Natural foods business SunOpta has completed a $26 million expansion of its Modesto, Calif. production facility, the company announced today, allowing it to increase its oat milk output by more than 60%.
According to a press release, the project is the second largest expansion of its kind in the more than 50-year-old company’s history. The upgrade to the 167,684 square foot plant includes new oat extraction production lines that utilize a proprietary process to “break down whole oats into a liquid oatbase” which can be used for plant-based milks, yogurts and ice creams.
“Through this significant investment in Modesto to produce more oatbase, we’re well positioned to meet the increasing market demand for plant-based milk and other oat-based products,” said SunOpta CEO Brian Kocher in a statement. “We are also pleased to bring 17 new positions to our Modesto team and continue making a positive impact in the communities in which we work and live.”
In Q4 2023, SunOpta reported 14% revenue growth to $181 million year-over-year, helping to offset double-digit revenue declines for the full year. Plant-based milks have been a source of growth for the Minneapolis-based company, reporting the category – in particular oat milk – drove mid-single digit growth in Q4 with much of its revenue in the space coming from untracked channels.
The business maintained its double-digit gains in Q1 2024, as Kocher said in an earnings report that the company has been “encouraged by the progress of our capacity investments,” which have helped to drive volume sales growth and improved gross margins.
According to the company, SunOpta sees room to grow in plant-based milks, citing proprietary sales order data that suggests category volume for shelf-stable plant-based milks will be up mid-single digits in 2024 across all channels.
In 2022, SunOpta said during its Investor Day event that it believed that oat-based products and expansion in RTD nutrition would help it to double its business by 2025, with a strategy shifting away from commodity sales and towards “value-added products.”
In addition to the California facility, SunOpta opened a $125 million Dallas/Fort Worth area production facility last year, which included a production line for 330ml products.