MIDLOTHIAN, TEXAS — SunOpta, Inc. closed fiscal 2022, ended Dec. 31, with $937 million in sales. In fiscal 2023 the company is guiding sales to be just over $1 billion and in the next five to seven years management sees the potential for $2 billion in sales. Driving that sales growth will be added capacity in its plant-based dairy alternative, nutrition beverages and fruit snacks businesses.

SunOpta’s growth strategy was outlined April 11 during its investor day that was held at its new plant-based beverage processing plant in Midlothian. The plant, which cost $125 million to build, will process a variety of beverage package sizes and configurations, including 16-oz and 32-oz packages for foodservice, shelf-stable retail and e-commerce for plant-based milks. The plant also will process 330-ml packages primarily used in high-protein nutrition drinks.

“One of the things … I think that is underappreciated, or misunderstood, is just how broadly penetrated the plant-based milk category is,” said Joseph D. Ennen, chief executive officer. “Forty percent of US households — 113 million US households … have two or more plant-based milks in their house in a 12-month period. Fifty-three percent of US households have bought plant-based milks at least once. So, over … half of American households have purchased a plant-based milk in the last 52 weeks.  

“Seventy-four percent of households have both plant-based and dairy milk in their house. So, this is not a niche; this is not a fad.”

Using oat milk as an example, Mr. Ennen said in 2019 SunOpta had oat milk sales of $1 million in 2019. In 2022, it was $120 million, and he expects the category to continue growing. Other avenues for plant-based growth cited by the company include foodservice and its Barista business.

Joseph D. Ennen, CEO of SunOpta. Photo: SunOpta Inc.

Serving the market for plant-based milk alternatives will play an outsize role in SunOpta’s growth strategy. By growing its business in the category, the company sees $1.2 billion in additional revenue potential. Supporting SunOpta’s efforts in generating that additional revenue will be the added capacity the Midlothian plant provides, expansion of its oat platform, and innovation in ready-to-drink coffees and next generation milks, according to the company.

In 2022, SunOpta said the development of a nutrition beverage business was a strategic priority. Key to the development of the business was the installation of processing capacity at the Midlothian plant. At the time, the company forecast sales in the new category would reach $50 million by fiscal 2025.

“Nutrition beverages, we believe, is an absolute future growth driver for us for the next decade,” Mr. Ennen said during the investor day presentation. “(It’s a) huge category, hits with our core competencies very, very well.”

Management sees $250 million in additional revenue potential in expanding its presence in the nutritional beverage category. That additional sales growth may come from branded opportunities, new product formats and market adjacencies, according to the company.

While beverages and particularly plant-based beverages are a core element of SunOpta’s business, the growth of the snack segment has not been lost on management and the company has set its sights on being a leader in the better-for-you snack market. A few years ago, SunOpta’s fruit snack business generated $50 million in sales and today the business has approximately $92 million in sales.

“Our long-term goal is $250 million of revenue,” Mr. Ennen said.

Growth in the category is stalled due to capacity constraints, but Mr. Ennen said new capacity will come online during the third quarter of this year.

“Right now, we are making every single pound of product we possibly can, and we are incredibly excited about that capacity expansion,” he said. “We have one of the world's largest retailers ready to throttle down the minute that capacity comes online.”

Other strategic initiatives supporting SunOpta’s growth in snacks will be new product formats, a bowls platform and the potential acquisition of additional manufacturing capacity, the company said.

While SunOpta’s horizon goal is $2 billion in sales in the next five to seven years, in the near term, the company is guiding $1.1 billion in sales in fiscal 2024 with an adjusted EBITDA of $120 million. In fiscal 2025, sales are expected to be approximately $1.25 billion with an adjusted EBITDA of $150 million.