GLG finalizes Indian and Middle Eastern stevia agreement

05-Oct-2010 - Last updated on 06-Oct-2010 at 15:32 GMT

Stevia supplier GLG Life Tech has finalized a joint venture with Global Agrisystem Private Limited (Global Agri), a Katra Group company, to commercialize its stevia extracts in India and the Middle East, the company has said.

The partnership is the latest of a string of agreements that the company has signed over the past few months. In September, GLG signed an exclusive supply agreement with Fengyang Xiaogangcun Yongkang Foods High Tech Co. Ltd. (FXY) for distribution of its stevia products in China; in July, it signed a five-year deal with Sugar Australia for distribution and marketing of its stevia-derived sweeteners for the Australian and New Zealand food and beverage markets; in June, a binding memorandum of understanding with Mexico’s largest sugar producer Group Azucarero Mexico (GAM); and in April, a definitive agreement with Essentia Stevia for distribution of its stevia-derived sweeteners in 18 South American countries.

For several of these partnerships, GLG Life Tech has looked to position the sweetener as a means to cut sugar consumption, and its latest joint venture is no exception.

Chairman of Global Agri Gokul Patnaik said: “India offers a natural market for stevia, given the propensity for sugar consumption in India and the accompanying concerns related to its supply and consumption pattern. Indian agriculture will greatly benefit from adding a newer range of products such as stevia, which provides sustained value both to the farmer and the consumer at large.”

Sugar blends

Increasingly, much of the stevia industry has distanced itself from the idea that the zero-calorie, plant-derived sweeteners should entirely replace either sugar or artificial sweeteners, although in some applications this is possible. Instead, several major stevia suppliers have aligned themselves with the sugar industry – a situation that holds appeal for both. Combinations of sugar and stevia can reduce calories by up to 50 percent while retaining much of the functionality of sugar and a more sucrose-like flavor, and such blends open a new reduced-calorie market for the sugar industry.

In India, consumption of sugar is expected to increase with growing wealth and improved domestic supply, but GLG said that concerns over increasing obesity rates have created “a compelling market proposition for the introduction of stevia as an alternative sweetener.”

GLG chairman and CEO Dr. Luke Zhang said that Global Agri and Katra Group’s experience in agriculture and marketing of food and beverage products in India and the Middle East makes it a strong partner for the company’s expansion in the region.

“India has a large population with health challenges that include diabetes and obesity and we believe that stevia will be an important healthy sweetener option for this market,” Zhang said. “GLG is looking forward to a successful partnership with Katra and Global Agri for many years of continued development of these important markets."

The company said that the agreement includes a five-year distribution deal, with a further five-year deal possible depending on certain conditions for Middle Eastern supply; marketing of the full range of GLG stevia extracts in the region; and an initial purchase commitment for the Middle East market of about $1.7 million, for delivery within the 2010 fiscal year.