has been grown in places like South America, China and Vietnam. The diversification of growth conditions and differing cultivars of stevia plants grown has led to problems with costs, consistency in taste, and reliable supply, particularly in a broad market such as the U.S.

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