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Sunwin International Neutraceuticals, Inc. (SUWN-OTC: BB) |
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February 27, 2009 Issue |
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The Most Powerful Name In Corporate News and Information |
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CURRENT ISSUE | COVER ARCHIVES | INDEX | CONTACT | FINANCIALS | SERVICES | HOME PAGE |
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Sunwin International Is In The Right Place At The Right Time With Their All Natural Stevia Extract Sweetening Product |
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Sunwin International Neutraceuticals, Inc. is a China and U.S. based company engaged in the manufacturing of zero calorie natural Stevia sweetener, essential traditional Chinese medicines, and veterinary medicines and feeds prepared from 100% organic herbal ingredients. Sunwin employs more than 400 workers and operates in China since 1996. Sunwin is an integrated global agricultural processing firm with the sourcing and production capabilities to meet the needs of consumers throughout the world. Sunwin USA is the US based subsidiary of Sunwin International. Sunwin USA is responsible for the sales, marketing and distribution efforts of bulk stevia extract and a retail dietary supplement consumer product, OnlySweet™ that is sold in over 4,000 grocery stores in the United States. For more information, visit www.sunwininternational.com and www.onlysweet.com.
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Investor Relations: 469-362-5960
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Interview conducted
by: Lynn Fosse, Senior Editor , CEOCFOinterviews.com, Published – February
27, 2009 Mr. Reynolds: “The vision for Sunwin International Neutraceuticals is multi-faceted because of the international aspect of the business. Today, our business is predominantly being done in countries outside of the United States; primarily in the Asian Rim. That business is going to continue to grow organically based upon the expanded use of Stevia extract, and the consistent growth of our other two business segments, which are veterinary medicines, and Chinese herbal extracts. The major growth of the company is going to be experienced in countries that approve Stevia extract as an all-natural, zero calorie sweetening system and the largest obviously is the United States, where Stevia has recently been approved as a sweetener and this has started a foot race for food and beverage companies to integrate stevia into their product lines. Our goal is sustain our position as one of the world leaders in the production of stevia extracts, and be a leader in stevia extract innovation.”
CEOCFO: Why do we need another non-caloric sweetener? Mr. Reynolds: “Currently in the United States there is not a popular or affordable zero calorie, all-natural sweetener. Today the consumer market is dominated by chemical based sweetening systems i.e. saccharine, aspartame and sucralose. Consumers who are looking for an all-natural zero calorie alternative, really do not have many choices. In addition, the products that are filling that niche today are extremely expensive on a per pound basis or usage basis. However, our retail product OnlySweet™ is a very cost effective choice for consumers and it’s taste is super. Food and beverage companies both large and small recognize the consumer demand for all natural, low or NO calorie products. Consumers will start to see more products using stevia as the sweetener of choice, and with advancements in natural flavor technology; these products will be very healthy and taste great. The keys are to be all natural, be zero calorie, taste great, and to be as affordable as possible.”
CEOCFO: Sunwin recently announced a major strategic alliance and capital infusion. What does that offer to investors? Mr. Reynolds: “This announcement partners Sunwin with WILD Flavors Inc., one of the leaders in food and beverage product development who has product experience with many of the major food and beverage companies that produce world class brands. Working with them, Sunwin expects to place its Stevia extracts in more products in less time. WILD also has a number of specialized flavor technologies that will pair nicely with our stevia extracts and make them easier to use in more products. The agreement has provisions for WILD to invest in Sunwin with both capital and value added services. The cash infusion will assist us in expanding our production facilities for what we believe will be a larger demand for high grade stevia extracts, and with noncash services that will expand much of our US operations without added cost to Sunwin. Unlike other alliances within the Stevia industry, this agreement enables Sunwin to work with a broad cross section of food and beverage companies as an independent stevia provider. It also allows Sunwin to continue selling and expanding its extract business beyond the partnership, opening the door to many other opportunities.”
