The global stevia market is projected to account for US$565.2 million of the overall sweetener market by 2020, registering a compound annual growth rate of 8.5% during the forecast period, according to a report by Future Market Insights (FMI).
Lead consultant Narasinha Varute tells FNI how manufactures in parts of the world can grasp market opportunities unique in their regions by understanding consumer and market trends.
FNI: How can the findings of the survey help manufacturers target their products to markets — Americas, Europe and Asia Pacific?
Varute: The findings of this survey cover the complete value chain analysis for stevia at an ingredient level.
For example, manufacturers are categorized into: farm owner (grower of stevia), manufacturer (1st level), downstream manufacturer (2nd level) and others (a combination of all).
Based on the findings of the survey, we learned manufactures from around the world are operating in cross-functional value chain that emphasizes on a backward integration from distributors to manufacturers to raw material suppliers.
This backward integration enables improved quality and profit margins, along with offering a competitive advantage.
Additionally, we asked the manufacturers, distributors and retailers to rate the age groups of stevia consumers on the basis of their percentage usage in regions like Americas, Asia Pacific, Europe and Middle East and Africa.
The survey indicated that consumers falling in the age group — 45 years old and above — were the largest consumers of stevia worldwide.
The only exception to this was the Asia Pacific region that had a different take with the percentage of stevia consumers being high in the age group — 16 to 25 years.
Apart from this, the other age group that had high stevia consumption was 36 to 45 years.
FNI: What are the drivers for stevia demand in these markets?
Varute: One major driver for stevia demand in these regional markets are the increasing government approvals for use of stevia in a range of applications or products.
Over the past few years, governments in various countries, especially in emerging economies, have been providing economic support to farmers engaged in stevia cultivation.
For instance, the government of Vietnam offered financial support for stevia cultivation in 2012.
Additionally, the Bac Giang provincial government offered support for 20 ha of stevia cultivation.
Such projects are expected to increase cultivation of stevia and lead to increased stevia production.
Another driver is the demand for plant-based sweeteners or products with natural ingredients, which enables companies to sustain the consolidated stevia market.
Furthermore, the use of stevia in beverages and packaged food is expected to penetrate the existing as well as new or untapped markets worldwide.
New product offerings, especially in the US, where stevia has been recently recognized as a generally recognized as safe or GRAS product, is expected to boost growth of the stevia market in the near future
In addition, the backward Integration from manufacturers to raw material suppliers helped in improved quality and profit margins and provided competitive advantage.
Prominent companies have also entered into long-term agreement with farmers.
This enables the companies to produce high-graded leaves using its patent technology and thus, enhance quality of the final product.
FNI: What are the opportunities in these markets for manufacturers?
Varute: Technology developments like new stevia extraction methodologies are being developed such as extracting stevia via a fermentation process to accomplish better taste and affordable stevia products, thus gaining advantage in cost, taste and supply reliability.
In addition, increasing demand for range of stevia based products especially for organic-based steviol glycoside has provided the opportunity thrust for manufactures.
FNI: How are these opportunities different geographically?
Varute: Europe is experiencing new stevia-based product launches primarily for beverages and dairy products followed by dietary supplements.
In terms of stevia cultivation, the region is exploring cultivation measures for stevia glycosides.
As for Asia Pacific, it is witnessing consumer awareness for low-calorie food coupled with increasing investments by companies for extraction and agricultural facilities for stevia.
Meanwhile, North America is expected to witness product launches catering to beverages, dairy products and packaged food products.
This region is potentially viable for manufacturers to penetrate owing to increasing diabetic population, rising obese population and consumer inclination towards low-calorie food.
FNI: What are the challenges in these markets?
Varute: A major factor hampering growth of the global stevia market are concerns for stringent regulatory norms regarding the use of stevia as a food ingredient.
This is due to potential side effects, such as allergic reactions, improper functioning of digestive system and other health-related issues.
Although, the cultivation and consumption of stevia is increasing at a rapid pace; various end-use industries such as confectionery and bakery are witnessing slow adoption of stevia as a food ingredient.
This is due to limited regulatory approvals by respective legislations owing to health concerns of consumers across the globe.
Since the stevia market is consolidated with key players holding more than 80% market share, supply chain management is a major concern for companies operating in the market.
For instance, the entire volume of stevia produced in Latin America is exported to China, where the extraction and purification processes take place.
Also, improper climatic conditions may restrict stevia cultivation.
Thus, effective manufacturing process right from procurement to end product to delivery is a concern for companies, which ensures sustainability in the long run.
In addition, economies of scale ensuring low per-unit cost and greater quantity produced needs to be managed effectively in the near future.
Apart from Latin America and Japan, the lack of consumer awareness and acceptance of natural ingredient as an alternative to sugar in products such as confectionery, snacks and dairy products has resulted in low consumption of stevia across the globe.
The after-taste of stevia-based products and the high price of low calorie sweeteners are lowering the acceptance of these products among consumers and thus, restricting market growth to a certain extent
FNI: How manufacturers can manage them?
Varute: They can do so by —
*Ensuring high quality raw material procurement,
*Developing supply chain across emerging nations resulting in availability of affordable stevia-based products to the consumers,
*Increase alliances with regional companies to penetrate the local market in order to achieve a sustainable growth, and
*Improving the extraction of stevia resulting in better after-taste and thus consumer acceptance of stevia as a substitute to conventional sugar ingredients across varied end-use industries.
