Hi, everyone, and good morning. My name is Jim Salera. I run the packaged food and beverage practice here at Stephens. With us today from SunOpta are Joe Ennen, Chief Executive Officer, and Greg Gaba, Chief Financial Officer. Thank you guys for joining us this morning.
Thank you.
Thanks. Excited to have a conversation with you guys, I think especially in light of some of the recent exciting changes you've made to the business. So maybe a good starting point for our discussion today, especially for those that aren't as familiar with the story, if you could just give us a quick overview of the structure of the business now that you've divested your frozen fruit assets, and we have kind of the new look SunOpta.
Yeah, great, thanks. You know, happy to be here today. Excited to talk about the new SunOpta. Great trajectory from a growth standpoint. So the company, on a pro forma basis, when you look at what is now SunOpta, 40% revenue growth in the last 36 months, 45% EBITDA growth in the last 36 months, and a great trajectory ahead of us. The core business is focused on several high growth, competitively insulated categories. Shelf-stable, plant-based milks is the biggest part of our business. We have recently entered into the protein shake category with a very strong and long-term partnership already inked.
Our fruit snacks business, which has been a bit of an under-the-radar part of our portfolio, 13 consecutive quarters of double-digit growth, solid margin profile, and great long-term customers there as well. So we're go-to-market agnostic, so we have a private label business, we have a co-manufacturing business, we have our own brands. And we have an ingredients business. So a lot of different ways to win in the marketplace. We manufacture oat milk, almond milk, soy milk, coconut milk, hemp. You name it, we milk it. And as well as we're in the tea business, and the protein shakes business, and so a lot of different ways to win, and that's one of the things we have been pulling on and leveraging over the last several years.
Great. Maybe that's a good place to start, and we can drill down a little bit deeper on the plant-based beverages portion of your business. If we think about the component of that piece of your portfolio, what's the mix between, you know, what we can see, kind of tracked retail, and then food service and, and maybe club, which is a little bit more opaque to us?
Yeah, we would roughly estimate. So it's an estimate only in that when you manufacture for national brands, you don't quite know exactly where their sales mix is. But we would estimate roughly 20% of our business shows up in retail channels. The rest of it is very, very significant business is in the coffee shop food service space. We have a very significant supply share of total food service coffee shops. Whether it's the national brand behind the counter or it's our brand, or it's a white label program, very, very good chance that we are the manufacturer of that across the vast, vast majority of all coffee shops in the U.S.
So you know, where coffee shops/food service would definitely be the lion's share of our business, with roughly 20% of our business flowing through retail channels, and that's specific to the plant-based milk product group.
So if we drill down a little bit on food service, can you just talk about some of the shifts we've seen, especially away from hot coffee towards cold coffee, and how that format change it helps support the growth in, you know, plant-based beverages or plant-based milk specifically, as an additive to this coffee?
Yeah. So we've seen really consistent growth in the food service channel going back arguably decades. If you look at brick channel grocery retail, roughly 16% of all milks are plant-based milks. So 84% milk from a cow, 16% plant-based milks. When you look at the coffee shop universe, it's a smaller percentage. We would estimate maybe double digits, maybe 10%. T here's a big opportunity gap just in getting food service up to where brick channels are. The shift to cold, you know, just based on our revenue and sales in the category, it is a tailwind for us. I think Starbucks reported 75% of their drinks are cold, which is amazing statistic and transformation of their product portfolio.
When you look at those products, they frequently feature coconut milk, as a base or a component. There is a current seasonal drink, which I would strongly recommend, Gingerbread Oat milk Chai, which uses two SunOpta products, so we love that. But again, you know, much more specialty-type drinks and much easier for the baristas and the product developers to integrate things like plant-based milks, whether it's chai tea or oat milk or coconut milk. Coconut milk is a very strong part of many of those iced drinks.
If we shift gears to the retail, the track channel, you know, that we can have more visibility into, we've seen a little bit of softness there recently. Maybe could you just give us a sense for what you're seeing at retail, what your confidence is around the longer term growth trajectory of that, especially relative to dairy-based milk? And you know, just the divergence of the trends that we see at retail versus food service for plant-based milk.
