The increasing occurrence of obesity, diabetes, and other health related issues globally have led to the emergence of several healthy trends in the food and beverage (F&B) sector in recent years. Consumers’ interest in healthy products has spurred innovation and led to the development of various healthy substitutes for ingredients currently being used by the food industry. The ingredients discussed in this presentation, namely stevia, potassium chloride, carotenoids, and soy products, are four important healthy ingredients that industry experts believe will have a huge impact on the food and beverage sector in the coming years.

1. The increasing occurrence of obesity, diabetes, and other health related issues globally have led to the emergence
of several healthy trends in the food and beverage (F&B) sector in recent years. Consumers’ interest in healthy
products has spurred innovation and led to the development of various healthy substitutes for ingredients currently
being used by the food industry.The ingredients discussed in this white paper, namely stevia, potassium chloride,
carotenoids, and soy products, are four important healthy ingredients that industry experts believe will have a
huge impact on the food and beverage sector in the coming years.
“Just as obesity has many causes, it can be solved only if all sectors of society do their part to help.”
- Betsy D. Holden,Kraft Foods
MARCH | 2011
Healthy Trends in the Food and
Beverage Sector
1Copyright © Beroe Inc, 2011. All Rights Reserved

2. Stevia
In December 2008,the US Food and DrugAdministration
(FDA) announced that Rebaudioside A (Reb A), a
molecule extracted from the stevia leaf, was Generally
Recognised as Safe (GRAS) for use as a “general-
purpose sweetener in foods.” Industry experts viewed
this announcement as a key turning point in the search
for a natural alternative to sugar.
The current trend of consumers moving away from
products perceived as unhealthy and artificial ensured
Reb A’s smooth introduction into the market as a
general purpose sweetener by companies such as
Cargill (supplier to Coca-Cola),Whole Earth Sweetener
Company (a division of Merisant), and PepsiCo. In its
Q3 2009 report, PepsiCo stated that it had “benefited
from the extraordinary growth at its zero-calorie
stevia sweetened line extensions.”
In 2011 and 2012, industry experts believe that stevia
and stevia-based sweeteners will move from niche
market status into the mainstream. Sugar (and other
sweeteners) is the second most important ingredient for
the F&B industry after water, a USD 60 billion market.
The global high intensity sweeteners (HIS) market size
is USD 1.2 billion, of which stevia only has a 4% share
(or USD 48 million). The stevia market is expected to
reach a market size of USD 10 billion in a few years.
Competing Products
Stevia is expected to grow at a high rate due to the
advantages it possesses compared to competing products.
China supplies close to 75% of global stevia leaf
production, followed by Paraguay. Cultivation area is
concentrated in four Chinese provinces: Jiangsu, Anhui,
Shandong, and Heilongjiang. PureCircle is the leading
supplier of stevia extract.
Stevia Applications
Food and Beverage Sector:Stevia’s low calorie content
makes its consumption suitable for diabetic individuals.
Stevia’s good thermostability and its compatibility with
frozen foods, added colors, and flavors, makes it ideal for
a wide variety of food and beverage applications.
Pharmaceutical Sector: Stevioside can be used as a
sweetening agent in medicines, especially in diabetic
medicines. It is compatible with most ingredients used
in medicines and can used in oral liquids or chewable
tablets.
Oral Hygiene Sector: Research indicates that microbes
that hinder oral hygiene, such as streptococcus mutans,
pseudomonas aeruginos, and proteus vulgaris, do not
thrive when non-nutritive stevia constituents are present.
This fact, coupled with its sweet taste, makes stevia
an ideal ingredient for mouthwashes and toothpastes.
“Demand for natural sweeteners in the US is being
driven by concern over calories and obesity and the
growing demand for natural products.”
- Zanna McFerson, Health and Nutrition Business
Director at Cargill
2Copyright © Beroe Inc, 2011. All Rights Reserved
Product Sweetener Type Calories Comments
Sugar
(technically
known as
sucrose)
Natural
é
Due to the high amount of calories present in sugar and price
volatility (which makes it difficult to plan sugar procurement),
stevia is an ideal replacement for sugar.
High-
Fructose
Corn Syrup
(HFCS)
Natural
é
Despite being a natural substitute for sugar, studies have suggested
that HFCS is contributing to obesity. In addition, the opposition
to US subsidies for corn growers is a potential threat that could
increase HFCS prices.
Artificial
High
Intensity
Sweeteners
(HIS)
Artificial
ê Since HIS are artificial, there is a perception that these products
are detrimental to health.
Stevia Natural
ê
In addition to being a natural product, stevia does not possess
calories. Furthermore, stevia is 200-300 times sweeter than sugar,
which is helping it claim a larger share of the sweetener market.

