Ingredion acquired 75% equity of Paceco, strong alliance of stevia industry

Recently, Ingredion and Paceco have reached an agreement, Ingredion will acquire 75% stake in Pseco. The proposed acquisition has been approved by the boards of directors of the two companies and is expected to be completed in the second half of 2020, subject to approval by Spectrum ’s shareholders and regulatory authorities.

01 Joined forces

Committed to the development of Stevioside.html'>stevia products

This is the second major announcement issued since last week after Ingredion announced its investment in the construction of a new modified Starch integrated plant in China. The transaction is expected to be completed in the second half of 2020. Prior to the completion of the acquisition, Erian and Paceco are still independent companies with independent product portfolios and marketing teams.

“Iraian ’s global market entry (Go-To-Market) model and our expertise in formulas will be highly complementary to the capabilities of Spectrum Base. Spectrum Base is a recognized innovator in the industry. The business established in the past 20 years pays great respect and welcomes them to join the Erian family. We are ready to continue to support new growth through the trend of stevia and sustainable solutions. "President and CEO Jim Zallie said in the press release.

"We are very pleased to find such a strong partner as Ingredion. Ingredion and Paceco share a common mission, committed to encouraging consumers around the world to eat healthily, and become the preferred high-purity, delicious stevia in the global food and beverage industry. Ingredient suppliers, "Peter Lai Hock Meng, CEO of Spectrum, said in a press release," This acquisition will inspire current and potential customers of both companies, and the combined company will be able to provide better services to our customers. Services, a wider product portfolio, and deeper expansion into global, regional and local markets. "

02 Irion's goal
Improve product structure and accelerate global expansion

Last week, Ingredion announced that it will vigorously expand its production capacity in its Shandong plant in China, and build a comprehensive plant of natural starch and modified starch near the existing Shandong plant to provide quality services to domestic and Asia-Pacific customers, and To further optimize the global supply chain network of specialty starch, this investment is expected to be completed in early 2022.

In addition to the market expansion of core products such as starch, sugar reduction is also an important part of Ingredion's growth strategy. In 2017, Ingredion announced that it has become the exclusive global distributor of sweeteners under the American natural sweetener manufacturer SweeGen (except for the Chinese market, which is a non-exclusive distributor). SweeGen is committed to the development of next-generation stevioside components such as Reb M and Reb D, and is produced through its patented genetically modified yeast biotransformation technology. The "biotransformation" process uses an innovative multi-step biosynthetic pathway to obtain high purity Reb-M. The yeast used in the synthesis process contains uridine 5'-diphosphate-glucuronosyltransferase, which can promote glucuronic acid Converted to small molecular glycosidic bonds. Last year, SweeGen launched Bestevia e + stevioside sweetener, which mixes Reb E, Reb M and Reb D, can achieve 100% sugar reduction, and provides a pure, sugar-like flavor. SweeGen has also developed a Bestevia-based Sugar reduction solution platform.

In addition to stevioside, Ingredion also involved in allulose. In December 2018, Ingredion established a partnership with Matsuya Chemical in Japan. In 2019, Ingredion opened the first alloxan sugar production plant in San Juan del Rio, Mexico, and produced and sold sweets throughout the Americas and Asian markets. Flavor ASTRAEA Allulose (Matsuya trademark). As a promising low-calorie sweetener, alloxan sugar has a very similar taste to sugar and is suitable for various applications including beverages, dairy products, baked goods and confectionery.

After the acquisition of Spectrum, Ingredion will gain stronger R & D capabilities and product competitiveness in the field of stevioside, and further expand the market business of Spectrum's stevioside products through its marketing network and global factories.

