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Some branded players in plantmilk may be struggling but business has been booming for the guys with the tanks and the pipes and the filling lines to service booming coffee chains and other foodservice customers. Count publicly traded SunOpta among them, last week delivering a 17% volume gain in Q3 as orders from unidentified "marquee" customers came in faster and larger than anticipated. The boom prompted co to announced that it's adding a $35 mil aseptic line at its new Midlothian, Texas, plant that's already 50% subscribed with anticipated startup in late 2026. The line will boost overall capacity at Midlothian by about 10%. Q3 revenue rose 16.8% to $205.4 mil driven by strong volume growth not just across teas and plantmilks but also broths and fruit snacks, which already has announced a new line in Omak, Wash. Protein bevs grew only slightly, tho. Gross margin remained tite: 12.4% vs 13% a year earlier as co incurred costs servicing the accelerated volume. "It will take a few quarters to digest the incremental volume," said CFO Greg Gaba. "We expect our previously announced margin expansion plan will resume in the second half of 2026." He said co hasn't changed its expectation of getting to 20% margin in 2027. That 17% in volume growth capped 9 successive quarters of avg 15% volume growth, CEO Brian Kocher enthused. Operating income soared to $6.9 mil from $807K in prior-year period. The co is slightly upping its anticipated revenue for 2025 but backing off its earnings guidance as it deals with unplanned downtime and higher labor, parts and maintenance costs as it races to keep up with demand. There was no mention in release or discussion of co's branded items.Tho SunOpta is navigating short-term challenges, Kocher put the best face on it, reminding investors, "We continued to demonstrate our revenue, diversity and ability to grow market share. Our categories and customers continue to grow and have accelerated rate compared to broader food and beverage trends."Some, like Oatly, who've hitched wagon to Starbucks have taken some lumps lately. But SunOpta brass is pumped about all the Starbucks challengers it supplies who're growing at astounding rates. In a category whose store count will grow by anticipated 20% over next 5 years, SunOpta products are featured in 8 of top 10 chains across North America, including all 4 of fastest-growing chains. A slide in earnings presentation summed it up: Dutch Bros adding 1,000 unit in 4 yrs, Scooters adding 800 units in 5 yrs, Seven Brew adding 1,000 units in 5 yrs, Bigby Coffee adding 500 units in 3 yrs, Tim Hortons adding 400 in 3 yrs, Black Rock adding 100 stores a year. (It's not clear whether invasion of Asian chains like Luckin reps oppty for SunOpta.)Profitless Prosperity So Far By now, state-of-art plant in Midlothian has been open 3 years and co "really have never been able to unlock the full power," Kocher acknowledged, citing couple of shakedown years followed by wastewater capacity crunch. But "I am really excited to see what Midlothian looks like when we&#39;ve got the ability to run the existing lines at full bore. We get another one in there, and oh, by the way, you get all that volume to dilute the fixed cost or absorb the fixed cost. I think that&#39;s going to be a really powerful leverage point in our margin."Accepting the accelerated biz at a time SunOpta already was scrambling worsened issue but CEO argued that it was worth the pain to pull in these multiyear customers. Still, "I am not satisfied at all with the progress we&#39;re making on gross margin. While taking the accelerated volume was the right strategic decision, I&#39;m dissatisfied that we didn&#39;t realize the profitability and have that flow through. However, we&#39;ve got a clear and finite plan on how to address that."US-Based with US Customers? Tariffs Are Still a Concern Tariffs, you ask? Tho most of SunOpta's production and customers are located in US, it's not immune from the tumult. Some of its ingredients and packaging are sourced globally, and some of its fruit snack items are imported into US from a plant in Niagara, Ontario, that's not exempt under the USMCA trade agreement. In response, "we have been implementing alternative sourcing strategies and pricing arrangements that have allowed us to mitigate our known tariff exposure at this time, although the long-term tariff environment remains uncertain," per earnings release. Only the long-term environment?

Avalanche of New Biz Pops SunOpta Volume by 17% but Erodes Margins; Another Aseptic Line Going into New Texas Plant

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