The Global Race for Consumer Taste: Sugar vs. Stevia; PepsiCo (PEP), Coca-Cola (KO), GLG Life Tech (TSX: GLG), (GLGLF) and Pure Circle (LSE: PURE.L)
Will a Lifestyle of Health and Sustainability Win?
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New York, NY - Point Roberts, WA - April 15, 2014 (Investorideas.com Newswire) Investorideas.com staff: Investorideas.com, global news source covering leading sectors including food and beverage and LOHAS (Lifestyles of Health and Sustainability) issues an alert on the global trend of rising stevia sales.
As health concerns of too much sugar continue to make headlines, diehard sugar fans like The Coca-Cola Company ( NYSE:KO ) and PepsiCo NYSE:PEP ) continue to push international sales of sugary sodas. However, a trend towards healthier alternatives such as stevia continue to be reflected in the increased sales of stevia makers GLG Life Tech Corporation (TSX: GLG), (OTC: GLGLF) and PureCircle Limited (LSE:PURE.L).
A global battle about health and sustainability is brewing between vegans and the meat industry, and the sugar and stevia industries. According to the Global Stevia Institute, "Stevia's great tasting, zero-calorie sweetness not only can be part of a healthful diet, it can be part of a more environmentally friendly diet too.”
Companies that have built empires on sugary sodas and fast food burgers are making concessions with stevia drinks and salads but they are still pushing the original, less healthy products that made their brands iconic. However, the numbers are starting to show what trend consumers really want.
According to Zenith International, over the past six years, stevia has enjoyed a rapid rise in popularity - on a global scale. A new study by leading food and drink consultancy Zenith estimates that worldwide sales of stevia reached 4,100 tonnes in 2013, a 6.5% increase on 2012, taking its overall market value to $304 million US.
"As rising levels of obesity and diabetes continue to generate headlines, there has never been so much emphasis on reducing our caloric intake as well as consuming healthier foods and beverages,” commented Zenith Senior Market Intelligence Consultant Davide Deiana. "After persistent efforts by key producers, which led to widespread legislative approval, stevia is finally being recognised for its natural, zero-calorie, sweetening properties.”
GLG Life Tech Corporation (TSX: GLG), (OTC: GLGLF) ( www.glglifetech.com) a producer of high quality stevia and other natural sweeteners, reported earnings on March 31 st to shareholders, noting it i ncreased the percentage of international sales for the twelve months ending December 31, 2013 to 30% from approximately 7% in 2012. According to the company, this change in sales strategy towards higher purity stevia extracts to international customers was an important driver towards improved gross margins, as in 2012, a number of the lower purity sales were sold below cost.
The Company notes it has already received purchase orders as of March 31st that exceeds 50% of 2013's full year revenues from international customers ($4.8 million in fiscal 2013).
The Company also reported the success of its non-GMO hybrid breeding program, which has resulted in a number of new strains .The Company is of the view that the consumer's preference will always be "naturally sourced from a stevia leaf" glycosides compared to those originating from a different process such as fermentation.
According to The Beverage Digest Newsletter, carbonated soft-drink sales hit their lowest point since 1995, with 2013 marking the ninth consecutive year of declining soda sales. Also according to Beverage Digest, "while Coca-Cola ( NYSE:KO ) improved its market share by 0.4% to 42.4%, the flagship brand Diet Coke reported a 6.8% fall in volumes. Consumers have been shifting to natural and healthier beverages with less sugar and calorie content due to the health risks associated with sugary drinks. The diet counterparts have fared even worse, with the artificial sweetener aspartame being criticized for causing sugar cravings, dehydration, weight gain and even heart diseases. Health and wellness concerns have further caused a 7% decline in diet soda consumption in the domestic.”
In late January of this year, PureCircle Limited (LSE:PURE.L) announced its 2013 Calorie Footprint. The global producer of high-purity stevia ingredients reported it has supplied enough stevia sweeteners to enable the food and beverage industry to remove 1.8 trillion calories from global diets. "In our 2013 fiscal year, we supplied enough stevia to enable a reduction of 500 billion calories from global diets,” explained Ajay Chandran, director of corporate sustainability.
"Since we started monitoring in 2006, we've supplied enough stevia to help the industry achieve a reduction of approximately two trillion calories in food and beverage products. The pace at which we're helping the food and beverage industry moderate calories is increasing at a significantly faster rate than we anticipated. As a result, we now have the capability to help the food and beverage industry reduce up to two trillion calories per year. This positions us well to achieve our cumulative calorie footprint reduction goal by 2020.”
PepsiCo ( NYSE:PEP ) has introduced stevia into some of its brands including Pepsi Next but apparently wants to stick by its sugars. It has announced plans for this summer to launch "Made with Real Sugar' offerings - "Pepsi Made with Real Sugar," "Pepsi Vanilla Made with Real Sugar," and "Pepsi Wild Cherry Made with Real Sugar." Apparently Pepsi confirmed the planned roll-out to USA TODAY, but did not comment further.
The World Health Organisation (WHO) has joined the battle against sugar consumption globally saying, "There is increasing concern that consumption of free sugars, particularly in the form of sugar-sweetened beverages, may result in both reduced intake of foods containing more nutritionally adequate calories and an increase in total caloric intake, leading to an unhealthy diet, weight gain and increased risk of non-communicable diseases (NCDs)."
So are the iconic brands really getting the message or will they continue to see their sales fall while new competition appeals to what consumer trends are dictating ? … Only time will tell.
Article source: http://www.trefis.com/stock/ko/articles/234183/needs-push-apr-15-diet-soda-slump-to-lower-coca-colas-volumes-still-beverages-could-offset-this-decline/2014-04-11?from=artPopin
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