Zero-calorie, natural sweetener
Stevia is a widely approved natural sweetener derived from the leafy green plant Stevia rebaudiana. Stevia is rapidly gaining market traction because it is a natural, zero-calorie food and beverage sweetener that is suitable for the whole family including diabetics. Currently, only farm-derived Stevia is available. The Stevia plant is widely grown around the world today.
The Global sweetener market
Based on sales volume data published in 2011 by the industry research group LMC International and data published by other sources, Evolva estimates that total sales of all sweeteners amount to approximately USD 60 billion p.a., with sugar representing an estimated 85% of total sales. Stevia-based sweeteners are believed to be the fastest-growing segment because of increasing consumer demand for products that are low-carbohydrate and low-sugar. Steviol glycosides can already be found in hundreds of food and beverage products, including carbonated soft drinks, teas, juices, flavoured milks, yogurts, baked goods, cereals, salad dressings, confectionery, and as a table-top sweetener.
A Mintel and Leatherhead Food Research report estimates that by the end of 2013, the global market for intense sweeteners in the manufacture of food and beverage products had a value of USD 1.27 billion. By 2017, global market value is expected to increase to around USD 1.4 billion. The report estimates stevia sales at USD 110 million in 2013, and predicts it will grow to USD 275 million by 2017.
A major area of interest for stevia is in carbonated beverages. Such drinks make up around 40% of the US beverage market. 2012 saw the launch of a stevia- and sugar-sweetened, 30%-reduced-calorie version of Pepsi Next in Australia and in 2013 Coca-Cola Life was introduced in Argentina, achieving a 60% calorie reduction.
Based on data published in 2012 by Mirabaud Securities LLP and in 2011 by LMC International, as well as other third-party sources and its own market forecasts, Evolva estimates that the total addressable market for its stevia product (i.e. the size of the total market in which its product will compete) will amount to approximately USD 4 billion in 2020.
Evolva’s Value Proposition
The only commercially available steviol glycosides today are derived from stevia plants grown and harvested in an agricultural setting. Evolva believes it is the first company to successfully adapt fermentation technology to produce a range of steviol glycosides, using sustainable, low-cost carbohydrate feedstocks, which can be sourced from virtually anywhere on the planet.
Like most things in nature, the science behind Stevia’s taste and potency is complex. The sweetness of the Stevia plant is due to the production of sweet constituents in its leaves. These constituents, also known as steviol glycosides, are up to 300 times the sweetness of sugar—without any calories. There are at least ten known steviol glycosides in the Stevia leaf with Stevioside and Rebaudioside A being the most prevalent.
Evolva has succeeded in making the key individual components of the sweetener Stevia via fermentation in yeast, using low-cost plant sugars as starting material. The availability of pure, fermentation-derived Stevia components has several key advantages for food and beverage manufacturers.
It will allow better-tasting steviol glycoside-based products (the best-tasting stevia molecules are not currently commercially available due to their very low concentrations in the plant).
It will allow steviol glycosides to become more affordable products for companies and consumers alike.
It will allow steviol glycosides to be produced using a simplified and scalable supply chain.
Fermentation allows the large-scale production of all the different steviol glycosides, opening up the possibility of new food and beverage products that were previously not possible due to limitations of taste and cost. Based on these advantages, Evolva believes that fermentation-derived steviol glycosides have the potential to accelerate the adoption of steviol glycosides and significantly expand the market for such sweeteners.
In 2009, Evolva entered an agreement with Abunda regarding the discovery and development of food ingredients, with the agreement being expanded in 2010. One part of this collaboration was focused on producing the key constituents of stevia via fermentation in yeast. Numerous patent applications have been filed around the approach.
The programme has progressed well since inception. In July 2011, we made the strategic decision to acquire Abunda to gain full ownership of the firm’s Stevia and other nutritional ingredient programs. Stevia research is primarily conducted at Evolva’s Copenhagen site, with development activities in the USA.
On 6 March 2013, we entered into an agreement with Cargill to jointly develop and commercialise fermentation-derived steviol glycosides. Cargill made a CHF 4.5 million equity investment in Evolva and in addition Evolva stands to receive up to USD 7.5 million in milestone payments. While Cargill will be responsible for the commercialisation, Evolva has the right to a participation of up to 45% in the final business. If Evolva decides not to exercise this option it will receive royalty payments from global sales of the co-developed steviol glycoside products; these royalties will scale from mid-single digit to low double-digit percentages as a function of sales volume and other parameters.
Cargill brings to the collaboration its vast manufacturing and commercial expertise in bulk sweeteners, food ingredients, and of course stevia sweeteners. Cargill is a global market leader in the stevia-based sweetener category with consumer products and as an ingredient, which can be found in a variety of branded food products and beverages sold in the U.S., Europe, Mexico, and South America.
Pilot-scale fermentation of the product started towards the end of 2013. Based on current plans and expectations, the first products are expected to be available for launch in 2015/2016.