Since Joe Ennen took over as head of Eden Prairie-based SunOpta in 2019, the fruit side of the company’s plant-based food business has been a drag on the bottom line.
This week, the CEO finally had some progress to report.
“We’ve fundamentally reset the company’s manufacturing footprint and put a focus on innovation,” Ennen said in an interview Thursday. “The added value that can be added to frozen strawberries in a bag is limited — we’ve focused on innovation that drives value-added products.
SunOpta’s main source of revenue – and the bulk of its growth expectations – comes from plant-based beverages like oat milk, which it produces for a number of in-store and national brands and under some- one of its own brands.
Fruit sales include frozen whole fruit sold in stores; ingredients for restaurants and other food manufacturers; and fruit-based bars and snacks. Together, the segment accounts for about 40% of SunOpta’s sales, but regularly records operating losses.
The fruit business posted operating profit for the first time since the end of 2020 during its first quarter this year, SunOpta reported on Wednesday.
The company recently introduced fruit smoothie bowls that are showing up at major retailers, including under Target’s private label which was an early success, Ennen said.
Moving fruit operations from California to Mexico has helped reduce costs and meet growing demand for organic and no-sugar-added products, in particular, Ennen said.
The company has also been able to pass on nearly all of the inflation it sees to its customers.
SunOpta beat analysts’ expectations with first-quarter profit of $700,000, down from $1.7 million a year earlier, the company reported Wednesday after markets closed. Revenue for the January-March period was $240 million, up about 16% from a year earlier.
The company’s stock price rose 31% on Thursday to $6.44 per share.
Fruit revenue jumped 18%, half of which came from one-time orders from a customer who needed to make up a shortfall with their regular supplier.
“We’re definitely seeing a sequential improvement in profitability every quarter from now, really driven by strong demand for plant-based products – led by oats – and the turnaround in our fruit business,” Ennen said.