The ingredient firm said it has completed the isolation of Rebaudioside A, a sweet compound derived from stevia, using a "more economical and proprietary process".
The company expects to go into industrial scale production in 2008.
Although stevia has created a whirlwind of action in recent months, the major hurdle to getting the product onto the market remains regulatory.
In the US, the Food and Drug Administration (FDA) does not approve the ingredient for use in foods and beverages due to a lack of adequate information on its safety.
It is, however, approved for use as a dietary supplement, and has so far been available in 'green' stores, where a niche sector of health-aware consumers has traditionally purchased it for its sweetener properties.
However, with major players circling around the ingredient, industry expects FDA will soon take some action.
Notably, Coca-Cola and Cargill have teamed up to market a stevia sweetener product.
Coca-Cola has filed 24 patent applications for the ingredient in the US, and media reports claim that the firms are gathering information to petition FDA for approval.
"The FDA's approval for stevia as a food additive would be welcomed by several industries that can benefit from this amazing natural sweetener," said Blue California.
Indeed, the regulatory agency recently told FoodNavigator-USA.com that "we're waiting for a petition", although it did not specify from where.
It added, however, that the current information available on stevia is insufficient to allow for its safe use as a food ingredient.
Stevia, derived from the South American plant stevia rebaudiana, is said to have up to 300 times the sweetness of sugar.
As a sweetener, stevia's taste has a slower onset and longer duration than that of sugar, although some of its extracts may have a bitter or liquorice-like aftertaste at high concentrations.
According to Blue California, its isolation process for Rebaudioside A results in a product that delivers the desired sweetness without the bitter aftertaste.
The potential use of the ingredient as a sweetener is gathering increasing attention as more and more consumers seek a more 'natural' sweetener alternative in an attempt to avoid what they consider 'artificial' products.
"Reduction in sugar is in everyone's wish list and this more economical form of Rebaudioside A, with its amazing sweetening power, will make it possible for consumers to enjoy sweet-tasting foods and drinks, while benefiting from the reduced calories this ingredient offers," said Cecilia McCollum, Blue California's executive vice president.
Although the ingredient is not approved as a food additive in the US or Europe, around a dozen other countries currently approve stevia for use in foods and beverages, including Japan, Brazil and China.
According to Mintel's Global New Products Database (GNPD), there have been 180 new food and beverage products containing stevia launched globally in the past year.
These include teas, potato snacks, dressings and beverages.
In order to seek approval for the use of stevia in foods in the US, food manufacturers have two options: they can either take the necessary steps to classify the ingredient as generally recognized as safe (GRAS), and be prepared to provide FDA with the necessary scientific backing if necessary; or they can petition FDA to approve the ingredient as a food additive.
Achieving GRAS status is a much quicker process, with FDA generally responding to GRAS notices within 180 days of reception.