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Improving performance to accelerate growth and improve operational performance

SunOpta is a global leader capturing the growth of a sustainable consumer shift towards healthy and organic food. It's this growth driven by a number of key global trends that makes SunOpta's purpose more relevant than ever. The company is focused on building an efficient, vertically integrated field-to-table supply chain to build private-label brands in emerging healthy categories. SunOpta is investing in process improvements to drive increased efficiencies and reduce costs, while focusing its product mix in emerging healthy categories with strong growth where it holds significant competitive advantages.

Core Strategies

Focus on an efficient vertically integrated field to table supply chain
  • Acquired Citrusource, Niagara Natural and Sunrise Growers
  • Divested Opta Minerals (January 2016)
  • Started new sourcing projects around the globe
To build private-label brands
  • Opened the SunOpta Innovation Center to develop and commercialize new products
  • Expanded customer centric focus with addition of sales and category management resources
  • Enhanced aseptic capabilities with expansions in Modesto, Alexandria and Allentown
In emerging healthy market categories
  • Healthy beverage - aseptic beverages, chilled and shelf stable juices and lemonades
  • Healthy fruit - frozen fruit and fruit ingredients
  • Healthy Snacks - bars, fruit snacks and pouches

2015: A Transformative Year for SunOpta

2015 was a transformative year for SunOpta as the company delivered on many of its strategic objectives. SunOpta completed three acquisitions in its consumer products segment, enhancing its market leadership and improving the company's competitive positioning and long-term profitability. SunOpta also completed several major capital projects to expand capacity and add capabilities, including opening the new Innovation Center in Edina, Minnesota. SunOpta completed its transformation into a pure-play healthy and organic foods company following the sale of Opta Minerals.

While the company accelerated its transformation and completed investments supporting key strategies, financial performance in 2015 did not meet expectations. With assets in place and its strategic repositioning completed, SunOpta's focus is now on improving shareholder returns through delivering higher margins by leveraging the integrated field-to-table business model SunOpta has built over the past 16 years.

Core Strategy 1: Focus on efficient field to table supply chain...

In 2015, SunOpta further expanded its manufacturing footprint with three key acquisitions – Citrusource, Niagara Natural and Sunrise Growers.

The acquisition of Citrusource aligns with SunOpta's core vertically integrated two-touch strategy and complements its expanded citrus extraction and ingredients operation in San Bernardino, Calif. The acquisition of Niagara Natural enhances SunOpta's healthy snack portfolio and expands its market presence in fruit snacks. Importantly, the acquisition also gives SunOpta fruit snack manufacturing capabilities on both the East and West Coasts to help deliver lowest landed costs for customers.

Sunrise Growers, SunOpta's biggest acquisition to date, aligns with the company's increased focus on consumer packaged goods and complements its existing frozen fruit and fruit ingredients business. It also utilizes the global sourcing network of both organizations and is expected to create significant operational and sourcing synergies.

In 2015, SunOpta executed a number of sourcing projects that enhanced the company's global sourcing capabilities. To assure customers they receive the highest quality non-GMO soy beans and corn, SunOpta's facility in Hope, Minnesota, became the first facility in the U.S. to receive the USDA Process Verified Program (PVP) certification for non-GMO ingredients, demonstrating SunOpta's leadership in the non-GMO and organic foods industry. SunOpta continues to work with the USDA to expand the certification to other SunOpta facilities.

Core Strategy 2: to ultimately build private-label brands...

SunOpta's strategy to build private-label brands is supported by its innovation capabilities. SunOpta made significant investments in research and development in 2015, including opening the SunOpta Innovation Center in Edina, Minnesota. The new Innovation Center significantly increases SunOpta's product development capacity and includes new spaces and technologies to engage customers in the product ideation and development process. SunOpta's proactive approach to innovation is already paying dividends with the launch of several new products created for its customers.

SunOpta's investments in its consumer products platform during 2015 included expanded aseptic processing and filling at the company's Allentown, Pennsylvania facility and the expansion of its Modesto, California aseptic facility. The Allentown expansion, a $23 million investment, made SunOpta the only company with low-acid aseptic packaging capabilities on both the East and West Coasts and in the Midwest. This significant competitive advantage allows SunOpta to better serve customers by measurably reducing transportation and logistics costs and the environmental impact of product transportation.

Core Strategy 3: in emerging healthy categories

SunOpta made a fundamental decision to focus on three core categories: Healthy Beverage, Healthy Fruit and Healthy Snacks. The decision is in response to a combination of market dynamics and investments the company has made over time to build these platforms. SunOpta plans to operate at the leading edge of trends in these categories through its global sourcing expertise and innovation capabilities.

SunOpta is focused on developing its innovation pipeline and becoming a strategic partner for retailers looking to grow their private-label brands. The company has invested in new resources, expanded its use of proprietary market data and commissioned custom market research. In the Healthy Snack category, SunOpta commissioned ethnographic research including observing consumers in their homes and conducting focus group research to better understand opportunities for new products to serve unmet consumer demands. Using this market data, SunOpta's Innovation Center collaborated with partners at its Carson City, Nevada facility to develop Quinoa Crispies, an organic version of a classic crispy rice treat. The product, under development for a major national retailer, offers three times more fiber and 75% less sugar than the original version.

SunOpta's innovation team is also leveraging the company's global sourcing platform, including using ginger juice as a key ingredient in several products it currently manufactures. Over the past year, several new aseptic products were launched with SunOpta's retail partners including almond and coconut milks and broths.