SunOpta expands its line of plant-based beverages in a rapidly growing market.
Minneapolis, Minnesota SunOpta, Inc.’s plant-based business is experiencing double-digit revenue growth driven by oat-based beverages. Executives at the company anticipate that the recent purchases of a rice- and soy-based beverage brand will quicken that growth.
The plant-based division of SunOpta reported first-quarter sales of $119.5 million, up 47% from $81.3 million in the same period in 2019 and up 12% from $106.2 million in the same period the year before. Growth was driven by higher retail sales volume of various plant-based beverages and greater demand for oat-based product offers.
The demand for oat milk substitutes is rising by triple digit percentages, according to Joseph D. Ennen, CEO of SunOpta, who made this announcement during a May 12 earnings call. Four or five brands control the majority of the market share.
“We collaborate with multiple top brands as they launch their oat milk products,” he stated. Therefore, we believe that in terms of our brand partners, we are in a pretty excellent position from a demand perspective.
In terms of capacity, the investment we made in oat milk in 2019 was quite fortunate for us. Regarding our oat milk production, we are witnessing incredibly robust business development and utilization from both new and existing customers. We still have capacity available at this time. It is still possible for us to accept new clients.
The Hain Celestial Group, Inc.’s Dream and WestSoy plant-based beverage brands were acquired by SunOpta for $33 million in April. Half of the Dream product portfolio and the whole WestSoy product portfolio are already produced by SunOpta. According to Mr. Ennen, Dream is 90% rice milk while WestSoy is 100% soy milk.
“When we finish the in-sourcing of all volumes, we anticipate that these brands will add $15 million to $20 million in incremental revenue and $6 million to $8 million in incremental EBITDA next year in 2022,” he stated. “Achieving in-sourcing synergies, transitioning the business, and developing the capabilities required to manage these brands are our current priorities with Dream and WestSoy.”
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He continued by saying that Dream provides SunOpta with the opportunity to grow beyond plant-based milk substitutes, as discussed by the company’s leadership.
SunOpta, a Minneapolis-based company, reported total revenues of $207.6 million, which remained unchanged from the first quarter of the prior year. Revenues for the fruit-based company came in at $88.2 million, a 13% decrease from the first quarter of the previous year’s $101.4 million. The anticipated stock-keeping unit (SKU) and client reduction caused a decline in fruit-based revenues. Another negative effect was the limited availability of blended frozen fruit due to supply difficulties for specific fruit varietals.
SunOpta’s $1.7 million earnings from continuing operations contrasted with a $4 million loss from continuing operations in the first quarter of the prior year. Relative to net earnings of $1.3 million, or 2¢ per share on the common stock, in the first quarter of the prior year, there was a $281,000 earnings loss attributable to common stockholders. The modified EBITDA of$18.3 million as opposed to $13.7 million in the first quarter of the prior year.
“The first quarter performed pretty much as anticipated, with plant-based revenues growing at a rapid pace, fruit-based margins getting better, and adjusted EBITDA growing by double digits,” Mr. Ennen stated.