Sunopta bets on growth in oat milk

North America’s best- performing food producer is going big on oat milk.

Sunopta Inc. has spent more than two decades focusing on natural and organic foods, making products such as frozen fruit, soy milk and fruit bars. The latest push, though, is the milk substitute made from oats.

“Oat represents the biggest bet the company has ever made,” chief executive Joe Ennen said in a phone interview. “You’re going to see continued growth in oat milk.”

Sunopta, based in Mississauga, Ont., is making its largest investment in its history by spending US$ 26 million to expand its oat processing facility in Minnesota, Ennen said. The upgrade will turn oat milk into SunOpta’s second- largest plantbased milk product after its almond beverage, with annual production capacity jumping fourfold by the end of 2022.

The move is part of the company’s drive for high growth and sharpened focus on plant- based products under Ennen, who joined as CEO in April 2019. Under the strategy, Sunopta is selling its global ingredients business to an Amsterdam-based commodity trading company for 330 million euros ( US$ 390 million). Proceeds will be used to pay down debt and invest in the plantbased push.

Sunopta shares have soared 39 per cent since the firm announced the sale on Nov. 10, extending this year’s rally to 277 per cent and making it North America’s best performing food producer, according to data compiled by Bloomberg. The stock — which trades in Canada under the ticker “SOY” — has surged during the pandemic, giving Sunopta a market value of about $ 1.1 billion.

“We’re a bet on the sector, on the consumer movement,” Ennen said, highlighting his company’s range of healthy products that are marketed both through its own brands and under labels of its retail partners. Sunopta’s substitute- milk drinks are sold by “many of the big national brands that you see on the shelf.”

North American sales of ready-to-drink milk alternatives are forecast to reach US$ 4.2 billion by 2025, a 31 per cent increase from this year, according to Euromonitor International.

Demand for oat milk is soaring, with U. S. sales this year surpassing those of coconut milk and soy milk. Almond milk is still the most popular among dairy alternatives, accounting for about two-thirds of the market with US$ 1.6 billion in sales, according to data from Nielsen.

Still, U. S. oat milk sales tripled in the past year, following a sevenfold surge a year earlier.

Oat milk is expected to grab more market share from other plant-based milk substitutes and be more successful at attracting dairy drinkers, D.A. Davidson analyst Brian Holland said in an interview.

“I think it has the potential to be bigger than almond milk,” he said.