PureCircle plans flotation to fund Reb-A sweetener supply

By Jess Halliday

- Last updated on GMT

Related tags: Stevia

Malaysia-based PureCircle is to float on London's AIM in a bid to
raise US$50m, which it will use to expand Rebaudioside-A sweetener
production from Stevia and secure an advantage in anticipation of
an explosion in demand.

Rebaudiodise-A (Reb-A) is a zero-calorie sweetener extracted from the Stevia rebaudiania bertoni​ plant. Its natural origin, zero-calorie content and low-glycaemic index are very much in line with current health trends in the food industry. Reb-A is being regarded as the next big thing in high intensity sweeteners, since in May Coco-Cola and Cargill announced that they are launching a new calorie-free natural sweetener called Rebiana - that is, high purity Reb-A. Although Reb-A can already be used as a sweetener in some South East Asian, North Asian and South American countries, the Coca-Cola-Cargill launch is currently pending regulatory approval in the major market, the US, for its use in foods (at present it is approved only as a dietary supplement). The US green-light, together with Australia and New Zealand and Europe, will enable Rebiana to hit the market with a splash - and initial contracts could call for the speedy supply of more than 2000 metric tonnes. PureCircle, which holds the proprietary process technology for the extraction of high-purity Reb-A and believes itself to be the world's only commercial supplier - a position that gives it an obvious advantage. To make sure it keeps this advantage, the company is planning to use funds raised by its initial public offering to expand production capacity three-fold over the next two years. At present, global annual consumption of sugar and all other sweeteners is estimated to be in the region of 150m tonnes. PureCircle's Reb-A accounts for just 0.2 per cent of this volume (0.3m tonnes). The company owns a 55 per cent stake in a subsidiary called Ganzhou Julong, which is involved in large-scale stevia plantation and production of crude extracts. PureCircle believes its capacity for crude stevia extraction is the largest in the world - currently 1000 tonnes of crude extract are produced per annum. By the end of next year, however, it expects to increase this to 3000 tonnes per annum. "Floating on the AIM will enable PureCircle to access capital to maintain our crucial first mover advantage in what we believe will be a huge market for all natural, zero-calories HIS,"​ said PureCircle managing director Magemet Malsagov. "We are extremely excited about the prospects for our business as we look to expand our production capacity to address the rapidly increasing demand from some of the world's largest food and beverage companies." ​ The company's production is currently based in Malaysia and China, where it operates a vertically integrated supply chain from plantation, primary production through to final product distribution. This control of the supply chain is said to be crucial in ensuring supply, cost and quality, and in meeting individual specifications of client companies. PureCircle is currently supplying the sweetener to Cargill under a contract that expires in mid-2008. A new supply ingredient to take the relationship beyond next year is said to be in the final stage of discussion - and carved into this will be a non-exclusivity clause that will permit the company to supply other companies too.

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