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The Coca-Cola Company (KO), PepsiCo, Inc. (PEP), Stevia First Corp (STVF) – Companies to Watch: Next-Gen Developers of Stevia

Sandwiched between the two press releases, Stevia First Corp (OTCMKTS:STVF) announced that it has entered into a non-disclosure agreement with GRAS Associates, LLC, to expedite regulatory approval of the company’s stevia extracts manufactured through its fermentation-based processes.  GRAS Associates has already successfully prepared and submitted 17 separate stevia Generally Recognized As Safe (GRAS) applications with the U.S. Food and Drug Administration (FDA), which represents more than half of all public GRAS notifications for stevia extracts, each of which has received a “No Questions” letter from the FDA.  According to Stevia First Corp (OTCMKTS:STVF)’s CEO, Robert Brooke, “For us, the goal is all about moving rapidly ahead towards commercialization, and such GRAS approvals are a key component for widespread market adoption.

While the fermentation-based method is still in its development stages, a Malaysian company, PURECIRCLE LTD (OTCMKTS:PCRTF), the world’s largest producer of stevia, continues to develop its stevia through farm-based methods.  Last September PURECIRCLE LTD (OTCMKTS:PCRTF), which also has offices in Oak Brook, Ill., signed a joint agreement with the The Coca-Cola Company (NYSE:KO) Co to investigate and develop a commercially viable stevia sweetener product; and earlier this month in a press release, the two companies announced they were developing what should be a better flavor profile than the much used Reb A with rebaudioside D (Reb D) and Rebaudioside X (Reb X).  Reb D, though roughly 10% less sweet than Reb A, has a significantly lower bitterness that Reb A and has been found to have a more desirable taste profile, especially in cola products where stevia previously has not worked well.  The issue with both Reb D and Reb X is that they are found in much smaller amounts than Reb A. Thus, at this time it will take a lot more stevia leaves to produce the extracts.

PURECIRCLE LTD (OTCMKTS:PCRTF) has seen its stock rise over 50% YTD due in part to its agreement with Coke, and the partnership appears to have developed new stevia strains for the market.  In May the company submitted a GRAS filing with the FDA for the use of purified Reb X as the principal food ingredient component.  PURECIRCLE LTD (OTCMKTS:PCRTF) has also received a “no objection” letter from the FDA for the use of Reb D as a sweetener in the U.S.  According to Jason Kecker, vice-president of global marketing and innovation for PureCircle, “We have invested over $300 million in a supply chain infrastructure capable of delivering breakthrough ingredient innovation.  We are proud to now work with our customers to turn this investment into breakthrough food and beverage solutions.”

PureCircle does not grow its own product, but is more of a holding company as it contracts farms scattered around the globe to grow stevia to certain specifications.  One such farm is the S&W Seed Company (NASDAQ:SANW). Toward the end of 2011, PURECIRCLE LTD (OTCMKTS:PCRTF), with a goal of developing stevia in the U.S. for the U.S market, entered into a five-year agreement with the California-based grower of high-yield alfalfa seeds, to grow stevia to the company’s specifications. Unfortunately the results have not matched expectations as reported by S&W Seed Company (NASDAQ:SANW):

Due to weeding control practices, damage to a majority of the fields occurred and we believe it is unlikely that the existing plants will produce the desired levels of leaf that will make it economically viable to continue farming these fields.  Stevia plants on the properties in Chowchilla and Los Banos have not emerged from the ground as expected, and we have tentatively concluded that the plants have suffered damage from application of certain herbicides…. We currently believe that the field in Chowchilla will not produce a commercially viable harvest. We estimate that the Los Banos field has suffered an 80 to 90% loss rate, and expect that we will be able to maintain approximately 20 to 30 acres of stevia production at that site.”

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