SunOpta Invests $26 Million To Expand California Plant-Based Beverage Processing Facility

Rhea-AI Summary

SunOpta (Nasdaq: STKL) has completed a $26 million expansion at its Modesto, California facility, the company's second largest capital project. The expansion boosts oatmilk production by over 60%, meeting increased demand. The Modesto plant now spans 167,684 square feet and added 17 new jobs, bringing total local employment to 208. The facility's new oat extraction production line uses proprietary enzymatic processes and reduces freight miles by nearly 800,000 yearly, aligning with SunOpta's sustainability efforts. This investment is part of a broader strategy to scale production and reduce carbon emissions.

Positive

• Completed $26 million expansion at Modesto facility.
• Oatmilk production capacity increased by over 60%.
• 17 new jobs created in Modesto, increasing total employment to 208.
• Facility expansion spans 167,684 square feet.
• Reduction of nearly 800,000 freight miles annually.

Negative

• None.

Insights

Financial Analyst

SunOpta’s $26 million investment in expanding the Modesto facility represents a significant commitment to the growing plant-based beverages market. From a financial perspective, this move is likely to boost revenue and market share due to increased production capacity. The plant-based milk market is projected to grow from US$20 billion in 2024 to over US$45 billion by 2034, offering substantial growth opportunities.

The associated reduction in nearly 800,000 freight miles per year due to this expansion suggests a strategic efficiency improvement, potentially leading to lower operational costs. However, this investment also implies an increase in capital expenditures, which may impact short-term cash flow. Investors should monitor the balance between initial capital outlay and anticipated revenue growth to ensure a positive return on investment.

Market Research Analyst

Expanding the Modesto facility aligns with the increasing consumer demand for plant-based beverages, particularly oatmilk. This trend is driven by health-conscious consumers and those with dietary restrictions. By increasing its production capacity by more than 60%, SunOpta is well-positioned to capitalize on this trend. Additionally, the creation of 17 new jobs indicates a positive economic impact on the local community, enhancing the company's brand reputation.

From a market perspective, SunOpta's strategic geographic positioning of its plants in a diamond-shaped national network for distribution demonstrates a strong logistical strategy. This setup not only reduces freight costs and carbon emissions but also ensures a more reliable supply chain. Investors should note that market expansion and sustainability efforts can enhance brand loyalty and attract socially conscious consumers.

Sustainability Analyst

SunOpta’s expansion at the Modesto facility reflects a commitment to sustainability. The reduction of 15 million freight miles annually across their manufacturing plants significantly cuts carbon emissions by 59 million pounds. This positions SunOpta as a leader in environmentally responsible manufacturing, likely enhancing its appeal to investors focused on Environmental, Social and Governance (ESG) criteria.

The collaboration with local organizations such as Pacific Gas & Electric and Central Valley Ag to minimize the environmental footprint further solidifies SunOpta’s dedication to sustainable practices. The installation of a pollinator habitat to commemorate the expansion underscores their long-term environmental commitments. Such initiatives can improve stakeholder relations and potentially lead to favorable ESG ratings and investment.

New Modesto expansion is the second largest capital project in the company’s history

MINNEAPOLIS--(BUSINESS WIRE)-- SunOpta (Nasdaq:STKL) (TSX:SOY), an innovative and sustainable manufacturer fueling the future of food, today announced it has completed a $26 million expansion at its Modesto, Calif. facility. As the second largest project in the company’s history, the expansion allows SunOpta to increase the amount of oatmilk produced annually by more than 60%, meeting ongoing customer demand and demonstrating SunOpta’s commitment to plant-based beverage production.

Commercially launched in May, SunOpta’s Modesto oat extraction production line uses proprietary enzymatic processes to break down whole oats into a liquid oatbase that will then be used to make oatmilk and other products such as plant-based yogurt and ice cream. The new expansion has created 17 new jobs in the community. SunOpta supplies liquid and dried oatbase as an ingredient to companies large and small, manufactures oatmilk for leading brands and food service operators throughout the country and produces private label oat-based products for many top national retailers.

“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 Brian Kocher, CEO of SunOpta. “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.”

After considering the incremental investment, key features of SunOpta’s Modesto, California newly expanded facility include:

• 167,684 total square feet of production space
• 17 new jobs bringing the total Modesto-area employment to 208
• Reduction of nearly 800,000 freight miles in SunOpta’s network per year

Plant-based milks have been a major focus in recent years at SunOpta, and there is still room to grow. Based on the latest publicly available data and SunOpta's proprietary sales order data, the company estimates the category volume for shelf-stable plant-based milks will grow mid-single digits for calendar year 2024 across all channels combined. Depending on the source, the plant-based milk market is estimated to grow from approximately US$20 billion in 2024 to over US$45 billion by 2034.

SunOpta’s Modesto facility is part of a broader strategy not only for production but also for sustainability. SunOpta’s four aseptic manufacturing plants are strategically located in Modesto, Calif., Allentown, Pa., Alexandria, Minn. and Midlothian, Texas, creating a diamond-shaped national network for distribution. Additionally, the network of regional plants has the potential to reduce more than 15 million freight miles annually and save 59 million pounds of carbon emissions.

SunOpta’s Modesto location works closely with Pacific Gas & Electric, Central Valley Ag and other local municipalities to minimize the environmental footprint of the manufacturing process and looks forward to collaborating with additional local organizations.

“SunOpta loves the Central Valley, and the Central Valley loves SunOpta,” said Joe Gerhardt, senior plant manager. “We are proud to be a leader and partner in the local community for the long term, fueling the future of food.”

In keeping with the company's long-standing tradition of commemorating major milestones with a planting, SunOpta will install a pollinator habitat at its Modesto facility to celebrate the commercialization of its new expansion. This gesture demonstrates its long-term commitment to the community and will be marked at an upcoming ceremony.

About SunOpta, Inc.

SunOpta (Nasdaq:STKL) (TSX:SOY) is an innovative and sustainable manufacturer fueling the future of food. With roots tracing back over 50 years, SunOpta drives growth for today’s leading brands by serving as a trusted innovation partner and value-added manufacturer, crafting organic, plant-based beverages, fruit snacks, nutritional beverages, broths and tea products sold through retail, club, foodservice and e-commerce channels. Alongside the company’s commitment to top brands, retailers and coffee shops, SunOpta also proudly produces its own brands, including SOWN^®, Dream^®, and West Life™. For more information, visit www.sunopta.com and LinkedIn.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240626051772/en/

Investor Relations:

Reed Anderson

ICR

646-277-1260

investors@sunopta.com

Media Relations:

Claudine Galloway

SunOpta

952-295-9579

press.inquiries@sunopta.com

Source: SunOpta Inc.

FAQ

What is SunOpta's recent investment in its Modesto facility?

SunOpta has completed a $26 million expansion at its Modesto, California facility to increase oatmilk production by over 60%.

How will the expansion of SunOpta's Modesto facility affect oatmilk production?

The expansion will boost SunOpta's oatmilk production capacity by more than 60%, meeting rising customer demand.

How many new jobs were created by SunOpta's Modesto facility expansion?

The expansion created 17 new jobs, bringing the total employment at the Modesto facility to 208.

What are the sustainability benefits of SunOpta's Modesto facility expansion?

The expansion is expected to reduce nearly 800,000 freight miles annually, contributing to SunOpta's sustainability goals.

What is the size of SunOpta's expanded Modesto facility?

The expanded Modesto facility now covers 167,684 square feet.