Nutrition Business Journal
GLG Life Tech blames falling U.S. stevia prices for 10% drop in revenue

GLG Life Tech blames falling U.S. stevia prices for 10% drop in revenue

GLG sees sales and profits fall dramatically in the first quarter of 2011, notes 25% decrease in U.S. raw material prices for stevia.



Vertically-integrated stevia grower and processor GLG Life Tech recently announced financial results for its first quarter of 2011, to the tune of a 10% decline in quarterly sales revenues. GLG—which has corporate headquarters in Vancouver, British Columbia, as well as several agricultural and manufacturing operations in China—markets raw stevia worldwide, along with a stevia-sweetened RTD tea product sold in China.

According to its financial filings, the company posted total Q1 sales of CAD $7.4 million, a 10% plunge from CAD $8.2 million in revenue recorded in the same quarter of 2010. Gross profit was also well below historical numbers, at CAD $1.2 million in Q1 2011, a 62% drop from CAD $3.2 million in Q1 2010.

GLG noted in its May 16 press release that for its rebaudioside A 80% purity (RA 80) stevia products, although its volume shipped to customers was comparatively flat, the U.S. pricing for RA 80 was 25% lower in the first quarter of 2011 than in 2010. A tough USD-CAD exchange rate contributed to the revenue gap as well.

NBJ Bottom Line

As a public company, GLG is a good bellwether for developments in the stevia market. The company’s astounding drop in profit speaks to the proliferation of stevia suppliers in the market, now that the sweetener has gone mainstream. The company’s global focus may help insulate GLG from U.S. pricing headwinds in the future, but for now most of its eggs are in the U.S. supply basket.

Low prices are good for manufacturers of finished goods, and GLG’s latest product development speaks to this. In December 2010, GLG formed a joint venture with China Agriculture and Healthy Foods Company Limited to launch Dr. Zhang's All Natural and Zero Calorie Beverage and Foods Company (AN0C). The AN0C product is a stevia-sweetened RTD tea sold in China, giving GLG a direct path to the consumer market in China, which has great potential for weight management products as its well-fed middle class population grows. The company has already notched up CAD $1.6 million in 2011 sales, and will be a focus for the company going forward.


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