SunOpta: Demand For Plant-Based Products Fuels Record Growth In Q2

Specialty food and beverage company SunOpta reported one of its strongest quarters in company history, posting a record $145.9 million in revenue, up 31% compared to $111.4 million in the same quarter 2021.

Gross profits were up to $34.8 million versus $26.3 in 2021 lifting gross margins to 14.3% in Q2. The company experienced double-digit growth in nearly every major customer segment, every channel, every product type and every go-to-market business, reported CEO Joe Ennen.

“The actions we have taken over the past several years to optimize our product portfolio, streamline operations and aggressively expand capacity are driving significant and sustainable momentum across our business,” he said in a prepared statement. “Our increased outlook for 2022 reflects the strength of recent results, and more importantly our confidence in our ability to continue delivering significant growth and increasing value for shareholders.”

SunOpta raised its guidance up $930 million to $960 million (previously $890 million to $930 million) and adjusted EBITDA to $72 million to $78 million (up from $67 million to $75 million).

The strong Q2 earnings were attributed to the company’s successful strategy of raising prices over 10% which offset the impact of inflation by about 95%, according to the earnings report. The food and beverage maker expects continuing economic headwinds as inflation for packaging, wages and utilities remains “stubbornly high” but doesn’t expect any new pricing actions will be needed, Ennen said.

Investing activities used $37 million of cash during the Q2 with about $34.1 million going towards SunOpta’s expansion in Texas and the West Coast.

Ennen assured investors and analysts that the new manufacturing projects were all on schedule with the new line at the Modesto plant expected to be operational by the end of Q3. The Greenfield plant in Midlothian, Texas is expected to be completed by the end of year.

Leadership is expecting the Midlothian facility to help SunOpta reach its goal of doubling the business by the end of 2025.

The new facilities will help SunOpta, one of the country’s largest suppliers of oat milk, keep up with capacity and build on the momentum it has seen in the plant-based milk category. Company leadership announced sales growth in soy, almond and oat milks. Almond and oat milk were the big winners with over 40% sales growth in each.

Ennen expressed that the future opportunity for oat milk is huge and that the increased extraction facilities will open up more capacity to meet consumer demand.

SunOpta leadership credited the company’s diversified strategy within its portfolio from branded products to its co-manufacturing and private label business. Retail sales were up over 40% and food service up 20%. Revenue more than doubled for its in-house brands Dream (acquired in 2021) and oat milk creamer Sown.

Although the company is built around its core plant-based beverage production, it has focused recently on innovation in its fruit snack category through expansion of current production and a smoothie bowl product line. The strategy seems to be paying off as it reported in Q2 that fruit snacks increased 48% in revenue year-over-year.

“While the consumer landscape is always dynamic, we have not seen any abrupt changes in consumer behavior,” Ennen said. “Given how balanced our portfolio is, we feel we are well positioned to evolve with any future changes in purchase patterns.”