GLG taps into Chinese demand for stevia; helps plug sugar shortfall

By Caroline Scott-Thomas

- Last updated on GMT

Related tags Food China

Stevia supplier GLG Life Tech has signed an exclusive supply agreement with Fengyang Xiaogangcun Yongkang Foods High Tech Co. Ltd. (FXY) for distribution of its stevia products in China.

Sugar demand has soared in China in recent years and production has shrunk as farmers have turned to crops with higher returns, particularly maize, according to the Food and Agriculture Organization.

GLG Life Tech has said that stevia, as a domestic agricultural product, could help bridge the gap between sugar supply and demand, offering Chinese food and beverage manufacturers sugar/stevia blends as an alternative to dependence on sugar imports. The new partnership with FXY allows for direct supply of stevia and sugar/stevia blends to the Chinese Sugar Reserve, GLG said.

In addition, rising affluence has led to more westernized diets in China, as well as associated health problems such as obesity and type-2 diabetes. It is thought that a growing Chinese middle class is increasingly looking for ways to tackle these problems.

Chairman and CEO of GLG Life Tech Dr. Luke Zhang said: “This agreement represents a significant milestone for GLG to diversify our business in China. Starting last year, we have focused on the Chinese market, which is one of the fastest growing sweetener markets in world…We expect China's food industry will continue its fast growth for the next 10-20 years when the Chinese middle class population begins to increase.”

The partnership to develop and market stevia in China carries an initial term of five years, with an automatic renewal for another five. The agreement specifies that GLG will be the exclusive supplier of stevia extracts to FXY, and the company said it has received an initial purchase order of $12.6m for delivery during this fiscal year.

Dr. Zhang added that the company expects new zero and half calorie food and beverage products to be available in major Chinese distribution chains by the end of the year.

He said: “FXY will be directly supplying stevia and stevia/sugar blended products to China Sugar Reserve for the production of healthier food and beverage products in China. This is an important step in the realization of the stevia opportunity in China that we described to investors earlier this year and represents months of work that the two companies have spent developing the stevia opportunity in China."

Chairman and president of FXY Song Xiankun said: “We expect to launch over 30 beverage and food products using GLG's high quality stevia extracts before the end of this year and believe that stevia…will be warmly welcomed by Chinese consumers.

Over the last few years China has experienced a sugar shortage and our blended stevia/sugar products have been developed to provide a healthy sweetener alternative that will support filling this gap in China.”

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