SunOpta expands oat milk production in Modesto facility

CANADA – SunOpta, a leading producer of organic and plant-based beverages, has announced the completion of a US$26 million expansion of its Modesto, California facility.

The investment marks the company’s second-largest and aims to boost its annual oat milk production by over 60%.

Modesto’s new oat extraction production line utilizes a proprietary enzymatic process to transform whole oats into a liquid oat base, which is then used to produce oat milk and other plant-based products like yogurt and ice cream.

This expansion has created 17 new jobs, bringing the total number of employees in the Modesto area to 208.

Brian Kocher, CEO of SunOpta, highlighted the company’s preparedness to meet the rising consumer demand for plant-based milk and related products and its positive impact on the local community through job creation.

Additionally, the expansion has significantly reduced the company’s freight miles by nearly 800,000 annually.

SunOpta has been focusing on the plant-based milk market, which is projected to experience substantial growth.

The market for shelf-stable plant-based milk is expected to grow at a mid-single-digit rate in 2024 across all channels, potentially expanding from approximately US$20 billion in 2024 to over US$45 billion by 2034.

SunOpta’s commitment to sustainability is evident in its network of aseptic manufacturing plants, including Allentown, Pennsylvania; Alexandria, Minnesota; Midlothian, Texas; and Modesto. This strategic distribution aims to reduce freight miles and carbon emissions.

The Modesto facility collaborates with local entities such as Pacific Gas & Electric and Central Valley Ag to minimize its environmental impact.

SunOpta plans to install a pollinator habitat at the Modesto site as part of its expansion celebration, demonstrating its dedication to the community and the environment.

Despite facing significant debt, the company’s net income is projected to grow this year, which could indicate a positive outlook for investors as SunOpta scales up its operations.

InvestingPro Data revealed that SunOpta has a market capitalization of US$640.91 million, indicating a substantial industry presence.

However, the company’s P/E ratio is -3.57, and the adjusted P/E ratio for the last twelve months as of Q1 2024 is -41.29, reflecting market concerns about profitability.

On a positive note, SunOpta has experienced robust revenue growth, with a 30.03% increase over the last twelve months as of Q1 2024 and quarterly revenue growth of 17.99% for Q1 2024. This suggests that SunOpta’s expansion efforts may be yielding tangible sales results.

While SunOpta’s stock price has been volatile and does not currently pay dividends, the company’s liquid assets exceed its short-term obligations, providing a measure of financial stability.

Investors considering SunOpta’s stock should be aware of these factors as the company grows and expands its operations.

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