CEOCFO: Are Coke and Pepsi involved with Stevia? Mr. Reynolds: “Yes they are. They have a two-pronged approach, the bulk of Coke and Pepsi’s interest in Stevia right now is going to be its utilization of the high intensity, zero calorie, all-natural sweetener, to be used in place of or in lieu of either sucralose or aspartame. Currently the large franchise brands like Diet Coke, Diet Pepsi and other diet soft drinks are sweetened for the most part with aspartame. There are some brands that are under those major core brands that are sweetened by sucralose. Both companies have a vested interest over the long-haul to convert over as many brands as they can from a sweetening system they are purchasing from an ingredient company, to one they can use that they each can profit from. Each company has developed separate partnerships with companies to make stevia based sweeteners for them. From a tabletop perspective, which is the familiar packet business, it is hard to discern what their relationship is, how it is financially structured between Coke and Cargill, and Pepsi and a division of Merisant, which Pepsi is partnered with. I am sure there is financial benefit there, to what degree I do not know, but the long-term thought processes could be that Pepsi and Coke will benefit from both from the tabletop business being managed by those companies, and the ingredient business that they are going to be purchasing and procuring for their brands.”
CEOCFO: Does Sunwin produce Stevia in China? Mr. Reynolds: “Yes we do.”
CEOCFO: What is the competitive landscape? Mr. Reynolds: “Eighty percent of the worldwide production of Stevia extract is done in China. Our company, Sunwin International Neutraceuticals, is a top-3 player in that space and we continue to grow our business not only by developing the business we have in countries that have been using Stevia for years as a sweetener, but also expanding its usage and presence here in the United States. Currently it is a dietary supplement, but with the recent FDA letters of no objection, its use is going to expand quickly. The company has been engaged in the Stevia industry for over thirteen years, has a very strong management team that has been in place since the beginning and has a very good understanding of the Stevia industry and landscape in China. The fact that 80% of the leaf stock is grown in China is an important aspect of the business. Having long term sustained relationships with stevia growers, a strong and stable management team in place, and a proven consistent refining process will enable Sunwin to continue to grow and improve for years to come.”
CEOCFO:
Will this continue to be manufactured in China for US consumption?
CEOCFO: Can your existing facilities be ramped up from the growth and extraction process to meet the demand that will come? Mr. Reynolds: “Yes, we have additional capacity available with our current facilities to increase production of not only what we define as mid-grade Stevia extract, but also high-grade Stevia extract. It is important to understand that in order to make the high-grade Stevia extract you have to have the ability to make mid-grade Stevia extract first. You need to be able to make the mid-grade and we have tremendous upside and capacity in that area of the business. We have a high grade crystallization facility there as well. We will be using some of the capital infusion from our WILD Flavors partnership agreement to expand our facilities and this is taking place already.”
CEOCFO: What are the challenges and benefits of being based in China? Mr. Reynolds: “The benefits of having the company based in China are twofold; one is a very strong management team that has been in place for a long time as I have said earlier. That is undervalued and not a topic that is discussed in Stevia circles very much, and it should be. Both of our major competitors that have a presence in China are companies that are based outside of China and they have gone the acquisition route. I think whenever you do this, you run the risk of having a management and production team and quality control teams of people that may not necessarily be the managers that have been there for a long time. This is not the case with our company, which is a significant strength. They know the industry, the ins and outs, and they have strong relationship with the growers of high quality stevia leaf stock. Understanding and managing this process is critical. From a benefits standpoint I think that is significant. The other aspect is the cost of doing business in China. Currently the cost of labor, land, and facilities is lower in China than in other countries and we do not see this changing in the near term.
CEOCFO: Obviously, you are doing something right because first half 2009 revenues increased 29%; what is the financial picture like today? Mr. Reynolds: “The company is a very strong financial performer. The revenues continue to grow year-after-year, with profit margins that continue to sustain themselves and grow. From a cash position standpoint the company enjoys a cash balance of over $6.7 million in the bank with virtually no debt, even after making a significant purchase of raw leaf stock during the recent harvest season. So whenever you can speak to anybody in the financial industry and talk about revenues growing at that rate, profitability sustaining itself,, then having cash flow to this degree, those are all very strong financial performance indicators. Again I think that goes back to a strong management team that understands the business, has been involved in it for a long time, and being very prudent and conservative minded in terms of expansion and growth.”
CEOCFO: Will you be going into the Australian market? Mr. Reynolds: “Absolutely! The expansion of Stevia, with the approval of the Australian FDA equivalent, presents two segments of opportunity for business growth: ingredient sales, and the retail tabletop business, which is the packet business and the consumer baking ingredient business. I think it is going to be tremendous in terms of upside growth, because zero-calorie, high-intensity sweeteners that are chemically based cannot be heated and that is why you really don’t see a huge growth of those types of products, because they don’t perform well when they are heated. Stevia is a much different product than that, so it is going to lend itself to be used by the consumer in baked goods and other types of applications that aren’t being used today.”
