Our Special Recipe for Growth
As the CEO of a publicly traded company, I’m focused on a simple goal: building value for the organization and our shareholders. We’re a $25 million market cap company today with a team that desires to be a bigger player, certainly $100 million or even more. I’m not shy about stating this because I believe we have the team and resources to do it, though that’s not to say it’s easy or that we ignore the risk factors.
Some people like to hear the simple story… We’re a small stevia company with a proprietary method to produce the “holy grail of the sweetener industry,” which is increasingly valuable to major beverage companies like Coca-Cola and Pepsi. These companies spend billions annually on sweeteners and, to them, stevia is a powerful asset due to being a zero-calorie sweetener at a time when the WHO is proposing you shouldn’t drink even a single 12-oz sugary beverage per day. For us, obviously, being a preferred supplier or partner to either company would be incredible, though some may consider this approach “swinging for the fences.”
It’s certainly valuable to receive direct feedback at high levels from the multinational beverage companies. But, with our goals for growth in mind, there are more layers to our story and business. We’re an ag-biotech company focused on stevia that invests heavily in R&D, yet is expanding commercial operations due to opportunities too good to resist, including ones that could fully fund our R&D operations and make us cash-flow positive as a business. Just yesterday we announced an alliance and pivotal commercialization deal that brings this much closer to reality.
The news should make it evident that instead of just “swinging for the fences,” we’re taking a methodical approach, while also continuing to invest heavily in intellectual property and cutting-edge R&D like artificial intelligence that will drive significant value in the long-term.
Our new arrangement with Qualipride involves taking over their global stevia distribution business by forging an alliance with their ownership and quickly gaining a business that internationally sold more than 350 tons of stevia extract over the last year and achieved more than $10 million in revenue. Successful integration of this entity through the formation of a subsidiary is key. Once this is concluded we’ll begin adding new customers and capabilities through our North American R&D unit that can provide improved quality control and stevia applications support. Getting our organization to cash-flow positive on this business alone would require first integration and then achieving margins of 15% or better. Alternatively, we could obtain margins of 10% or better and ramp up sales by 30% or more. This strategy is certainly possible given that Qualipride has access to significantly more capacity through its partners – more than 2,000 tons annually – a large chunk of the global stevia industry that exists today. For reference, the LSE-listed company Purecircle has a fully invested supply chain capable of delivering 2,800 metric tons of high purity stevia as of their 2013 annual report, which they report can support sales of $250 to $300 million.
In additional news, we’ve accelerated our timelines for construction of the first ever North American stevia extraction and purification facilities with plans to build them at or near our headquarters in California’s Central Valley. We’ll be using modern stevia production technologies that could be far ahead of the industry today in terms of energy efficiency and environmental safety. In order to do this cost-effectively and relatively quickly, we’ll design and construct an initial 150-ton capacity extraction facility and incorporate into the plans room for additional growth. We have been focused on technical work to enable this objective for more than 12 months, so we expect timely construction and the ability to readily fill its capacity. On the strength of this facility alone, we could convert our business as a whole to cash-flow positive if we’re able to fill capacity and keep production costs down by growing the necessary leaf supply on 850 or less total acres in California.
Finally, don’t forget about our stevia enzyme enhancement program, which could complement each of these businesses in a powerful way, and also enable us to succeed independently of them. For instance, the sales and distribution business may provide starting material to be enzymatically enhanced, which could double or triple the value of the input starting material. This is quite lucrative when you have access to 1,500 tons or more of stevia extract to use as relatively inexpensive starting material and have already filed for patent protection. Since our enzyme enhancement process could act as an independent business, we may also scale up only through contract manufacturers and strategic partners. We’ve already taken steps toward this and could eventually see 50% or better margins, but even much smaller margins and less than 200 tons of annual capacity could make us cash-flow positive on the back of our enzyme enhancement process alone.
In closing, our recent announcement and alliance positions us with lucrative and near-term commercial opportunities. When combined with how we invest heavily in long-term R&D, such as our next-gen stevia program, and our work in artificial intelligence , it’s our special recipe for growth. I encourage you to read more about us in our public filings, and especially in our upcoming 10-K annual report.
Robert Brooke, CEO
Stevia First Corp.
5225 Carlson Rd.
Yuba City, CA 95993
Phone: (530) 231-7800
Dian Griesel Int’l
Phone: (212) 825-3210
Phone: (530) 231-7800
Forward Looking Statements
This blog contains "forward-looking statements" as that term is defined in Section 27(a) of the United States Securities Act of 1933, as amended and Section 21(e) of the Securities Exchange Act of 1934, as amended. Statements in this blog which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future. Such forward-looking statements include, among other things, projections of worldwide sales of stevia products, growth of stevia production and global markets. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainties associated with new projects and development stage companies. These forward-looking statements are made as of the date of this blog post, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Although we believe that any beliefs, plans, expectations and intentions contained in this blog are reasonable, there can be no assurance that any such beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in our annual report on Form 10-K for the most recent fiscal year, our quarterly reports on Form 10-Q and other periodic reports filed from time-to-time with the Securities and Exchange Commission.