Since Joe Ennen took the helm 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 have fundamentally reset the manufacturing footprint of the business, and we’ve put a huge focus on innovation,” Ennen said in an interview Thursday. “There’s only so much value one can add with frozen strawberries in a bag – our focus has been on innovation driving value-added products.”
SunOpta’s main revenue stream – and the focus of much of its growth expectations – is in plant-based beverages such as oat milk, which it produces for a number of in-store and national brands and under a few of its own brands.
Fruit sales include quick-frozen whole fruit sold at 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 has been consistently reporting operating losses.
The fruit business posted an operating profit for the first time since late 2020 during its first quarter this year, SunOpta reported Wednesday.
The company recently introduced fruit smoothie bowls that are showing up at major retailers, including under Target’s house brand, and have been an early success, Ennen said.
Moving fruit operations from California to Mexico has helped trim costs and keep up with rising demand for organic and no-sugar-added products especially, Ennen said.
The company has also been able to pass along almost all the inflation it is seeing to its customers.
SunOpta beat analyst expectations with a $ 700,000 profit in its first quarter, a drop from 1.7 million the previous year, the company reported Wednesday after markets closed. Revenue for the January-March period was $ 240 million, up about 16% from the year before.
The company’s stock price rose 31% on Thursday to $ 6.44 per share.
Fruit-based revenue jumped 18%, half of which came from one-time orders from a customer that needed to make up a shortfall from its typical supplier.
“We definitely see sequential improvement in profitability every quarter here on out really driven by strong demand in plant-based – led by oat – and the turnaround in our fruit business,” Ennen said.