03 The current situation of Spsaco
Fall into financial crisis and urgently need capital injection

Spectrum is undoubtedly one of the companies with the strongest R & D capabilities in the field of stevioside. Globally, Spectrum has obtained more than 214 Stevia-related patents, and more than 300 patents are pending. Paceco collaborates with farmers in Asia, Africa, Latin America and North America to grow its patented Stevia plant, Starleaf, which produces more Reb D and Reb M ingredients, which is 40% more than conventional. It is planned to improve all its stevia to this variety in FY2021. "In August of last year, Spsaco launched its own brand of ice cream to promote its Reb M stevioside product. This sweetener eliminates the need for additional sugar in the ice cream and performs well in various foods and beverages. Spsaco also Announcing the launch of a new stevioside ingredient, this product called Sigma Syrup is an optimized blend of next-generation stevia molecules (including Reb M) produced by the company. Sigma Syrup can overcome the high sweetness of concentrated syrup and liquid Solubility challenges encountered when using stevioside in products such as tabletop sweeteners and have a clean, sugar-like taste. Psaceco also plans to commercialize stevia-based protein and fiber ingredients in 2020.

While making a lot of progress on the product, Paceco also encountered a lot of trouble. The previous accounting violations of spectrum managers made historical inventory overvalued and historical cost of sales underestimated. The adjusted financial figures put the company in debt. When accounting violations occurred, Mageset Malsagov, the then chief executive of Spectrum, left the company in November 2019, and Peter Lai Hock Meng became the new chief executive. On the 31st of March, Spsaco provided unfinished financial results for the financial year ended June 30, 2019, and adjusted financial results for the financial year ended June 2018. The company reported that its net after-tax loss for fiscal year 2019 was $ 79.7 million, while its net after-tax loss for fiscal year 2018 was $ 1.7 million; and gross profit fell from $ 38.3 million in fiscal year 2018 to fiscal year 2019. $ 1.2 million.

Peter Lai Hock Meng said: "This is a difficult time for Spectrum. The company's management system and management capabilities have been found to be problematic. Although I only took over as CEO recently, I would like to apologize to shareholders. In the six months of the year, pesace changed the management team, updated the board of directors, and began implementing the necessary control measures to ensure that similar errors will not occur in the future. The board of directors is actively considering various refinancing options to obtain certain new Equity capital injection to provide funds for business and operations. "And the acquisition of Ingredion at this time has undoubtedly solved the urgent need for Paceco. This shows that this acquisition is the best choice for both parties.

04 DSM, Cargill, Taylor, SGF ...
The strong union of the stevia industry

Cargill and DSM established a joint venture Avansya in November 2018, each holding 50% of the shares. After the cooperation, DSM provides expertise in strain development and fermentation processes, and Cargill provides large-scale fermentation production capacity through its own factory. The joint venture produces Everbright Reb D and Reb M by fermentation under the Eversweet brand. Currently, the first commercial products using EverSweet Stevia have been launched in the United States, and more types of food and beverages are expected to appear on the market in 2020.

In 2017, Tyler became the exclusive global distributor of Sweet Green Field stevia products and acquired its 15% stake in 2018. Last year, the two companies launched a number of new stevioside products such as Optimizer Stevia 4.10, Intesse Stevia 2.0, and ZOLESSE.

05 Stevia has huge market potential
Giants have added

In December 2008, the FDA approved the General Recognized Safety (GRAS) status of stevioside Reb A, making it a sweetener in food and beverages. The stevioside market has grown exponentially for more than a decade since then. It has achieved great success worldwide and has become one of the most popular natural sweeteners. According to INNOVA data, from 2014 to 2018, the number of new product releases using stevioside globally increased by an average of 13% per year. In the new global food and beverage products in 2019, the use of stevioside as a sweetener has been second only to Sucralose and acesulfame.

The reason why stevioside is so popular is inseparable from its natural health properties, lower use cost, wide application range and good compounding ability, and the global regulations of stevioside Relatively perfect, you can easily enter various markets. The new generation of stevioside ingredients Reb D and Reb M have also solved the after-bitterness and aftertaste of stevioside, making it achieve the same taste as sugar. It can be predicted that stevia will still occupy the natural sweetener market in the next decade The main share, which is why the food ingredients giant is so optimistic about it.