Shakeout foreseen on supply end of stevia market

A quick search of the word “stevia” on global trading site Alibaba.com returned 15,367 entries, many of which were for suppliers of the bulk ingredient. Suppliers advertise bulk leaf, Reb A extracts from 40% to 98%, and stevia-erythritol blends. These suppliers include well-known names such as Chengdu Wagott Pharmaceutical Co., which says it can supply organic stevia, to a plethora of anonymous players. 

Consumer demand for stevia seems durable, especially in various beverage categories. But  a slowdown the rate of  growth of new product launches in the United States featuring stevia seems to indicate that the market might be starting to mature. With so many companies chasing strong, but no longer meteoric growth, is there a bubble in the stevia supply sphere waiting to burst?

Marketplace rationalization​

“As an outside observer, my personal view is that there has to be a rationalization in the marketplace,”​ stevia consultant John Fry told FoodNavigator-USA.  Fry, who was trained as a food chemist and has also worked with Leatherhead Food Research, has consulted with Cargill on the sweetener’s technical issues.  Fry emphasized his observations were his own and did not necessarily reflect Cargill’s views.

“Some of the smaller suppliers are simply unable to offer some of the services that major reputable players like Cargill can,”​ he said. “A lot of them are going to fall by the wayside, at least in Western markets.  Western markets are significantly demanding of the additional services that customers expect of ingredient suppliers and only larger, more reputable suppliers are equipped to cope with that.”​

Smaller suppliers struggle with sustainability​

The competition has caused prices for the ingredient to fall, Fry said.  But he said there are other pressures at work in the market, and it’s not simply a story of a rush to the basement on price.

“You have to bear in mind that there are trends in the marketplace that militate against small suppliers.  Major beverage companies, major users of stevia, are becoming increasingly sensitive to issues of sustainability and corporate social responsibility,” ​Fry said.

“They will be increasingly looking to their suppliers to adopt international standards of sustainability and social responsibility.  It will very hard for a trading house in Shanghai to demonstrate that their supply chain meets those standards.  Indeed, it’s quite hard for many suppliers to show that they meet those standards.”​

The issues of transparency and traceability reach beyond stevia and apply across the market for ingredients, Fry said.

“This is clearly going to be a trend in food additive supply as we move into the coming years,” ​he said.