3. Price Analysis
The price of a suitable sugar-equivalent (taking into
account that stevia is 200-300 times sweeter than
sugar) is projected to be in the range of 125-200 USD
per kg.This price forecast is based on historical market
prices of sugar and the expected price of sugar in the
next few years.
Assuming the current lower limit sugar equivalent price
is constant for the next few years, stevia prices are
projected to be comparable to sugar prices by 2015.
However, stevia prices are expected to reach sugar price
levels before 2015 because sugar prices (which are
volatile) are expected to be higher than the lower limit
sugar equivalent price in the coming years. Hence, the
price of Reb A is likely to be competitive in the coming
years, which makes it an attractive alternative for sugar.
Cost Analysis
Nearly three-fourths of the total market price of stevia is
the profit margin. However, in order for stevia to deliver
the same sweetness as sugar, it requires three times less
land,water,labor,and total resources compared to sugar.
The main reasons why stevia prices are expected to fall
in the coming years are:
1. Mass production of stevia, which is expected to
reduce the per unit cost
2. Greater demand and economies of scale, which can
be leveraged
3. Improved quality and quantity of the stevia leaf supply
4. Introduction of major players in the stevia market,
which will increase the pressure on farmers to
reduce their profit margins and result in competitive
pricing
5. Introduction of stevia leaf production in emerging
countries, which could possibly lead to lower prices
US Stevia Market
The following developments have taken place in the US
stevia market:
1. Coca-Cola, in partnership with Cargill, developed
Truvia, a stevia-based sweetener. Coca-Cola’s
beverage brands Sprite Green and Odwalla are
sweetened with stevioside.
2. PepsiCo developed a stevia-based sweetener named
Purevia in partnership with Whole Earth Sweetener
Co. and is using it in its SoBe soft drinks brand.
3. Some of the other prominent companies that have
launched either a stevia-based sweetener or a
product containing a stevia-based sweetener are
Lipton, Kraft Foods, Zevia LLC, and Wisdom Natural
Brands (makers of SweetLeaf).
Stevia is currently being used in niche products and
has been met with widespread consumer acceptance.
However, if stevia prices are comparable to sugar and
HIS prices in the coming years,the mass production of
stevia could drive the use of the sweetener in mainstream
products.
Supplier Analysis
Current Suppliers
Currently, the major suppliers of stevia that have a
global reach are PureCircle and Cargill. Apart from
these companies, there are many smaller suppliers,
such as Blue California, GLG Life Tech Corporation,
Daepyung Co., Sweet Green Fields, DIC Lifetec Co Ltd.,
Morita Kagaku Kogyo Company Ltd., and Sunwin Stevia
International Co.
Long-Term Outlook
Industry experts expect stevia to be the sweetener of
the future, especially since the consumer preference for
3Copyright © Beroe Inc, 2011. All Rights Reserved
0
50
100
150
200
250
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
USD/kg
RebA Forecast Prices vs. Sugar Equivalent Prices
Reb A Forecast Prices
Lower Limit Sugar Equivalent Price
Upper Limit Sugar Equivalent Price
26%
74%
Cost Analysis
Input Costs (as a % of price) Profit Margin (as a % of price)

