Minnesota-based food and beverage company SunOpta forecasts it will double its business by 2025 with focused investment in more aseptic manufacturing capacity that will service its move into the RTD nutrition category and will help grow its oat-based products division.
“Growth is oxygen,” CEO Joe Ennen said during the Investor Day on Friday, and that growth is taking the form of three new facilities. SunOpta’s new 285,000 square foot beverage facility in Midlothian, Texas is slated to play a pivotal role alongside more oat extraction operations in California as integral parts of the company’s further investment in its plant-based food and beverage businesses.
SunOpta has shifted its focus from a commodity business into its value-added products and is the largest supplier of shelf-stable milks in North America, Ennen said. Since 2019, value-added products have doubled from 30% in 2019 to 60% presently. Recent acquisitions and expanding its ingredient business has shown the company can capitalize on its manufacturing expertise and become more than a co-manufacturing and private-label business. Leadership was confident that SunOpta can continue to dominate the shelf-stable, plant-based milk segment while innovating into other categories.
SunOpta maintained its 2022 guidance of $890 million to $930 million in revenue and a projected revenue of $1.3 billion by 2025. It expects the core TAM to grow from $3 billion in 2019 to $12.5 billion by 2023.
Building Out Manufacturing Capacity
SunOpta is playing to its core strength of aseptic food and beverage manufacturing, both for private label clients and its own brands. About $220 million has been invested between 2020 and 2023 to expand its production capacity and lean into this competitive advantage in the market.
“In combination with our plants in California, Minnesota, and Pennsylvania, the Texas location creates a competitively advantaged, ‘diamond-shaped’ national network…this new facility is estimated to annually eliminate over 15 million freight miles from our supply chain,” Ennen said in a press release.
The company expects its new Dallas/Fort Worth area processing facility to be operational during 2023 complete with a new 330ml production line. Executives were confident that they were “very close to finalizing an agreement” with an anchor customer who is “one of the leading brands” in the RTD nutrition industry. SunOpta declined to name who the company was but said that two existing customers were committed to incremental volume into the network as well.
Investing In Plant-based RTD Protein Beverages
The new Midlothian production facility’s 330ml production line which will serve as the beachhead for SunOpta’s RTD protein beverage plans.
Initially, SunOpta will be servicing the whey protein product market but the company plans to play to its strengths and capitalize on the lack of plant-based, RTD nutrition drinks offered to consumers.
According to SunOpta research, 40% of protein powder is plant-based whereas only 3% of RTD. Company executives cited that data point as a guiding factor in incubating innovation in the plant-based protein drink segment.
There is not enough capacity and not enough supply to reach the demand for plant-based RTD protein drinks, Buick said Friday. “That will be a big part of our innovation going forward.”
SunOpta is confident it can build a $50 million nutrition business by 2025.
Oat products Sowing the Ground for Growth
The strategic center of the company will continue to be the plant-based beverage category which makes up 80% of gross profits. SunOpta currently holds more than a 50% share of the shelf-stable plant-based beverage market with oat products representing 32% and almond products representing 31%, according to SunOpta general manager Mike Buick.
“If this was 2018, oat would be one-third of one percent of our business,” he said. “Oat is the fastest growing segment in plant-based milk.”
The plant-based company is banking on the continued demand for oat products in both retail and coffee chains. It launched SOWN oat creamer in February 2021 and OatGold, an ingredient powder made from upcycled oat-protein, in March. In April 2021, SunOpta closed the purchase of two non-dairy beverage brands – Dream and Westsoy – from Hain Celestial extending its reach in shelf-stable, plant-based milks.
SunOpta is innovating its oat production beyond refrigerated and shelf-stable milks and into other value-added products like yogurts and ice cream. It has plans to expand its oat extraction to California in 2023 to further meet the increasing demand for oat-based beverages.