By George Budwell
Stevia is a natural sweetener extracted from the leaves of the South and Central American plant Stevia rebaudiana Bertoni, and has been used as a sugar substitute in Brazil and Japan for more than 20 years. Since its approval as a food additive in 2008 by the FDA, stevia has also become popular in the United States, and is distributed under the brand names Truvia (Cargill & The Coca-Cola Company NYSE:KO) and PureVia (PepsiCo Inc., NYSE:PEP). Last year alone, global sales of stevia extract exceeded $130 million according to Zenith International, and the stevia market is projected to top $1 B in sales over the next two years.
Despite the impressive growth rate of stevia as a sugar substitute already, there are plenty of reasons to believe that stevia will become the market leader in short order. Chief amongst these reasons are the potential health benefits of using stevia extract on a daily basis.
The overarching problem for most, if not all, commercial sugar substitutes is that they are plagued by health concerns. Saccharin, for example, was banned in Canada in 1977 after studies raised possible links to cancer. Aspartame, a widely used sugar substitute, is now known to contain three metabolites (aspartate, phenylalanine, and methanol) that act as powerful neurotoxins when ingested in high concentrations.
The market share leader, Splenda, has not been immune from adverse health concerns either. Specifically, Splenda has been increasingly linked to conditions such as dizziness, cramping, and rashes. And these side effects associated with Splenda are not particularly surprising given that its chief compound, sucralose, was originally designed as an insecticide.
In this respect, stevia appears to be in a class by itself. Clinical studies in rats have shown that stevia extract reduces blood pressure, diuresis, and natriuresis, without any adverse effects. Moreover, in the 20 plus years of use as a natural sweetener, stevia extract has not been linked to any known adverse effects in humans, showing its tolerability during long-term use.
Most impressively, however, is the growing body of clinical research showing that stevia extract is a potent natural remedy for high blood pressure. The most surprising finding among these studies is that patients have a significantly higher level of compliance when taking stevia extract compared to traditional pharmaceuticals, which some researchers have attributed to its affordability coupled to the perception that stevia is a “natural” product. In a nutshell, soft drinks sweetened with stevia could eventually be marketed to diabetics and patients suffering from heart disease in a safe and responsible manner. That’s a claim no other sugar substitute can make, which is why I believe stevia is destined to become the market share leader.
Investors looking to take advantage of the rapidly growing demand for stevia might want to consider the microcap company, Stevia First Corporation (OTCMTKS:STVF). Stevia First Corporation (STVF) focuses on stevia agronomics–from plant breeding to good agricultural practices to post harvest techniques, and the company is taking tremendous strides towards becoming a leader in this niche market. Specifically, on May 7th the company announced that it is progressing towards the commercialization of its own stevia-based sweetener, and have achieved pilot scale functionability of its fermentation-based extraction methods. The company also recently signed a non-disclosure agreement with GRAS to expedite the approval of its fermentation-based stevia extracts that increases the yield of the more desirable Reb D and Reb X glycosides. Namely, these two glycosides have more desirable taste profiles compared to the slightly bitter Reb A used in the current commercial formulations of the extract.
In sum, the stevia market looks to continue to grow at an exponential rate over the next few years, and the added latent health benefits of ingesting stevia extracts should only help to bolster this trend. Given Stevia First Corporation’s strong outlook to become an industry leader, the company’s market cap (approximately $18 M) relative to the overall market opportunity (potentially over a billion in annual sales) represents an outstanding risk to reward profile, in my opinion. Even so, the company is currently in the early stages of its development, and will therefore likely have to rely on some form of dilutive financing in the short-term. Indeed, secondary offerings are without question the primary risk for early investors in this company going forward. Nonetheless, the current imbalance between the supply and demand for high quality stevia extracts bodes well for the growth prospects of Stevia First Corporation (STVF).