By Lynda Kiernan
Leading global plant-based ingredients provider Ingredion announced that it has agreed to acquire a 75 percent controlling stake in pioneering stevia company PureCircle for an undisclosed amount.
The proposed deal, which is expected to close in the second half of this year, has been approved by the Boards of both companies, but remains subject to approval from PureCircle’s shareholders, and securing the necessary regulatory approvals.
Founded in 2002, and headquartered in Chicago, Illinois, PureCircle is a pioneer in bringing stevia to the market. The company is continually pursuing breakthrough R&D, and has 2,014 stevia-related patents to-date, with more than another 300 patents pending.
Native to South America, stevia extract is a natural, zero-calorie, high-intensity sweetener derived from the stevia leaf, that is up to 350 times sweeter than sugar. Stevia requires far less land, water, and inputs compared to sugarcane to bring the same sweetness to market.
The company works with farmers and with food and beverage companies looking to use a plant-based solution to enhance their low- and no-calorie formulations, offering stevia flavor modifiers that work in synergy with sweeteners to improve taste, mouthfeel, and calorie profiles.
A Sweet Niche
Driven by the trend toward a more healthy lifestyle and diet, consumers have recently targeted sugar as the next ingredient to reduce or eliminate from their food choices – even above other ingredients like salt that have been shown to have connections to high blood pressure, or heart disease – finds research from the 2019 FMCG Gurus Global Active Nutrition Study. From a responded field of 26,000 people, the study concluded that 44 percent say that they are either very aware, or aware of how much sugar they’ve consumed in the last 24 hours, compared to 39 percent that pay attention to fat or salt intake.
Given these concerns and consumer trends, partnered with the prevalence of diabetes and obesity, food and beverage companies are turning to alternatives like stevia that enable the reduction of sugar content and calories in products.
This has been reflected in the growth of the number of product launches that include stevia – which grew by 11 percent in 2017, and a significant 31 percent in 2018, according to data from Mintel, cited PureCircle.
Meeting Demand
To meet growing global demand, PureCircle has been rapidly expanding its supply chain capabilities. In April 2016 the company announced it was investing $200 million over the following five years to establish a supply chain in India, following that country’s approval of the ingredient. Only months later, in July 2016, the company announced the investment of another $100 million to fund the expansion across 15 key global growing regions beyond China. And in March of the following year, it completed the expansion of its stevia extract facility in Malaysia.
Ingredion has an ingredient portfolio of more than 1,000 food and beverage ingredients, however, this list doesn’t include stevia, according to Food Dive. Despite this, 36 percent of the company’s 2019 net sales were due to sugar reduction, through erythritol and other more rare sugars, such as allulose.
Over several years, the company has been following PureCircle’s growth, according to a recent statement, concluding that the business is attractive, and the company fundamentally strong and a good fit with Ingredion’s long-term strategy – which has identified sugar reduction as one of its five specialty growth platforms.
“Beyond its leadership in the market, PureCircle brings unrivaled innovation and manufacturing expertise related to stevia,” said Ingredion. “Upon completion, both companies will be able to build on these strengths and PureCircle will be able to leverage on Ingredion’s global go to market network, as well as its formulation expertise and broad product portfolio will drive both growth synergies, as well as significant savings to both companies.”
Together, both Ingredion and PureCircle will offer food and beverage customers key technologies that solve complex formulation issues. Combining PureCircle’s leadership in stevia, and Ingredion’s extensive portfolio of texturizers and functional ingredients, along with its expertise in formulation, the two will provide a full suite of complementary ingredients and solutions to enable sugar reduction across the industry.
“PureCircle is a widely recognized innovator with a proven track record for producing great-tasting, plant-based stevia. Ingredion’s successful and global go-to-market model combined with our formulation expertise will be highly complementary with PureCircle’s capabilities,” said Jim Zallie, president and CEO, Ingredion.
“We have tremendous respect for the business that PureCircle has built for nearly two decades and are excited to welcome them to the Ingredion family. We are ready to support this new phase of growth with stevia’s on-trend and sustainable solutions.”
– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.