PureCircle reviews ‘transformation’, eyes long term

The supplier of high purity Reb A (rebaudioside A) today reported sales of US$60m in the 2009 financial year (ended 30 June), up from $34.1m in 2008. Sales volumes have soared from 115 tonnes to 266 tonnes.

In the last year – the year in which Reb A received regulatory approval in the US, Australia, Switzerland and Russia – PureCircle has expanded its Chinese extraction facility to deliver 4000 tonnes; diversified its leaf supply from one country to seven; and set up global sales operations in eight countries across five continents.

“The last 18 months have been absolutely transformational,”​ chief financial officer William Mitchell told FoodNavigator.com.

This huge year saw $63m ploughed into operating assets, which has left PureCircle with a net debt of $47.5m (it ended full year 2008 $16.6m in the black). But Mitchell said the underlying business will be cash generative in a matter of months.

PureCircle has “a lot of headroom in its debt facilities”, ​he said, ​and five year banking facilities were negotiated in May 2009. This means there is scope for even more investment in operations for the sweetener in due course.

“We believe firmly it will go mass market and become very large, and at that stage when we want to accelerate we will put more investment in.” ​

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Reb A is expected to be used with sugar in formulations of lower calorie products, and this possibility open up great, mass market opportunities.

Big time to take time​

With time, market volumes will be “many thousands of tonnes”​,​while today the industry is talking in hundreds of tonnes. But this scale up will not take one to two years, but “five to seven to ten,” ​Mitchell predicts.​

The company said: “The next 18 to 24 months are expected to give greater clarity on how fast the large long term market will grow.” ​

More insight into development was given by PureCircle chairman Paul Selway Swift, who stated in the financial report: “In the short term, take up depends on the speed of out customers getting new products to market. These launches will inevitably be tougher to programme against the current economic backdrop. Sales growth may therefore be volatile”.​

Mitchell said that the relatively small size of the industry means that a large order of 50 or 60 tonnes of Reb A will mean a sudden surge in sales volumes.

“At the moment growth is not in a straight line. A big launch will have a big impact until it gets up to scale.” ​

Once the industry is up to scale, these deals “will merge into a straight line”.​

Meaningful conversations ​

In the full financial year PureCurcle had just one customer, Cargill. It is now also supplying Pepsi and Merisant, and during 2009 made sales to 25 companies.

Of those 25, 20 were sales of initial trail samples for R&D use, so they were smaller volumes. But the fact that they are buying samples confirms that the discussions are meaningful, said Mitchell.

Overall, the company says it had “meaningful discussions with over 100 [customers] across all regions and major food and beverage categories”. ​

But Mitchell said the regulatory approvals around the world mean that launches will proliferate on a regional basis. It is also expected that Reb A use will grow from beverages into other categories.