PureCircle gets sweet news from EU

PureCircle, the maker of plant-based sweeteners, saw its share price rocket on Monday following the announcement that its stevia-based sweetener has been given regulatory approval by the European Union (EU).

Stevia is extracted from the leaves of plants and can be used as a no-calorie alternative to sugar or other sweeteners.

The EU decision is a massive boost to PureCircle because it will mean access to a new market of around 500 million people.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Magomet Malsagov, chief executive officer of the Kuala Lumpur-based company, said of the EU's decision: "The approval of stevia in the European Union marks a major milestone for PureCircle and the industry. The EU is the largest single market for sweeteners in the world. EU approval effectively increases the current addressable market for high purity stevia by more than 50%."

Broker Westhouse Securities said: "Our understanding from informal soundings of soft drink companies, is that they have been preparing for this announcement

and it is likely to be followed quickly by new product launches containing stevia."

The broker added that these soundings were backed up by the attendance and interest from food and drink companies at a recent UK trade seminar entitled "Are you ready?"

As a result of the readiness of soft drinks companies in Europe, Westhouse thinks "the market take-up is likely to be considerably more rapid than in the US, following the FDA's [Food and Drug Administration] GRAS (Generally Regarded

as Safe) announcement in late 2008."

"Producers have more experience with stevia and consumers also have greater familiarity, especially as France jumped the gun in allowing stevia in food and

drink products some 18 months ago," Westhouse noted.

At 2.39 GMT shares in PureCircle were trading at 115p, up 19.8% on the day.

BS