SunOpta food scientists were testing an experimental batch of pumpkin oat milk last week when the big boss walked into Eden Prairie’s spacious new research and development facility.

The question: if they changed an ingredient, would it taste the same?

General Manager Joe Ennen couldn’t tell the difference – a relief for the team as they prepare for possible supply chain disruptions.

SunOpta, a leading plant-based milk producer that supplies Starbucks and major retailers, moved its headquarters from Edina to Eden Prairie this winter. The $20 million expansion embodies the company’s ambitions to double sales of its herbal products by 2025.

“When we evaluate the ROI of this building, it very much revolves around the speed of innovation,” Ennen said. “New products, new customers, new capabilities and new categories are going to be paramount to driving this growth.”

The move completes SunOpta’s transformation into a Minnesota-based food maker after executives moved from Toronto to Edina in recent years and the company sold its commodities trading business in 2020.

The company’s research and development space has grown from approximately 3,000 square feet to 36,000 square feet. It includes a pilot plant where workers can test products without having to shut down manufacturing lines at their processing facilities.

Connected to the lab and test kitchen is a wide-open office layout with plenty of sustainability features — and a few ficus trees growing under the skylights.

Ennen acknowledged that the construction of a large new headquarters is contrary to the current trend for companies to reduce their office space after two years of employees working from home.

But the goal of bringing SunOpta’s more than 150 employees together in the Twin Cities at least a few days a week is also tied to the company’s vision for growth.

“It was easier to manage the core business with everyone remotely than I would have imagined. And it’s much harder to solve problems, innovate and collaborate than I would have imagined. “, Ennen said. “It works if your growth ambition is 3%. It doesn’t work if your growth ambition is 15-20% because there are too many problems to solve.”

Surf the plant wave

A mock cafe greets employees and visitors as they enter SunOpta’s new offices on Shady Oak Road.

The bulk of the company’s business involves making plant-based milks for Starbucks, which accounted for nearly $150 million in sales last year, Ennen said. So having a place to test how the final product will be used – from the flavor profile in the lattes to making sure the cartons fit in the fridges – was key for the new space.

“It’s about us being in touch and in tune with our customers,” Ennen said. “That’s how we’re going to win in the long run, focusing on the end consumer.”

Plant-based milk accounted for 16% of all U.S. milk sales last year, according to a recent report by market research firm Spins, and 42% of households purchased plant-based milk at least once. Last year.

Almond milk leads the category, with oat milk rapidly dropping to second place as soy continues to decline from its once dominant position.

“Overall, plant-based food retail sales grew three times faster than total food retail sales, with most plant-based categories outpacing their conventional counterparts,” the report said.

SunOpta experienced significant growth in oat milk; in just two years, it has gone from negligible activity to almost 10% of turnover.

In addition to plant-based foods and beverages, SunOpta makes and sells fruit-based foods, which Ennen says has “always been a tough part.”

The company had total revenue of $813 million last year, but inflation and supply chain slowdowns led to a loss of $4.1 million.

SunOpta sold its bio-commodities business in 2020, leading to lower annual revenue, but stock analysts predict the company will top $1 billion in sales again this year and make a sizable profit in 2023.

As demand for plant-based milk is expected to continue its rapid growth, SunOpta has invested in a 285,000 square foot manufacturing facility in Texas slated to open at the end of the year. Ennen said the plant will be a “growth engine” to reach more customers.

“The whole industry is capacity constrained and has been for at least half a decade,” Ennen said. “There aren’t a lot of people investing in the category right now, oddly enough, and we want to be that vendor that has the ability to grow customers.”

Consumer first, brand second

While the SunOpta name may not be familiar to most consumers, it’s the manufacturing force behind a line of familiar plant-based milks made in facilities in Minnesota, California and Pennsylvania.

“We manufacture a significant percentage of the brands you would see on store shelves,” Ennen said. “Whether it’s oat milk, almond milk, or coconut milk, we do them all.”

Private label (private labels) and co-manufacturing for name brands remains the primary focus of the business, with branded products accounting for just 6% of SunOpta’s business in 2021.

Last year, SunOpta acquired Dream and Westsoy, two leading players in the non-dairy milk market. Both will see rebranded packaging hit shelves this fall, and Westsoy has been renamed West Life.

Instead of relying heavily on its own brands, Ennen said the company focuses first on what consumers want and then on how it reaches them.

This was the case with OatGold, a bakery product made from the fiber and protein rich leftovers from oat milk production.

“We create the product, then we figure out how to bring it to market,” Ennen said.

The CEO said SunOpta is rooted in sustainability through its products. The company wanted this to be reflected at the Eden Prairie headquarters, with its bamboo flooring and solar panels that will soon be installed.

“That core product sustainability – organic food, clean label, plant-based – that’s what we’re really proud of.”