Vegetables & Fruits

SunOpta Shutters California Fruit Facility, Ups Investment in Plant-based Food and Beverage Sector

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SunOpta shut down its frozen fruit processing plant in Santa Maria, California, effective February 1. At the same time, as part of a multi-year supply chain optimization strategy, the company announced that investments are being made to boost plant-based food and beverage production at its facility in Allentown, Pennsylvania, with new capacity expected to come on line in the fourth quarter of 2021. This follows the completion of three large projects in the fourth quarter of 2020 to increase output of plant-based products.

“We are pleased with our sales pipeline efforts to deliver $100 million of revenue growth by the end of 2022. This additional capacity will ensure that we are well positioned to support our customers’ growth in 2022 and beyond,” said CEO Joe Ennen.

Commenting on the decision to shutter the California plant, Ennen said: “This closure will reduce the cost basis in our frozen fruit business, while leaving ongoing relationships with growers intact and ensuring adequate capacity to service demand for years to come. The highly successful automation and productivity efforts made over the last two seasons have created the ability for us to operate the same size business with fewer assets. Lowering our cost structure will improve gross profit, which we expect will make us more competitive as we seek to add new business. Finally, given the plant closure, we are using this as a catalyst to evaluate marginally profitable or unprofitable customers and SKUs, which may lead to some customer and SKU rationalization.” 

Meanwhile, on January 4 the Mississauga, Ontario, Canada-headquartered company announced completion of the sale of its global ingredients segment and related assets to Amsterdam Commodities NA, a commodity trading company, for cash and debt free consideration of €330 million. The transaction closed on December 30, 2020.

“This further solidifies SunOpta’s future direction as a high-growth, plant-based company focused on providing value-added products in competitively advantaged categories with consistent, sustainable, above average growth characteristics,” said Ennen. “The transaction significantly de-levers and strengthens our balance sheet, enabling the acceleration of expansion plans in our fast-growing plant-based food and beverage segment. The plans include both high-return capital investment projects, as well as synergistic acquisitions that add to an existing set of strong capabilities in our core plant-based beverage platform.”