MINNEAPOLIS — While almond milk remains the most popular plant-based milk in the United States, SunOpta, Inc. saw its oat milk sales surpass almond milk for the first time during the third quarter of fiscal 2022, ended Oct. 1. The shift contributed to a 20% increase in sales in the company’s Plant-Based Foods and Beverages business unit during the quarter.
“Oat continues to fuel growth in our plant-based business unit, and we are far outpacing the oat segment growth rates,” said Joseph D. Ennen, chief executive officer, during a Nov. 9 conference call to discuss quarterly results. “The oat milk segment growth in syndicated data for the quarter was plus 29% in dollars, our oat business grew 68%.”
Contributing to the sales growth in oat milk have been capacity expansion projects and the introduction of new varieties, including barista, chocolate, high protein and pumpkin oat milks.
“Most of this increase was volume driven, reflecting consumer growth and our strong partnerships with the biggest, fastest-growing brands in the category,” Mr. Ennen said. “Our oat barista products in foodservice contributed significantly to the 68% growth. The growth of these barista products is a testimony to our R&D capabilities as we have quantitatively demonstrated for customers that our oat barista products are functionally superior to other products in the market.”
Also contributing to the growth in oat milk sales was SunOpta’s ability to fill orders at a 98%, 99% rate, said Mr. Ennen.
“That then allows the retail customer the confidence to put that brand on the shelf knowing they’re going to be able to supply, and they’re going to be able to keep the product on the shelf,” he said.
Looking ahead, Mr. Ennen also said SunOpta’s experience in extracting oat base creates a runway for growth in such adjacencies as oat-based yogurts and ice creams.
“It is a very transferable end product,” he said. “It definitely opens the aperture for us to be an ingredient supplier … into those categories.”
During the third quarter, SunOpta recorded a loss of $13.4 million, greater than the loss of $3.8 million the company recorded during the third quarter of fiscal 2021. Items contributing to the loss included divestment of a sunflower business and sale of a facility in Oxnard, Calif.
“On an adjusted basis, we had earnings of $2 million, or 2¢ per diluted share, in the third quarter of 2022 versus adjusted earnings of $1.1 million, or 1¢ per diluted share, in the prior-year period,” said Scott E. Huckins, chief financial officer.
Quarterly sales rose to $229.7 million, up from $198.5 million the year before.
SunOpta’s The Plant-Based Foods and Beverages segment generated revenues of $137.7 million, an increase of 19.9% compared with $114.9 million in the third quarter of 2021. Pricing increased 16.2% and volume/mix was up 3.7%.
“This 25% growth in plant-based milks was broad based with four of our five product types experiencing growth,” Mr. Ennen said.
In addition to the strength in oat milks sales, coconut milk was up mid-30% versus last year and fueled by foodservice demand. Almond and soy milk sales rose in the low- to mid-single digits with pricing offsetting moderation in volume.
“Looking at the results by customer channel,” Mr. Ennen said. “Retail was up 16%, reflecting strong growth in mass and club. Foodservice was especially strong in Q3, with revenues up 30%, driven, as I mentioned, by oat-based offerings.”
The company’s Fruit-Based Foods and Beverages segment generated revenues of $91.9 million, an increase of 10% compared with the third quarter of 2021. Pricing contributed 10.6% while volume/mix fell 0.6%.
Sales in fruit snacks rose during the quarter while frozen fruit product performance was flat.
“The year-over-year revenue growth rate of our fruit snacks business was an impressive 52%, and the overwhelming majority of the revenue increase was driven by higher volumes,” Mr. Ennen said. “In roughly three years, we’ve grown our fruit snacks business, which includes our smoothie bowls by 125% to around $100 million of annual revenue.”Management raised the company’s outlook for fiscal 2022 with sales ranging between $940 million to $960 million, up from a range of $930 million to $960 million, and adjusted EBITDA growth to be between 25% and 32%, up from a range of 19% to 28%.