Product: Summer 2005

SunOpta

by Ken Scott

A stroll down the snack-food aisle of a traditional supermarket presents a kaleidoscope of eye-catching packaging for Doritos, Fritos, Rold Gold, Ruffles, and SunChips. All of these brands are owned by the Frito-Lay business of PepsiCo. A similar stroll down the snack food aisle of a natural and organic foods supermarket yields a kaleidoscope of almost-as-attractive packaging for Bearitos, Boston’s, Garden of Eatin’, Hain, and Terra. All of these brands are owned by The Hain Celestial Group. Yes, consolidation has arrived in the natural foods and organic industry. Whole Foods Market and Wild Oats dominate the natural foods supermarket business; United Natural Foods is the dominant distributor. Other natural foods businesses have been acquired by traditional competitors: Horizon Organic was purchased by Dean Foods; and Coca-Cola bought Odwalla juices.

While the result of consolidation for consumers is greater availability of natural and organic foods, it is a challenge for investors to identify many publicly traded companies expressly focused on this business. Aside from the major industry players previously mentioned, one of the few such North American companies is SunOpta Inc.

Based in Canada, SunOpta sells a variety of natural and organic foods. A key focus is soy. SunOpta is one of the largest soymilk concentrate suppliers in the United States, and is involved in every stage of soymilk production from seed to final packaging. It sells soy seeds to farmers, buys the soy beans back from farmers, sells the waste from the soy plant for organic chicken feed, and then processes the beans to make soymilk. SunOpta makes the soymilk for the three largest brands‑two sold by Hain Celestial, and one by Dean Foods.

Soymilk sales have grown at double-digit rates over the last few years, partly because of the perceived health benefits of soy: Soy may help reduce the risk of heart disease and certain cancers, may reduce menopause symptoms, and may have benefits for those with diabetes.

SunOpta is not all soy. It is also the largest supplier of oat fiber. SunOpta sells organic corn, organic dairy products, organic poultry, and various natural foods, including veggie burgers and fruit snacks, and also operates two small environmental businesses. And we won’t be surprised if they acquire more natural foods businesses.

The information provided in the above article is for historical purposes only. Such information may no longer be current and therefore should not be relied upon.

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