Stevia Corp. (OTC:STEV) is sitting on the next major evolution of the sweetener industry. Better still, it's the best-poised company to capitalize on that evolution. The introduction of a no-calorie sugar alternative that is also diabetic-friendly has been warmly-embraced, but has yet to scratch the surface of its revenue potential. Stevia Corp. has the solution and the know-how to scratch the rest of that surface.
Stevia isn't just the name of the company. Stevia is also the name of the plant from which the natural sweetener is extracted. Stevia extracts have two qualities of sweeteners that are very important to consumers. First, they're 100% natural, and second, they have no calories. This high intensity sweetener is three hundred times more potent than that of normal cane sugar, yet it has a low glycemic index, which means it's ok for diabetic patients to use.
The sweetener market is a big one too, including the alternatives to sugar, such as Splenda (sucralose), saccharine, and aspartame. Of the $80 billion sweetener market, 9% of that revenue is generated by the high-intensity sweeteners like stevia extract. And, that $7.2 billion market is growing.... fast. The World Health Organization expects stevia alone to eventually make up 20% of - $10 billion worth of - the current $50 billion sugar market.
Considering stevia sales in the U.S. have already passed sales figures for saccharine and aspartame in less than a year after its launch, the positive outlook isn't a stretch.
Stevia is Becoming the Sweetener of Choice
Much of that demand has been supported not by individual consumer purchases, but by major food institutions seeking something healthier and low-cal to make their products more marketable. Coca-Cola and PepsiCo, for instance, have been using in many of its soft drinks for the past two years. Now stevia is used in more than 6,000 food products such including beverages, packaged foods, and even medicines.
More are on the way too, according to market research. Last year, the stevia-based product count increased 200% on a global basis, with more than $800 million worth of that food being bought (more than twice the amount spent the year before on stevia-based foodstuffs). As the product continues win regulatory approval and consumer acceptance, more products and therefore more revenue are certainly in the queue. Indeed, stevia-sweetened product sales should top $2 billion this year.
Stevia Corporation at a Glance
So what does any of this have to do with STEV shareholders? Stevia Corp. is a multi-pronged organization, offering revenue-bearing services like stevia crop and farm management, as well as the production of stevia plant seedlings and agricultural chemicals.
The seedlings are grown using advanced propagation technique, but more important, they're optimized for the specific local of the farm where they'll be planted. The company will even go as far as to develop a standard operating procedure and growth regimen for the fans where the seedlings will be grown.
As for the chemical business, STEV has a wide menu of environmentally-friendly nutrition products, including microbial formulations, minerals, and plant phyto-chemicals. The all-organic solutions are more than acceptable according to modern 'sustainable farming' practices.
The heavyweight revenue source, however, is going to be its stevia farm management services, and eventually, management of its own plantations.
Stevia Corp has chosen Agro Genesis' technology as its exclusive farm management/ enhancement regimen that will be used to maximize the stevia farms it will be managing. Agro Genesis is a science-based agribusiness company that delivers an agricultural consulting and business development solutions specifically for Asian agriculture. The company's award-winning, patented 'Micro Suspension' technology and proprietary G-Farm crop production system address the pressing issues facing the agriculture industry today. The G-Farm system incorporates variety screening, crop rotation, comprehensive nutrient management and soil conservation to implement best management practices in crop production.
The target markets for the crop management service are initially going to be Vietnam and Indonesia, where STEV has contracted with farms, and has established its own nurseries and experimental fields. While Stevia Corp.'s priority for right now is Asia, it has opportunities in other Asian countries, and in the United States, as its farm-management services are not limited to specific countries, and the need for stevia extract is growing rapidly.
Further down the road, Stevia Corporation may even develop its own plantations, and perhaps even develop its own private branding. In the meantime, the already has a long-term supply contract in place with the stevia industry's leading refiner, PureCircle. That deal may eventually lead to a joint venture with PureCircle that established an extraction facility near the locale of the crops STEV is managing (thus shortening the production chain).
It's not a bad time to be thinking about expanding a stevia business either. Demand has soared, and is expected to keep soaring. Indeed, stevia production would have to triple form current levels in order to meet the projected growth of this market into the $10 billion market experts foresee. A lack of cropland will make it tough to do so, and a lack of ability to maximize the production of current stevia cropland will only underscore the limited supply. Stevia Corporation's seedlings, ag chemicals, and farm-management service will make that tripling in productivity much more feasible.
What's in it for STEV Shareholders?
The investment opportunity with STEV is not only finite, but it's attractive as well.
The company is only a $57 million company, and the stevia market could reach $7 billion to $10 billion per year within the foreseeable future. Though not bearing revenue yet, the company has already acquired two grower supply contracts, and three nursery fields in Vietnam. More are apt to be in the lineup. Assuming a very modest 10% market penetration of the lower-end $7 billion forecast, that's still $700 million worth of potential revenue for Stevia Corporation. While it's only a hypothetical scenario, it's not an off-base one.
With no other player in the market that can improve and coordinate stevia farms the way Stevia Corporation can, this startup appears to be an outstanding ground-floor opportunity.