GLG ramps up stevia production for Rebiana supply

The Canadian firm has raised CA$34.5m through the issue of additional company shares, in order to finance the expansion project.

The two new plants, to be located in the south of China, will start off with a capacity of 1,000 and 500 metric tons of processed stevia.

GLG's original facility, which last year expanded its capacity from 100 to 300 tons, will ramp up production to 500 tons, placing the firm's overall output at around 2,000 tons per year.

GLG told FoodNavigator-USA.com the expansion is designed to meet the supply needs of a "major multinational food and agricultural company", with which it has a five year renewable supplier agreement.

Cargill confirmed it is the partner in this agreement.

Together with Coca-Cola, the company has developed a proprietary stevia product called Rebiana, which it plans to market both in food and beverage products and as an ingredient.

The ingredient is in its final stages of development, and the two companies soon expect to start marketing it initially in countries where stevia is approved as a food additive.

They are also expected to petition for approval in other global markets, including the US and Europe.

In order to meet their supply needs, the two companies have set up a global supply chain.

GLG is one of their suppliers.

"They've been working with us on stevia sourcing for a number of years," Cargill said.

"The reason they are one of our partners is their experience in the industry, their quality assurance programs, and their knowledge of the agricultural requirements of this ingredient."

GLG operates as fully integrated a supply chain as is possible in China - as they cannot buy the stevia farms, but they will be supplying the high-quality seedlings to farmers and buying back the leaf under contract.

"We'll probably be doubling, maybe tripling the stevia growing areas over the next few years," said GLG chief operating officer David Bishop.

The company claims to control over 80 percent of the stevia production in China.

Its strength, it says, is that it has an international management team but a Chinese-Canadian chairman and president, Dr Luke Zhang, who "has good relations within China and the ability to open doors and get things done".

GLG said that beyond its five-year supply agreement for the leading multinationals, it will also have a "little leeway" to supply other customers.

It also plans to develop its own line of table-top products for sale in the US as dietary supplements (for which stevia has regulatory approval).

The company is confident that stevia will be approved in the US within the next one to two years, and in Europe within three to six years - no doubt on the back of petitioning from Coca-Cola and Cargill.

However, GLG said approval in the west will be "positive but we're not dependant on it for our sales".

Cargill confirmed that it will not wait for regulatory approval in the US and Europe to move ahead with its product.

"We will sell in the markets where regulatory approval already exists and we'll work through the paths for regulatory approval in other countries around the world, including the US," it said.

Currently, the largest markets for stevia are Japan and Korea.

In Japan the ingredient has been used to sweeten diet sodas for around 20 years.

Other markets where it is approved include China and Brazil.

According to GLG, industry members in other countries such as the Philippines and Chile are confident regulatory approval will follow after FDA approves the ingredient in the US.

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.

However, Cargill and Coca-Cola claim they have achieved the "right sweet" with their product.

GLG in 2005 listed on the CNQ in Toronto, Canada.

Last month the company's shares ceased trade on the CQN and were listed on the TSX board.