Shares in Purecircle (LON:PURE) rebounded by 2.6% to 215p in early trading following yesterday’s dramatic share price collapse which saw the stock fall from 274p to 209p on the back of a warning that 2010 profits at the natural food and drink sweetener group were set to come in below 2009 levels.

In an update today, PureCircle, whose high purity stevia products are designed to replace sugar and artificial-tasting sweeteners, announced five major multi-year contract wins with Danone, Unilever, Bimbo Bakeries, Dean Foods and Kerry Ingredients. The company already has global supply contracts with PepsiCo, Merisant and Firmenich and said that a number of other arrangements in the final stages of negotiations with global multinational F&B companies would be announced in due course. Over and above the strategic contracts PureCircle has more than 100 regional and local F&B invoicing customers and this list is expected to grow substantially in the 2011 financial year.

Magomet Malsagov, PureCircle’s chief executive, said: “We have successfully diversified our client base from one exclusive customer to a number of major strategic global F&B clients and over 100 regional and local invoicing customers around the world. Although the decision to go directly to the market has had short term impact on our sales in the early stages of the development of the industry, we are absolutely confident that it was the right decision for long term growth of the company.”

Malsagov’s comments follow and interim management update from PureCircle yesterday in which it said that 2010 revenues would be in line with 2009 sales and that profitability would actually take a dip this year. It blamed the performance on significantly increased investment in production overhead, sales and marketing compared to 2009, coupled with the fact that the company is running under capacity. PureCircle's strategy is to build a large global business and it has invested heavily to build an infrastructure designed to support a business with turnover of $250m or more. However, in the last 12 months the company has adopted a strategy of selling direct to end user F&B clients rather than through trading partners. As a result the company ended a contract with a trading partner that represented 60% of sales in 2009 after it failed to make any sales in 2010. PureCircle said it had since gone on to expand its direct customer base…

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