4. 4Copyright © Beroe Inc, 2011. All Rights Reserved
healthier products is increasing. Large companies, such
as ADM, Tate Lyle, Corn Products, and Bunge, are
likely to enter the market, either through organic or
inorganic growth. The introduction of these players is
expected to increase competitiveness and create a mass
market for stevia, which could lead to lower prices.
Action Plan for Potential Stevia Users
1. Stevia can be used by various sectors, such as food
and beverage,pharmaceutical,and consumer product
goods.
2. Companies that are considering using stevia
sweeteners in the short term and/or long term should
understand and analyze various facets of the stevia
market and its upstream and downstream impact.
3. It is necessary to track the stevia market, especially
prices, on a periodic basis.The frequency of tracking
should increase as stevia prices near sugar levels.
4. Opportunities in the market can be identified to
determine if there are any long-term strategic
relationships, either with stevia plant growers or
stevia sweetener producers, that can be established
which could be beneficial in the future.Alternatively,
the pros and cons of internally producing stevia
to meet the company’s own requirements can be
analyzed.
5. Identifying the best practices and sourcing models
adopted by industry peers for stevia procurement
can be useful to stevia buyers.
Potassium Chloride
In April 2010, the Institute of Medicine Report on Salt
2010 instructed the food industry to reduce the sodium
content in its products. The report recommended
mandatory national standards for permissible sodium
levels. Subsequently,the 17 major US cheese companies
(such as Cargill, Chr Hansen, Kraft Foods, etc.) pledged
to reduce the sodium content in cheese and increase
consumer awareness on the benefits of less sodium in
food products. In addition, in 2010, a number of major
firms, including Kraft Foods, Heinz, and Unilever, were
named among the signatories of the National Salt
Reduction Initiative, a program launched to cut the
level of salt in US packaged and restaurant foods by
25% over five years.
Potassium chloride has been identified as the closest
alternative to salt (sodium chloride). Although it has
an undesirable metallic aftertaste, masking agents and
blockers can be used to hide the bitter taste.An increase
in potassium intake, coupled with a decrease in sodium
intake, provides vast health benefits.
An estimated 77% of total dietary sodium is
contributed by the food processing sector. Hence, the
use of potassium chloride is expected to increase in the
coming years in place of sodium chloride. Tracking and
analyzing the potassium chloride market is imperative
for the effective replacement of salt in the food industry.
Carotenoids
Carotenoids are chemicals with nutritive properties
that exist in plant and animal pigments.They are used
to color food products. Growing consumer conscious-
ness about better health and nutritional intake has led
to an increase in the size of the natural carotenoids
market, as natural carotenoids offer health benefits,
unlike synthetic carotenoids.The global carotenoid
market is expected to grow to USD 1.2 billion by
2015.
77%
12%
6%
5%
Relative Amounts of Dietary Sodium in the
American Diet
Food Processing
Naturally Occuring
At the Table
During Cooking
OTHER HEALTHY TRENDS IN THE
FOOD AND BEVERAGE SECTOR

5. Disclaimer : Strictly no photocopying or redistribution is allowed without prior written consent from Beroe Inc.
The information contained in this publication was derived from carefully selected sources.Any opinions expressed
reflect the current judgment of the author and are subject to change without notice. Beroe Inc accepts no
responsibility for any liability arising from use of this document or its contents.
For more information, please contact info@beroe-inc.com.
Author: Pratap Premnath Palagiri | Senior Research Analyst at Beroe Inc
Source: PureCircle, Stanpack Pharma, bluecal-ingredients, USDA, nutraingredients
5Copyright © Beroe Inc, 2011. All Rights Reserved
Natural carotenoids are expected to substitute syn-
thetic carotenoids. Animal feed is the largest user of
carotenoids; however, due to the increasing demand for
natural products and natural ingredients, carotenoids
are expected to be used largely by food segments.
Lutein, lycopene, beta-carotene, astaxanthin, and can-
taxanthin are the major types of natural carotenoids.
Beta-carotenoids hold 32% of the carotenoid market.
The United States and Europe account for the major
share of sales in the carotenoid market. With the ris-
ing demand for carotenoids, however, Asian countries
like China, India, Japan, and Malaysia are expected to
enter the carotenoids market and cut into the share of
US and European producers.
Soy Products
Due to its high protein content, soya bean has been a
major ingredient used by the processed food sector.
The demand for soy products is increasing day by day
due to the growing health consciousness of consum-
ers. Soy products could be consumed as a substitute
for existing products. For example, tofu may be used
as a substitute for meat, and soy milk can be used as
a substitute for cow or buffalo milk.Various second-
ary products can be derived from these products, like
soy coffee/tea, soy ice cream, soy sauce, etc. All of
these products are witnessing an increase in demand
as consumers are aware of the health benefits that soy
products offer.
Soybean prices can be used as a base for soy products
prices. US average soybean farm prices are expected
to remain between 9.20-9.25 USD per bushel over the
next 10 years. Due to the modest increase projected
for the US soybean supply in the next 10 years (less
than or equal to 7% per year) and competition from
South American nations, such as Brazil, that offer
soybean at low prices, the forecasted prices for US
soybean are low.
Companies that procure soybean products should take
into account the volatility of soybean prices, supply-
demand fluctuations, and the most favorable regions
for soybean procurement.