1. What is Arboreal all about? Explain the business model of the company?
Arboreal Bioinnovations Pvt. Ltd. is a natural food ingredients manufacturing platform mainly focused on helping the Food and Beverage industry reduce/replace Sugar in their products. It was founded in 2015 by Swati Pandey and Manish Chauhan with the vision to accelerate the world’s transition to the ‘Post Sugar World’. The amount of sugar that an average person consumes on a daily basis is extremely unhealthy and Arboreal is trying to change this through its proprietary innovations. At Arboreal, we believe that the world has already reached the peak of its Sugar consumption, and what we are entering now is the post-Sugar era, where slowly, Sugar will become a thing of the past.
Arboreal combines Stevia (a zero calorie natural sweetener) with other natural ingredients and plant fibers to create sweetening solutions that don't just taste like Sugar, but also have textural and other sensory properties like Sugar. In the past 7 years, Arboreal has built a vertically integrated supply chain of Stevia. The company works with smallholder farmers in rural India to grow the right variety of Stevia plants, and then uses its proprietary organic technology to extract the sweet compounds from the Stevia leaves. Presently, the company is working on a B2B model where they help Food and Beverage manufacturers reduce added Sugars in their product recipes using natural ingredients. Just like any other natural product, the taste of Stevia extracts depends on various factors including the plant variety, the location of plantations, time of harvest, extraction process used etc. Here, our vertically integrated approach helps us in developing great tasting and better quality solutions consistently. The biggest challenge with replacing Sugar in most product recipes is that, Sugar is not just a sweetener, but also a cheap excipient (which provides bulk) and texturing agent. Developing the right tasting solution with Stevia therefore requires an interdisciplinary approach combining Agritech, Biotech, and Food technology, which is what Arboreal has been pioneering.
2. What is the current growth rate of the company? What is its annual turnover?
In terms of growth rate, the company is witnessing pretty good traction, especially in the last few months. The last quarter of FY 21 and first quarter of FY 22 have been really progressive. Over the past 6 months, the company has experienced a consistent growth rate of around 50% month-on-month.
3. Would you like to highlight any recent partnership or collaboration which took place in the company?
So far, the company has tried to do everything in-house. The company is involved in every step of the manufacturing process which includes cultivation, extraction, formulations development and production. The main reason to do this was out of necessity. When Arboreal started working on Stevia, the Stevia industry in India was non-existent. Nobody had taken a long term approach to building the Stevia industry. The cultivation was happening in a highly fragmented manner in very small pockets across the country, noone was doing any R&D on next generation Stevia molecules and there were no testing facilities in India either. So, the company had to start everything from scratch - right from developing the right Stevia plant variety to the right agronomic model and an economically feasible industrial scale extraction technology. And most of the R&D was done in-house. In terms of partnerships on the market side, the company has collaborated with a number of food and beverage companies to help them develop low/zero calorie food products. The firm has also started exports and is currently exporting to 5 countries. In India, the company has been working with various startups and renowned companies.
4. Explain the manufacturing or R&D process of Arboreal Bioinnovations
Arboreal has established a vertically integrated supply chain of Stevia in India. Arboreal is the first company in the country to do this. Since the inception of the company, we have successfully built the entire value chain of Stevia, which includes working with smallholder farmers for the cultivation of Stevia plants, extracting the sweet compounds from the Stevia leaves using an organic process, and developing a wide range of great tasting solutions and products for the market. We truly work at the intersection of Agri-tech, Biotech and Food tech, and have done unique scientific interventions to create IP at every step of the value chain. For example - many of our sugar reduction solutions which are being supplied in the market are currently patent pending and unique to us.
5. What is the current market size of the stevia industry? How do you see the growth of this industry in future?
The stevia market is around USD 1 billion and is projected to reach USD 10 billion in the next 10 years. The global natural sugar reduction space is a larger opportunity which is around USD 17 billion. Out of this figure, around USD 8 billion is represented by artificial sweeteners. Since the outbreak of Covid-19, people have become more health conscious. They are looking for natural alternatives to cut down their calorie intake. So, the stevia industry has gained more popularity in the last two years. Currently, 40% of the sweet-tasting products in Japan are made from sweeteners extracted from stevia. The pandemic has introduced us to new and healthy options like Stevia which, in its pure form, upto 300 times sweeter than table sugar and has zero calories. It also has a zero glycemic index and does not affect blood sugar levels. So, I think the growth of the stevia industry is going to witness a significant rise in the future. In the next 10 years, the natural sugar reduction is expected to represent a USD 25 billion opportunity, globally.
6. What are your future plans for the company as a founder?
Sugar reduction is a trend that is being highlighted across the FMCG and Food & Beverage sector. Many leading companies such as Nestle, Coca-Cola, and Pepsi have started reducing the amount of sugar in some of their mainstream products. For example, Tropicana has now lowered the level of sugar in their packaged juices. Nestle iced tea has also reduced the added Sugar in it and has replaced it with stevia. So, we are seeing such kinds of sugar reduction steps from large brands of the industry globally. There is going to be tremendous growth in this domain in the coming few years, which will be driven by the right formulation. And, that is where we have built a strong differentiator as a company. We have developed proprietary solutions on the basis of our six years long (and continuing) R&D. The company’s approach is to develop customised solutions for its customers. As a company, Arboreal is the only player in India which has taken such an approach. Over the coming future, the company has the opportunity to become a leader in this space, catering to not just the indigenous market but the global market as well.