Genki Forest supplier goes public in Shenzhen at $2.8 billion valuation
There’s a lot of money in sugar-free sweeteners, and Sanyuan Biology is making it.
Genki Forest is a sparkling zero-calorie soda company whose beverages can be found in every convenience store and supermarket of China’s major cities, as profiled by The China Project last year.
In a testament to its success and to global demand for sugar-free sweeteners, the supplier of its zero-calorie sweetener went public on the Shenzhen Stock Exchange yesterday valued at $2.8 billion.
- Genki’s supplier, Shandong Sanyuan Biology, sells a sweetener called erythritol, a type of sugar alcohol that occurs naturally in foods like grapes, mushrooms, and pears. It tastes like sugar but has only about 6% of the calories.
- Sanyuan Biology is run by 71-year-old Niè Zàijiàn 聂在建. A former director of a printing and dye factory, Nie took a business trip to Japan in the 2000s and discovered erythritol. Upon his return, he founded Sanyuan Biology in 2007 and built the zero-calorie sugar industry in China from scratch.
- The company has enjoyed a meteoric rise since clinching the deal with Genki Forest: In 2019, Nie’s company produced 55% of the domestic erythritol market and 33% of global production, making it the largest erythritol producer in the world.
The context: Erythritol is commercially produced by fermentation from a sugar derived from corn, called dextrose. Japan approved erythritol for use in foods in 1990, followed by the World Health Organization (WHO) in 1999.
- Shandong is the center of China’s corn production. Because of this, three of the world’s top five erythritol producers are in Shandong — Sanyuan Biology, Texas Bowling Green, and Zhucheng Dongxiao Biology. Thanks to Genki Forest, erythritol is now one of the most popular sweeteners in China today.
- Most of the erythritol produced by Sanyuan Biology goes overseas. In 2015, its main customers included Saraya, a healthy snack food company in Japan, and HFMH, a major ice cream and table sugar company in the United States.
- This market has made Sanyuan a public company even before Genki Forest, which was reported in November to be in talks for an IPO valued at a whopping $15 billion.
The takeaway: Genki Forest has transformed the beverage industry in China, forcing brands such as Nongfu Springs, Wang Laoji, Coke, Pepsi, and Hey Tea to launch their own sugar-free beverages one after another. As competitors rush in, Sanyuan Biology is reaping the rewards.
