Lentils in Cheerios boosts AGT’s growth
Foodmakers demanding more pulses
WINNIPEG — The demand for protein-packed products to be added to everything from Triscuits to Cheerios is providing a lift for AGT Food and Ingredients Inc., the world’s largest exporter and processor of dried peas, lentils and other pulses.
The company’s shares have gained 70 per cent in the 12 months through Monday, the most among 11 North American food-company competitors tracked by Bloomberg. Revenue from food ingredients is expected to rise more than 40 per cent to about $100 million in 2015 as production increases, chief executive Murad AlKatib said.
“Many of the majors have launched new products that contain pulses,” the 42-yearold CEO of the Regina-based company said last week, citing General Mills Inc., FritoLay Inc., Kraft Foods Group Inc. and Unilever Plc. “Our ingredients are getting into a lot of those applications either directly with those companies or through the distribution channels we’ve set up.”
He declined to specify customers. The company has 64 projects under development with major food manufacturers and research is being conducted on how to neutralize pulses’ “natural beany taste” in a bid to boost sales, Al-Katib said.
Pulses, part of the legume family, are gluten free, high in protein and fibre, and low in fat. They can be processed into fibre, flour starch and protein concentrates. Nabisco Inc.’s Triscuit brown rice and roasted red pepper crackers contain red beans, while General Mills’ Fiber One chocolate cereal contains pea fibre. Cheerios Protein oats and honey, released in May, contains lentils.
General Mills’ re-branding of Cheerios as nongenetically modified sent a message that this was a “more natural and a healthy product,” Al-Katib said.
Plant-based proteins are more than just a fringe trend, Steve Hansen, an analyst at Raymond James in Vancouver, said. Market demand for AGT Food’s specialty food ingredients has been “very strong” Hansen said.
“If you were to go into a Whole Foods and look for gluten free, non-allergenic, they’re everywhere,” he said, referring to the Whole Foods Market Inc., chain of natural-food supermarkets.
Demand is also being driven by millennials, people born between 1980 and 2000, as 50 per cent spend more for company products that are GMO-free, Gregory Larkin, an analyst at Bloomberg Intelligence, said.
“Corn and soybeans are almost entirely genetically modified now in North America,” said Al-Katib, who was born in Davidson, Sask., a town of 1,500, where his father worked as a doctor and his mother was the mayor. “The applications of pulses are to remove corn, soy and wheat.”
AGT Food plans to boost production at its North Dakota facility and is considering converting one of its Saskatchewan plants into a food-ingredient plant. Production of the company’s food-ingredient business began 18 months ago and capacity will rise to 105,000 tons in 2015 from 75,000 in 2014, Al-Katib said. AGT Food is examining adding an additional 100,000 tons of capacity in 2016, he said.
The company has grown from exporting pulses for soups in India and vermicelli noodles in China to developing pulse ingredients. AGT Food buys pulses from farmers in Canada, the U.S., Turkey, Australia, China and South Africa and ships to more than 100 countries.
AGT Food will see a decline in sales for the fourth quarter of 2014 and first quarter of 2015 because of lower pulse volumes “to reflect a weaker Canadian harvest,” AltaCorp said in a Nov. 19 report.