Sometimes, incredible investment opportunities are found in the strangest of places. I just discovered a possible monster long-term winning investment where I least expected it.
Recently, my wife had an allergic reaction to something. Upon testing at an allergist, it was determined that she is allergic to the natural sweetener stevia.
I was unfamiliar the sweetener market, so my interest was piqued. I started researching and was amazed at what I discovered. Stevia is not only a popular sweetener, but stevia-related stocks also have enormous potential.
What Is Stevia?
Stevia is a natural, zero-calorie sweetener derived from the Stevia rebaudiana plant. These plants are native to Paraguay and Brazil.
[ad#Google Adsense 336×280-IA]It is not only used as a sweetener, but as a treatment for burns, stomach issues, and even as a contraceptive.
Stevia can be more than 300 times sweeter than sugar, and has been used for centuries as a way to sweeten food.
Despite being approved by the World Health Organization as a sugar substitute, raw stevia remains on the FDA banned list for the United States.
However, the FDA permitted the use of one of the naturally-occurring composites in stevia in 2008.
Named Rebaudioside A, it is the prime ingredient currently being sold in the United States labeled as “Stevia.”
The Stevia Market Is Growing Rapidly
Stevia is part of the rapidly growing sugar substitute market, which is projected to be worth over $16 billion by 2020. The majority of the growth is forecasted to be driven by the United States, with Europe and the Asian Pacific region taking up the second and third place, respectively.
Stevia, although gaining in popularity, still makes up a minuscule part of the sugar substitute market. A paper published by Mintel and Leatherhead Food Research discovered the value of stevia as an additive for use in food and beverage manufacture equaled $110 million in 2013. The research firm projected the market for stevia to grow to $275 million by 2017. This is even better considering that aspartame is expected to drop to $230 million by 2017 as stevia and blends of stevia start to get traction on the market.
This changing climate is due to a consumer backlash against anything artificial and toward natural ingredients in food products. One of the global leading soft drink companies, Pepsi (NYSE: PEP), stopped using aspartame in its diet drinks due to the public outcry, despite a lack of proof of aspartame’s negative health effects.
Stevia, being a natural product, fits perfectly with the changing consumer culture. Soft drink behemoth Coca-Cola (NYSE: KO) joined with Cargill to brand a stevia-based sweetener known as Truvia. Truvia was the first stevia-derived sweetening agent and is used in over 45 Coca-Cola products, including Honest Tea and Vitamin Water Zero. Coke recently launched a new version of Coca-Cola known as Coke Life with Truvia as one of the sweetener agents.
Pepsi also jumped on the Stevia bandwagon, partnering with Merisant to create PureVia as its stevia-derived product.
The downside to stevia is its bitter taste to many consumers. It needs to be mixed with sugar to be palatable to most taste buds. The general rule was that Stevia could replace up to 30% of a drink’s sugar level before consumer complaints arise.
Cargill’s Stevia brand, ViaTech, can replace up to 70% of sugar, and the pending EverSweet, a creation of Cargill’s partnership with Swiss company Evolva (OTC: ELVAF), may be capable of replacing all soft drink sugar. In fact, EverSweet was recently issued a no-objection letter from the FDA, which is a big step in wider adoption.
Despite the positive news from the FDA, Cargill and Evolva have experienced scaling issues in getting the product to market. The launch date is currently scheduled for 2018. The latest press release explains:
“Under the 2018 launch plan, EverSweet will be produced initially at Cargill’s advanced, low cost, manufacturing campus in Blair, Nebraska through retrofitting existing Cargill facilities. Evolva and Cargill are additionally examining an accelerated move to a new facility that may also act as a production hub for other Evolva products, including nootkatone and resveratrol, and those of certain Evolva partners. As a result of the accelerated move, the initial retrofit will be more limited in scale than previously estimated, with significantly lower costs.”
3 Ways To Profit From Stevia Stock
Interested in investing in stevia stocks? Well, since most companies directly involved in stevia production are based outside of the United States, direct investments into Stevia stock are limited to the OTC (over-the-counter) market for U.S.-based investors.
1. Evolva Holdings (OTC: ELVAF)
Everything with this company hinges on its Cargill partnership and the acceptance of EverSweet as a sugar replacement. The upside is enormous but with tremendous risk. It is currently trading for $0.51 per share.
2. PureCircle (OTC: PCRTF)
Founded in 2002, this Malaysia-based company is a producer of pure stevia components to the worldwide food and beverage business. Its goal to lead the global expansion of stevia as the next mass-volume natural sugar subsitute. This stevia stock is currently trading at $3.17 per share.
3. Coca-Cola (NYSE: KO)
Coke has its issues as I outlined in an earlier article, but stevia may work to lift the shares in the long-run as the soft drink giant adapts to changing consumer tastes and health concerns. For conservative long-term investors, this seems like the best option.
Risks To Consider: The OTC market has inherent risks that make it unsuitable for conservative investors. However, great opportunities come with high risk.
Action To Take: Position in these stevia stocks to take advantage of the growth in popularity of this natural sugar substitute. With the OTC stocks mentioned, only consider a small position for the aggressive portion of your portfolio and be prepared to ride out the volatility that comes with these smaller stocks. Otherwise, Coca-Cola is always a safe bet.
— David Goodboy
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Source: Street Authority