Spend Matters welcomes this guest post by Monika Sosnowska of Mintec.
No doubt you’ve heard of stevia by now. The natural sweetener has been gaining in popularity over the past few years and is now seen in many products but notably, Coke Life and Pepsi True. With such big names jumping on the stevia bandwagon, let’s look at what makes this new sugar replacement such an exciting prospect.
Firstly, stevia has zero calories, zero carbohydrates and doesn’t cause dental cavities; making it perfect for diabetics and healthy conscious consumers alike. In addition to this, it is the only sweetener other than sugar that is 100% natural. Sounds like a dream come true, right? Yet stevia hasn’t replaced the calorific and demonised sugar in our food, which seems at odds to obesity being such a big problem. There are probably quite a few reasons for that. Remember that stevia was only approved as a food additive quite recently - 2008 for the US and 2011 for Europe - so it’s use and availability are still growing. However, another main factor is that stevia is an expensive choice when compared to other sweeteners.
There are two important steviol glycosides on the market, Stevioside and Rebaudioside A (Reb A). Both are extracted from the stevia plant, which is a shrub native to South America. Now though, the major producing region is China. The upward trend of prices this year is due to improved demand and lower stock levels in China. In previous years, demand expectations led to more production capacity being brought online, increasing production from 5,000 to over 20,000 tonnes between 2008 and 2011.
However, the expected demand failed to materialize quite as quickly as hoped causing overcapacity and high stocks, leading to falling prices in 2013. The supply and demand situation has become more balanced since the beginning of 2014, due to the scaling down of production by Chinese suppliers and a consequential reduction in stocks. With the continuing growth of new products containing stevia, demand has started to improve, driving prices up again.
Currently, the price of stevia extract is 3% up on January 2014. Although not a particularly large rise, the price of stevia was already high compared to other sweeteners, and these new increases could be limiting the expansion of the industry. Some major producers have recently announced that there is the possibility of producing steviol glycosides in a laboratory through a fermentation process. This new process would increase efficiency of the production, creating quicker stock replacements and could drive prices down substantially.
We’ll have to wait and see if the promise of stevia turns out to be as sweet as the taste.