Canada’s Maple Leaf Foods is seeking to at least double plant-based sales next year and exceed the CAD3bn (US$2.29bn) mark in a decade.
The Toronto-listed business is targeting in excess of CAD280m in sales from its meat-alternative operations next year, having established a plant-based subsidiary 12 months ago – Greenleaf Foods – to house its other businesses in the category, Field Roast Grain Meat Co. and Lightlife Foods, both acquired through recent acquisitions.
Maple Leaf made the announcement in conjunction with its third-quarter results today (30 October), which showed plant-based sales grew 30% to CAD47m, bringing the nine-month total to CAD126.6m. It is also in the process of building a new facility in the US for Greenleaf in Shelbyville, Indiana.
The company’s meat alternative offerings consists of plant protein and grain-based protein products, along with vegan cheeses sold to retail, foodservice and industrial channels.
In the earnings statement, Maple Leaf, which had traditionally been a real-meat products manufacturer, said it is pursuing “aggressive new growth goals focused on expanding sales and accelerating its leadership in the refrigerated plant-protein market under its flagship Lightlife and Field Roast Grain Meat Co. brands, targeting 2020 sales to exceed CAD280m with an opportunity of greater than CAD3bn in sales on a ten-year horizon, based on the plant-protein market’s growth potential and the company’s anticipated share of the market”.
Maple Leaf laid out a group profit target in 2017 to achieve an adjusted EBITDA margin of between 14% and 16% within five years. It added today: “The company remains focused on meeting this target in its profitable meat-protein group with ongoing progress in key margin expansion initiatives, including its sustainable-meat strategy, poultry-network strategy, its food-renovation strategy supporting Maple Leaf’s flagship brands, and its cost culture to deliver operational savings and efficiencies to fuel growth.”
The real-meat segment posted an EBITDA margin of 9% in the quarter ended on 30 September, down from 9.4% a year earlier. The group margin was 5.4% versus 9.3%. Maple Leaf is also investing in a new poultry plant in London, Ontario, to support its aspirations in the sector.
Group sales rose 13.8% to CAD995.8m in the third quarter and were up 12.5% at CAD2.93bn over the nine months. But net earnings dropped almost 50% for the quarter to CAD26.6m, while year-to-date net profits fell 36% to CAD57.2m.
Commenting on the results, chief executive and president Michael McCain, said: “Our third quarter marks our first on the journey to operating two significant segments with different economics: one in meat protein with a robust multi-year agenda of profit growth, and one in plant protein that is capitalising on enormous opportunities for rapid revenue growth. Our plant protein business saw 30% growth and accelerating, and we are intentionally investing very heavily in that growth.
“Meat protein faced an unexpectedly erratic market condition in the quarter connected with global trade, and we expect that to reverse in short order. We are very excited about how we are positioned and where we are headed.”
Meanwhile, Maple Leaf said it expects “ongoing uncertainty” in fresh pork markets related to the African swine fever (ASF) virus that broke out in China last summer and has since spread to other countries. The Asian nation has also temporarily suspended Canadian pork imports.
Maple Leaf said: “ASF is leading to a shortage of pork protein in China, which is expected to increase worldwide market pricing of lean hogs as well as processed pork. Maple Leaf Foods is partially mitigating the impact of the Chinese import suspension of Canadian pork with exports to other countries and inventory management strategies. Within this environment, management remains focused on existing opportunities to grow the core business by improving commercial performance, operational efficiencies and progressing against strategic initiatives for longer-term value creation.”