TORONTO — With more than 30 years of food and beverage experience at such companies as Columbus Foods, Safeway, Frito-Lay, Conagra Brands and Kellogg, Joseph D. Ennen, the new chief executive officer of SunOpta, Inc., knows a little about the consumer packaged goods industry. It is that knowledge that Mr. Ennen said made his decision to join SunOpta in early April a “no-brainer.”
In a May 8 conference call with analysts to discuss first-quarter financials, Mr. Ennen identified six key macro trends that he feels SunOpta is aligned with, positioning the company for a strong future.
First, the rapid increase in private label. As private label continues to win across the retail landscape, SunOpta’s position as a partner with many leading retailers in the United States should serve it well, Mr. Ennen said.
“I believe private label will continue to take share from the large national C.P.G. brand, and we’re positioned to win with these retail partners,” he said.
A second trend is the continued growth of organic products. Mr. Ennen pointed to SunOpta’s strong position in the organic market as a reason for optimism.
“Premium organic products also continued to take market share from the large national C.P.G. brands,” he explained. “SunOpta’s capabilities are well suited to serve these healthy food and beverage trends. I expect these products will continue to take market share, and we are positioned to win as a contract manufacturer and ingredient supplier.”
The shift to plant-based beverages is a third trend that plays in SunOpta’s favor, Mr. Ennen said.
“Plant-based beverages have been on a long-term upward trajectory as consumers move away from traditional dairy for taste, health and sustainability reasons,” he said. “Our national network of manufacturing facilities and a portfolio of products, which includes oat, almond, coconut, hemp and soy milk, were winning in this business. We plan to continue to make investments to strengthen our position as a leading provider of plant-based beverages.”
A fourth trend factoring into the mix is the prevalence of snacking. Mr. Ennen said SunOpta’s portfolio is positioned well with on-trend products in a growing market.
“Our recent results have been very strong, but more importantly, I believe there is untapped opportunity to expand this business,” he said.
Fruit as a foundation of a healthy diet is a fifth trend that Mr. Ennen feels SunOpta can capitalize on.
“Our frozen fruit business aligns well with consumers’ desire to get more fruit into their diet,” he said. “Frozen fruit offers consumers superior convenience, better value and higher nutrient retention. While we clearly have work to do to improve the performance of our frozen fruit business, the category has returned to growth.”
Finally, the continued growth of certified organic ingredients could be a boon for SunOpta, Mr. Ennen said.
“For decades, SunOpta’s wholly-owned subsidiary Tradin Organic has been building relationships and establishing programs around the world to source certified organic ingredients,” he said. “Consumers today are asking questions like where does my food come from? Is it authentic, and was it sustainably grown? Are the farmers being treated fairly? Tradin has been a pioneer and being the answer to these important questions.
“From our business in Sierra Leone, working with organic cocoa farmers, to Indonesia, where we worked with farmers to establish a supply of organic coconut products, to Ethiopia where we’re now pioneering the production of organic avocado oil, Tradin has built the unique insulated business model that remains at the forefront of organic integrity and quality around the world. Tradin’s revenues have grown five-fold since SunOpta acquired it in 2008, and we will continue to build and leverage the expertise to create new sources of organic supply and drive growth.”
Mr. Ennen said SunOpta’s alignment and capabilities within the aforementioned six macro trends is what convinced him to join the company as c.e.o. Six weeks into the role, he said he’s “even more confident” in the company’s ability to win.
“Of course, there will be no surprise to shareholders when I say the company has not leveraged the strength and positioning of these platforms to drive consistent results,” he said. “Developing consistency can be difficult in a turnaround, but it’s imperative we develop a culture that strives to deliver consistent profitable growth. To achieve this, we need to be more focused, more nimble and more innovative, all while maintaining our strong focus on food safety and customer service.”
Net income attributable to SunOpta shareholders totaled $23,654,000, equal to 27c per share on the common stock, in the first quarter ended March 30, which compared with a loss of $6,330,000 in the same period a year ago. Net earnings in the most recent quarter included a pre-tax gain on the sale of the specialty and organic soy and corn business of $45.6 million. Revenues eased 2.4% to $305,275,000 from $312,652,000.