Stevia supplier GLG Lifetech is working with China’s largest food company - state-owned COFCO (China National Cereals, Oils, and Foodstuffs Corporation) - on three major healthy food and beverage formulation projects.
In a mailing to investors yesterday about the firm’s second quarter results, investor relations head Stuart Wooldridge said two of the projects focus on dairy products for the COFCO Mengniu Dairy Subsidiary and one is for COFCO’s China Foods subsidiary.
The objective is to create reduced calorie healthier products with stevia for COFCO subsidiaries and introduce products into the China market, he said.
“The two partners are also assessing some of GLG’s existing stevia sweetened products for distribution in China including tabletop. Lastly, the two parties are in discussions on advancing the China Sugar Reserve Healthy Sugar project.”
GLG: There are 90m diagnosed diabetics and 200m+ people classified as obese in China
Under a deal with COFCO's Nutrition and Health Research Institute, GLG is now COFCO's preferred supplier of stevia ingredients and technologies and the two are working together to develop new zero or reduced sugar products because the Chinese government is so concerned about its epidemic of obesity and diabetes, GLG president Brian Meadows told FoodNavigator-USA last month.
"The Chinese government is very concerned about rising levels of obesity and diabetes.
"There are 90m diagnosed diabetics and more than 200m people that are classified as obese, so there is a huge market opportunity to developed reduced sugar products."
Strategic focus on international customers, steady income
GLG’s stock price plummeted in 2011 after bosses revealed they had renegotiated a supply agreement with Cargill such that it would no longer be obliged to purchase most of its stevia from GLG. In May 2012, its shares were suspended after it failed to file its accounts on time.
However, things are now firmly back on track, says GLG, which recently resumed trading on the Toronto Stock Exchange (TSX) and is now focused on selling to international customers who buy stevia on a recurring basis rather than selling to other stevia providers.
More predictable revenue streams
Wooldridge said international sales grew by 333% in the second quarter of 2013 compared with the second quarter of 2012.
He added: “The Company expects this change in business focus towards international customers will result in more predictable recurring revenue streams compared to large one-off or irregular purchases from other stevia providers.”
Revenue for the six months ended June 30, 2013 was $6.7m, 13% lower than the prior period (in which GLG was aggressively selling some of its inventories to other stevia providers), while the net loss was $10.4m compared with $9.8m in the first half of 2012.
Leaner and meaner?
GLG's annual leaf processing capacity is 41,000 metric tons, while its refining and purification facilities have a capacity of 3,000 metric tons, said Meadows.
He added: “Our H3 leaf is generating significantly higher yields of Reb-A, which is having a big impact on our cost structure. We've also reduced operating costs in other areas significantly. We're much leaner and meaner now."
GLG now has more than 20 distributors and/or agents marketing products in the US, Canada, Australia, New Zealand, Mexico, South America, Central America, India, the Middle East, Europe, China, Japan, Korea and Africa, said Meadows.
Extraction and refining
GLG's extraction and refining operations are conducted by four wholly-owned Chinese subsidiaries which handle primary processing of stevia leaf into intermediate stevia extract and purification into final high-grade stevia extract products.