SunOpta focusing on 'right to win' categories

by Eric Schroeder
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SunOpta frozen fruit
SunOpta will continue to look for ways to change how it goes to market with frozen fruit.
 

TORONTO — Operating in categories where it has a right to win, not revenue growth, is the near-term focus for SunOpta Inc. as it moves through phase one of its transformation, said David J. Colo, president and chief executive officer.

In the third quarter ended Sept. 30, SunOpta sustained a loss of $6,027,000 on revenues of $320,713,000. This compared with a loss of $3,355,000 on sales of $348,732,000 in the same period a year ago.

Earlier this year the company launched its Value Creation Plan. Part of the plan included a focus on portfolio optimization. To that end the company is working toward exiting its nutrition bar product lines and operations in Carson City, Nev., by the end of fiscal 2017.

David Colo, SunOpta
David Colo, president and c.e.o. of SunOpta

“Given our size relative to the competition, our customer profile and limited avenues to meaningfully penetrate private label we decided to exit the (nutrition bar) business,” Mr. Colo said during a Nov. 8 conference call with analysts. “We anticipate the business to be substantially wound down by the end of this year.”

While nutrition bars are being phased out, Mr. Colo said SunOpta will focus more attention on categories where the company believes it has the “right to win.”

“We are progressing with investments, we’re expanding capacity and capabilities in our Mexican frozen fruit facility and in our cocoa operations in The Netherlands, as well as having identified investment opportunities in roasted snacks,” he said. “While we continue to evaluate our operations for additional investment or divestiture and evaluate our product offerings on a s.k.u. (stock-keeping unit) basis to optimize our portfolio and enhance our strategic positioning going forward, we are already ahead of our target of $5 million of EBITDA improvement projects. Since the initiation of the Value Creation Plan, we have implemented portfolio changes expected to yield approximately $6 million of annualized EBITDA benefits.”

SunOpta nutrition bars
SunOpta is working toward exiting its nutrition bar product lines and operations in Carson City, Nev., by the end of fiscal 2017.
 

In the case of frozen fruit, Mr. Colo said SunOpta is seeing a larger focus in retail on fresh fruit and fresh vegetables. To compete with the fresh category Mr. Colo said SunOpta will need to continue to look for ways to change how it goes to market with frozen fruit. That may mean improving the quality, improving the usability, and, in some cases, improving the packaging format the fruit is in, he said.

“We see a trend going to moving to larger sizes in the category is helping, going to more blends and bringing in more tropical fruits,” he said. “So I think we see line of sight on how to return the category to growth and how to bring better innovation and options to the retailers and therefore the consumer. So, we still feel good about the category, I think we’re going through a meaningful transition in the category relative to both the pricing transition that’s occurred over the last several years and the correction this year. But also the change in consumer behaviors.”

Mr. Colo said SunOpta ended the third quarter led by recent wins in roasted snacks in both the food service and retail channels.

“We continue to see organic and specialty ingredients as well as roasted snacks as key areas of the business that SunOpta is uniquely positioned to grow profitably,” he said. 
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