Big interview: Brian Meadows, president, GLG Life Tech
GLG Life Tech shares back on the TSX: ‘The stevia market is growing, and we're positioned to take full advantage’
GLG’s stock price plummeted in 2011 after bosses reported a sharp drop in sales and revealed they had renegotiated their 10-year supply agreement with Cargill such that it would no longer be obliged to purchase 80% of its stevia supply from GLG.
In May 2012, GLG’s shares were suspended after it was issued with a cease and desist order from the BC Securities Commission for failing to file its full-year 2011 accounts by the March 30, 2012 deadline.
Our stevia sales revenue was up 23% to $21.7m in 2012
However, things are now firmly back on track, president Brian Meadows told FoodNavigator-USA this week.
"Some of our competitors took full advantage of the regulatory situation we were in, but it is fully resolved now and we are ready to grow our business aggressively. Our stevia sales revenue was up 23% to $21.7m in 2012, which we think represents just over 10% of the $200m market.
"We made a loss in 2012, but so did virtually every other publicly traded stevia company, and we are better-positioned to supply stevia in large quantities at a low price with consistent quality.
"We've got a vertically integrated supply chain from our patented leaf to our stevia finished products and our products are consistently coming out #1 or #2 in the industry in quality tests."
Deal with COFCO - China's largest food company - is a gamechanger
GLG also has a key point of difference in the market in that it has recently struck a deal with state-owned COFCO (China National Cereals, Oils, and Foodstuffs Corporation), China’s largest food company, he said.
Under the deal - which is 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.
"The Chinese government is very concerned about rising levels of obesity and diabetes", said Meadows.
"There are 90m diagnosed diabetics in China and more than 200m people classified as obese, so there is a huge opportunity to developed reduced sugar products."
We were expecting our deal with Cargill to be worth $200m in the first three years
Asked whether the global stevia market had grown as fast as market watchers had originally anticipated, he said: "No. For example, [in 2008] we were expecting our deal with Cargill to be worth $200m in the first three years.
"After a few months, that [estimate] was reduced by 90%. For many food and beverage manufacturers, the cost and taste was just not right. And at the time they didn't have the tools to make it work. But now they do, and while not all of the formulation challenges have been overcome, we've come a very long way since then."
And while other natural sweeteners - notably monk fruit - are now available, stevia still remains "the most viable", he said.
Now we can concentrate on the future.
In a mailing to investors and other stakeholders to announce GLG's return to the TSX, investor relations head Stuart Wooldridge said: “After a lengthy regulatory review of our company, the only requirement from the regulators was increased write downs for the 2011 fiscal year as we changed accounting standards. Now we can concentrate on the future.
“The stevia market is growing worldwide, and we are positioned to take full advantage.”
He added:"Cash flow from operations is positive. All short term loans with banks have been refinanced, and inventories have been reduced to $29.9m."
GLG’s long term strategy in agriculture is now paying off
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 Wooldridge.
“We have new distribution agreements with Orkila, the leading chemical/food additive distributor in the Middle East and Africa, Kawarlal, one of the largest importers of drugs, food ingredients, cosmetics and core industrial chemicals to the Indian market, and Crest Chemicals (Pty) Ltd. the leading distributor of chemical products in the South African market.”
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.
