SunOpta aims for $2 billion in revenue.
On December 31, 2022, SunOpta, Inc. concluded its fiscal year with $937 million in sales. The company anticipates slightly over $1 billion in sales in its fiscal year 2023, and management believes that sales might reach $2 billion in the following five to seven years. Increased capacity in its plant-based dairy substitute, nutrition drinks, and fruit snack businesses will be the main driver of that sales increase.
At its investor day on April 11 at its new plant-based beverage processing facility in Midlothian, SunOpta presented its expansion strategy. After spending $125 million on construction, the facility will handle a range of beverage package sizes and combinations, such as 16- and 32-ounce packages for foodservice, shelf-stable retail, and online sales of plant-based milks. Moreover, the facility will process 330-ml bottles.
“Among the things is… Chief Executive Officer Joseph D. Ennen stated, “I think the extent to which the plant-based milk category has permeated the market is underestimated, or misunderstood. Two or more plant-based milks are consumed by 40% of US homes, or 113 million households, over the course of a year. In the US, 53% of households have at least once purchased plant-based milk. Thus, in the last 52 weeks, more than half of American households have bought plant-based milk.
Seventy-four percent of homes had both dairy and plant-based milk available. Thus, this is neither a trend nor a niche.
Mr. Ennen used the example of oat milk, stating that SunOpta sold $1 million worth of oat milk in 2019. It was $120 million in 2022, and he anticipates that the sector will keep expanding. The company also mentioned its barista business and the foodservice industry as further opportunities for plant-based growth.
A major component of SunOpta’s expansion strategy will be catering to the market for plant-based milk substitutes. The company believes it can generate an additional $1.2 billion in revenue by expanding its business in the sector. According to the business, SunOpta’s attempts to generate that extra revenue will be aided by the Midlothian plant’s enhanced capacity, the growth of its oat platform, and innovation in next-generation milks and ready-to-drink coffees.
Installing processing capacity at the Midlothian factory was essential to the company’s growth. The business predicted at the time that by fiscal 2025, sales in the new category would reach $50 million.
“We think that nutrition beverages will be a major source of growth for us over the next ten years,” Mr. Ennen stated at the investor day presentation. “It’s a huge category that really aligns with our core competencies.”
The management believes that increasing its market share in the nutritious beverage sector may generate an extra $250 million in sales. According to the corporation, branded opportunities, new product formats, and market adjacencies may contribute to this extra sales growth.
Although drinks, especially plant-based ones, lie at the heart of SunOpta’s operations, the management has not overlooked the snack segment’s growth and the company has established itself as a pioneer in the better-for-you snack industry. Sales of SunOpta’s fruit snack division were $50 million a few years ago, and they are currently close to $92 million.
Revenue of $250 million is our long-term objective, stated Mr. Ennen.
Capacity limitations have stopped the category’s growth, but according to Mr. Ennen, additional capacity will be online in the third quarter of this year.
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He stated, “At the moment, we are producing every single pound of product that we can, and we are extremely excited about that capacity expansion.” “One of the biggest retailers in the world is prepared to reduce operations as soon as that capacity becomes available.”
According to the firm, new product forms, a bowls platform, and the possible purchase of more manufacturing capacity are among the other strategic measures that will help SunOpta’s expansion in the snack industry.
In the short term, SunOpta is projecting $1.1 billion in sales in fiscal 2024 with an adjusted EBITDA of $120 million. The company’s long-term target is $2 billion in sales over the next five to seven years. Sales of roughly $1.25 billion are anticipated in the fiscal year 2025, with an adjusted EBITDA of $150 million.