GLG will hold an 80 percent stake in the resulting company – to be called Dr. Zhang’s All Natural and Zero Calorie Beverage and Foods Company (ANOC) – and CAHFC will hold the remaining 20 percent. CAHFC owns Fengyang Xiaogangcun Yongkang Foods High Tech Co. Ltd. (FXY), with which GLG already has an exclusive stevia extract supply agreement.
Speaking in a conference call with investors, chief financial officer Brian Meadows emphasized that the deal does not include production assets, which will continue to be owned by FXY.
GLG chairman and CEO Dr. Luke Zhang said: “The CAHFC assets include formulations for over 30 beverage and 300 food products sweetened with GLG’s stevia, as well as certain patents and trademarks…This joint venture is an opportunity to leverage the two companies’ strengths to participate in the growing China food and beverage industry, a market which GLG believes is largely untapped.”
Zhang said that the company expects a speedy introduction of ANOC products, starting with stevia-sweetened beverages in the first quarter of 2011, followed by food products such as yogurt, cookies, candy and oatmeal.
“Our goal is to achieve RMB 3.75 billion ($US 568 million) sales in 2013,” Zhang said, adding that this level of sales would equate to about $50m worth of GLG’s stevia extract.
The company highlighted a growing interest in healthy, natural foods and drinks among Chinese consumers as disposable income has grown, as well as an associated increasing incidence of diet-related health problems, such as obesity and diabetes.
Chairman and president of CAHFC Song Xiankun said in a statement: “I believe with the upper stream [of stevia supply] secure from GLG and that through the combination of ANOC’s products, the leadership of Dr. Zhang and the highly experienced executive team of ANOC, we will be successful in this growing market in China and ANOC is expected to be a leading player in the China food and beverage industry based on its all natural zero calorie products within 3 years.”