Investing In Stevia's Huge Potential

|
Includes: KO, PEP, STEV
by: Bruce Vanderveen

"Some Cereals Have More Sugar Than a Twinkie" headlined the St. Petersburg Times last Friday. Indeed, added sugar is omnipresent in most processed foods and drinks. Why? It's simple: we like it!

Why We Crave Sugar (Even Though It's Not Good For Us)

The craving for sweets probably originated over thousands of years. The best way the human body could get Vitamin C and other nutrients was from "sweet" fruit. While fruit does contain sugar, amounts are small, and unlike soda, it is difficult to consume large quantities. Imagine you are given an unlimited amount of apples. If hungry, how many would you eat? Probably not many - even if you like apples.

The High Fructose Corn Syrup (HFCS) Controversy

Many blame HFCS consumption for large increases in obesity and diabetes in the U.S. over the last 40 years. I graduated from high school in 1967 - shortly before HFCS was introduced into the U.S. market. Looking through my old yearbook I find hardly anyone overweight. Obviously, something has gone terribly wrong. Although consumption has fallen somewhat in recent years, HFCS is still almost half of all added sugar in the U.S. diet. Gallup now finds 63% of American adults are overweight or obese.

The Corn Refiners Association vehemently denies HFCS is worse than natural sugar. Yet, former Princeton University professor Bart Hoebel, a specialist in sugar addiction and obesity, notes:

When rats are drinking high-fructose corn syrup at levels well below those in soda pop, they're becoming obese -- every single one, across the board. Even when rats are fed a high-fat diet, you don't see this.

Whether it's HFCS or just plain sugar, we eat and drink too much of the stuff, and it's making us sick.

Will Stevia Make Our Beverages and Foods Healthier?

Our cravings for sugar are unlikely to go away. Perhaps, however, consumers will recognize the benefits of satisfying this craving with a healthier alternative - an alternative like stevia.

Stevia is a zero calorie, all natural sweetener, derived from Stevia rebaudiana leaves. Certain extracts from stevia leaves are now FDA approved and marketed by companies such as privately held Cargill, Coca-Cola (NYSE:KO), and Pepsi (NYSE:PEP). Truvia is a stevia based sugar substitute developed jointly by Cargill and Pepsi. Stevia is used in flavored water, juice, baked goods, and as a table top sugar substitute. It can be blended with sugar to produce an "all natural" but reduced caloric product.

Coca-Cola is now marketing stevia sweeteners in Brazil and the European Union. It remains to be seen if stevia products will make inroads into mainstream beverage and food markets.

Investing Directly in Stevia

PureCircle (PURE.L - on the London exchange) is the world's leading producer of stevia ingredients. The company's website claims it's the "driving force behind moving stevia from niche to mainstream global acceptance." PureCircle supplies both Coca-Cola and Pepsi with Stevia products. In February 2010 PureCircle launched a joint venture with Imperial Sugar (NASDAQ:IPSU) to market sugar/stevia sweetener blends.

Stevia Corporation (OTCPK:STEV) is a farm management company expressly created to grow and market plants (Stevia rabaudiana) to produce stevia. The company has contracted with growers in Vietnam and Indonesia and has a supply contract in place with PureCircle. As far as I can tell the company is still in the organizational stage and has no revenue yet.

The potential for stevia is huge. If the epidemic of obesity and diabetes finally convinces consumers to limit sugar intake stevia may be the answer that keeps everyone happy. I will be convinced when they successfully put stevia in chocolate.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. Investments in PureCircle and Stevia Corporation should be considered as highly speculative.