The company's name, SunOpta, doesn't register much in a state that hosts such food industry giants as General Mills and Cargill.
But the Toronto-based company, which has a deep presence in Minnesota, is ensconced in one of the hottest spots in the food business: organic and non-GMO.
SunOpta supplies packaged food companies with ingredients from sunflower seeds to fruit, and makes its finished products — soymilk and orange juice, for instance — for major food retailers. It also is the nation's largest organic soybean processor.
It's unique in the breadth of its organic offerings, and this spring became the first company to win federal approval for a label verifying its non-GMO sourcing process. The packaging label could give it a competitive advantage as consumers increasingly seek food free of genetically modified ingredients.
"I don't think [the non-GMO label] will initially do much, but it has the potential to do a lot," said Eric Gottlieb, a stock analyst at D.A. Davidson. "It could potentially open the door to more sales. It's a very nice thing to have."
Currently, the food industry relies on one significant packaging label — "Non-GMO Project Verified" — to indicate that a product is free of genetically modified ingredients. SunOpta's "Process Verified" label, which has the imprimatur of the U.S. Department of Agriculture, could become a competitor.
But even if the new label proves a dud, the company still stands to post strong sales growth, Gottlieb said.
"SunOpta is one of the few companies that can fully participate in the growing consumer trend for high-quality natural, organic and specialty foods," he wrote in a research note.
The company's stock, after bottoming at less than $2 in 2009, rose to a range of $12 to $14 last fall as the organic market flourished. But the stock dropped to the $10 to $12 range after SunOpta fell short of near-term financial expectations. It closed Friday at $10.17.
SunOpta Foods is rooted in Minnesota, and about 40 percent of its workforce — 550 employees — are employed in the state. SunOpta's corporate office in Edina, which includes a research and development center, employs 120, and its two plants in Alexandria together have about 200 workers. The rest are in other plants around the state.
Last week, the company announced a new CEO effective Oct. 1, Rik Jacobs, who will be based in Edina, instead of Toronto as is the case with the current CEO.
The company got its start in the food business in about 2000 when it bought soybean specialist Sunrich Inc. (based in the southern Minnesota community of Hope) along with soy milk processing and packaging operations in Alexandria.
Over the years, SunOpta bought several small food companies, and today the publicly traded company has about $1.2 billion in annual sales. It sources ingredients — including nuts and cocoa — from 65 countries and counts as customers such heavyweights as Costco, Target, Starbucks, General Mills and Kraft.
Sales of organic foods are booming, hitting nearly $36 billion in 2014 and growing at an 11 percent pace in the past two years, according to the Organic Trade Association. Mintel, a market research company, said that last year, 10.7 percent of all new food and beverage products made organic claims, up from 6.4 percent in 2012.
"The demand is far outpacing our ability to add [organic] acreage in the U.S.," said John Ruelle, SunOpta's Edina-based chief administrative officer. "Our governor on growth is going to be access to supply."
SunOpta's business is about evenly split between non-GMO and organic ingredients and products. Consumer demand for non-GMO products has popped in the past three years.
In 2014, 10.2 percent of all new U.S. food and beverage products contained a "GMO-free" claim, according to Mintel, up from 6.5 percent in 2013 and only 2.8 percent in 2012.
Complex sourcing
SunOpta buys commodities directly from farmers, but converting from conventional to organic agriculture can be a risky venture. While organic crops can be more profitable, it usually takes farmers three years to meet the exacting standards of the USDA's organic program.
Switching to non-GMO crops is an easier proposition, since the farmer primarily needs only to use seeds that haven't been genetically modified. (Organic crops use non-GMO seeds, too.)
GMO-free has no federal regulatory definition, unlike organic. Products that have been certified as organic by USDA-approved testers can display the USDA organic label. With non-GMO products, labeling has become a contentious issue.
Makers of packaged foods have successfully fought legislative attempts to force labeling of products with GMO ingredients, a movement born of consumer skepticism about GMO safety. (Federal food safety regulators consider GMOs safe.) But food makers support voluntary GMO-free labeling as a method of marketing to GMO-wary consumers.
They have been largely relying on the nonprofit Non-GMO Project. The Non-GMO Project bestows its label — which features a stylized butterfly — on products proven to be free of genetically engineered ingredients. The organization works with independent testing companies to do the research.
Since its label launched in 2010, the Non-GMO Project has verified close to 35,000 products, including about 10,000 so far this year. Several large makers of packaged foods use the label. About 200 products from Golden Valley-based General Mills — under brands such as Cascadian Farms, Annie's, Muir Glen and Larabar — sport the Non-GMO Project label.
SunOpta's non-GMO label is a different animal, but could serve a similar purpose as the Non-GMO Project's seal.
Dueling labels
In May, the USDA allowed its Process Verified certification to be used by SunOpta for non-GMO food production — a first. The certification has been around for years, and has been used by many agriculture and food companies, including Minnetonka-based Cargill.
The USDA has verified Cargill's processes for ensuring that some turkey products were raised by independent farmers who didn't use antibiotics to juice the birds' growth. SunOpta won the Process Verified certification for non-GMO production, specifically for its grain processing operation in Hope.
"It's a validation of what we have been doing all along," said SunOpta's Ruelle.
The company plans to get Process Verified status for its Alexandria operations and other plants, which would allow the USDA bug to be printed directly onto consumer products, not just ingredients headed for a food manufacturer. Almost 40 percent of SunOpta's 2014 sales and 48 percent of its profits came from consumer products such as soy milk, snacks and frozen fruit packed under private labels.
SunOpta executives downplay any talk that the USDA Process Verifed label could become a competitor to the Non-GMO Project. So did Courtney Pineau-Bos, the Non-GMO Project's associate director, who said there's a "stark contrast" between the two labels. But some executives in the ingredient-supply business have a different take.
"It's a competing certification," said Lynn Clarkson, president of Clarkson Grain, an Illinois-based organic and non-GMO grain supplier. "There is no one definition of non-GMO."
Though SunOpta is a competitor, Clarkson tipped his hat to the firm's labeling efforts. "I thought it was a good marketing move by SunOpta," he said. "I suspect more companies will do the same. I also suspect there will be 10 to 15 definitions of what non-GMO is."
Mike Hughlett • 612-673-7003