CEOCFO: Who is using OnlySweet™ now? Mr. Reynolds: “We have our consumer brand here in the United States and we have distribution of that product in about four thousand grocery stores across the country predominantly in the Midwest and Southwest portions of the US. Consumers who are really looking for an all-natural, zero-calorie alternative are using OnlySweet™. There is an underlying subset of the consumer market that knows Stevia, understands it and has been using it for some time that is purchasing OnlySweet. This is because they see that the price value relationship that exists with our product vs. other Stevia based dietary supplements that are currently on the market is significantly less and the quality is equal to or better than other products that are out there.”
CEOCFO: How are you able to offer low prices? Mr. Reynolds: “A lot of it is vertical integration. Most of the companies that are in this business are companies that are buying the raw ingredients from many different sources. However, with our company, we manufacture the Stevia extract, so there is a cost savings there. We have a lean administrative cost function associated with the business vs. other companies. We outsource many of the necessary functions so we are not riddled with debt, which can make it very difficult to produce strong profit margins. Those are the things that drive the cost savings of the product. We pass those cost savings on to consumers so they can try it. I think there is significant opportunity as the business grows, for us to even reduce our costs even further as we attain greater scale. Let’s face it, there haven’t been many competitors in this space up to now, so I think people have had the luxury of being able to charge consumers what they want and reaping those profits in the higher margins that they could because they were the only game in town. So I think that is going to change.”
CEOCFO: Would you like to touch on other aspects of the business?
Mr. Reynolds:
“There are three additional aspects of the Sunwin business, two that are
strong businesses today that are continuing to grow and are very profitable.
First, there is the veterinary side of the business, which was one of the
original founding pieces years ago, and that continues to grow. Those
products are primarily being sold and marketed in the Peoples Republic of
China, in the agricultural space. These are farmers who are buying these
products to care for their animals and livestock. That business supports an
important aspect of the Chinese business sector, which is agriculture. The
other aspect is the Chinese herbal remedies and that business continues to
grow and be very profitable. These products are primarily marketed and sold
in the Peoples Republic of China.
CEOCFO: In closing, why should potential investors be interested today?
Mr. Reynolds:
“The biggest reasons investors should be investing is Sunwin centers around
healthier life styles and investing in companies that understand these
trends and market to that area. In the United States, the epidemics
associated with obesity and diabetes are well beyond our comprehension.
Therefore, if we really care about our own health and that of our children,
we need to take a moment to understand what things we can do without in our
diet or what changes in our diet we need to make in order to live longer and
healthier. Low calorie diets and diets that are all natural are better for
you. As consumers migrate in that direction they are going to have some
basic products that they are going to be turning in order to change their
lifestyles. Stevia will play an important role in this change.
I believe this business is going
to change rapidly. Technology is going to make stevia more adaptable to
other consumer products; be it foods or beverages. I think flavor technology
will improve the taste of products using stevia over time, which is going to
increase the volume and the usage rate of Stevia. Sunwin will be a key
player in this industry. We will be conservative minded, but also take
advantage of growth opportunities. We are a leader in a growing industry and
we profitable. We continue to focus on positive cash flow and consumer
trends in the sweetener industry. Those are all great reasons for an
investor to spend their hard-earned money on Sunwin International
Neutraceuticals.” |
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“Currently in the United States there is not a popular or affordable zero calorie, all-natural sweetener. Today the consumer market is dominated by chemical based sweetening systems i.e. saccharine, aspartame and sucralose. Consumers who are looking for an all-natural zero calorie alternative, really do not have many choices. In addition, the products that are filling that niche today are extremely expensive on a per pound basis or usage basis. However, our retail product OnlySweet™ is a very cost effective choice for consumers and it’s taste is super. Food and beverage companies both large and small recognize the consumer demand for all natural, low or NO calorie products. Consumers will start to see more products using stevia as the sweetener of choice, and with advancements in natural flavor technology; these products will be very healthy and taste great. The keys are to be all natural, be zero calorie, taste great, and to be as affordable as possible.” - Jeff Reynolds |
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Jeff
Reynolds