SunOpta has recently made a significant investment of $26m in its shelf-stable oat milk production site in Modesto, California. This investment was used to establish a new oat extraction production line at the plant, which commenced operations last month. The addition of this new production line is SunOpta’s “second largest” expansion project in the US to date.
This strategic move is anticipated to boost the company’s annual oat milk production by 60% starting from 2025, according to sources. The technology incorporated in the plant utilizes proprietary enzymatic processes to transform oats into a liquid oatbase, which can then be used to manufacture various oat-based products like oat milk, ice creams, and yogurts.
Moreover, SunOpta processes dried and liquid oatbase as an ingredient for other food and drink manufacturers at the Modesto plant. Additionally, the company produces private-label oat milks for brands, foodservice, and retailers in the US.
The plant also houses three plant milk brands: West Life, Sown, and Dream. With the inauguration of the new production line, seventeen new jobs have been created, expanding the total number of employees at the factory to 208. Apart from Modesto, SunOpta operates three other US-based shelf-stable drinks and broths factories in Allentown, Pennsylvania, Alexandria, Minnesota, and Midlothian, Texas.
SunOpta foresees growth in the shelf-stable plant-based milk category, estimating a “mid-single digits” increase in volume terms in 2024 across all channels. CEO Brian Kocher expressed confidence that the investment positions the company well to meet the rising market demand for plant-based milk and oat-based products. Joe Gerhardt, senior manager of the Modesto plant, emphasized their commitment to being a long-term leader and partner in the local community, driving innovation in the food industry.
In response to inquiries about potential mergers and acquisitions, Kocher mentioned during an analyst briefing that SunOpta is open to considering M&A opportunities by the end of the year. The company continues to evaluate options like ROI projects, share buybacks, and M&A deals to drive growth and enhance shareholder value.
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