Yeah, so what we're seeing in track channels, I think similar to hundreds and hundreds of other categories, is soft volume, revenue kind of holding in there, but volume soft. You know, total food and beverage is down, which I've never seen in 30+ years, and I think you're seeing consumer shifting to untracked channels, whether that's club, club format, et cetera. W e have seen over the last 10 years, 9% CAGR in plant-based milks. Underpinned and driven by really five consumer dynamics: taste preference, food allergies. May be surprising to know 35% of Americans are lactose intolerant, 35%. 65% of people on Earth are lactose intolerant. So that is a very sticky part of the growth underpinnings for the category. So a little bit of volume softness.
Overall, we would say volume in the both tracked and untracked aggregated, volume's up mid-single digits.
And then maybe if you could touch on just the competitive dynamic between plant-based milks and then dairy, and kind of what you've seen in retail there.
Yeah, I mean, there's certainly been a long-term shift from cow dairy to plant-based milks. That really started in, call it, the mid-eighties, with the launch of soy milk into the U.S. That product's obviously been around for thousands of years, but in the U.S., in earnest, began in the mid-eighties. So it's a 40-year-old category, and, you know, is now 16% of all milks. Again, I mentioned some of the drivers, food allergies, certainly one of them. Taste preference. You know, there's a phrase in the food business, which is: You can't be better if you're not different. And when you think about plant-based milks, they taste different. Almond milk taste doesn't taste like cow dairy. Oat milk doesn't taste like cow dairy.
So if you're a five-year-old, and for the next 20 years, all you ever drink is almond milk or oat milk, you don't like the taste of cow milk. I mean, we hear this very, very consistently from consumers. Plant-based milks are in 40% of U.S. households. Forty. And it's... taste preference is a huge driver because if that's what you grew up drinking... You know, we hear from consumers who grew up drinking plant-based milks, milk from a cow tastes sour, it's eggy, it's slimy. They just, they don't like it. So, you know, that's a really important thing to understand in the food industry, is taste, is no matter what the category is, taste is always the driver. And when you have a different product, you have the opportunity for that to create preference over time.
You know, we certainly see consumers coming to the category for sustainability reasons, for animal welfare reasons, and for health benefits overall. You know, those five factors are really what has driven the category for 40 years, and what we believe will continue to drive the category for the next 40 years.
That's great. Why don't I pause for a second, see if there's any questions from the audience? I'll keep going. Can you help us draw a contrast between your business, which is much more kind of brand agnostic, versus some other companies that are more focused on the branded side in plant-based beverages and how that differentiates you, and maybe any advantages that that could lead to in your business?
Yeah, I mean, certainly when you think about some of the pure play companies in the plant-based space, they tend to be a single brand, whereas we work with literally dozens of brands. They tend to be very narrowly focused on one product or one product type. Not only are we focused on seven different types of plant-based milks, but we have a tea business, we have a protein shake business, we have a fruit snacks business. And then one very obvious but significant, significant differences, you know, many of those companies have pretty significant negative EBITDA. We've obviously have positive EBITDA and have a great track record of consistent growth in EBITDA. Again, as I mentioned at the opening, 45% EBITDA growth in the last 36 months.
We feel like that trend will continue as we monetize the capacity that we started adding in 2021 and 2022.
Great. Maybe another question, but shifting gears away from the plant-based milks, can you just give us an update on tea, some trends you guys see there, and maybe some of the differentiation assets that you have as part of your manufacturing base?
Yeah. So, we have a very focused tea business. We have two customers, one on the retail side, one on the food service side. Chai tea is the product we produce. You know, our point of difference is, you know, shelf-stable, so not a refrigerated product. We had one of our two customers had some supply chain challenges in the second quarter, which hurt us from a revenue standpoint. That was, that is behind us, and we are back to having our sales full of wind. I don't know if that's a correct description of tailwinds, but we definitely have bounced back from that, and tea was one of the four growth drivers for us in the Q3 results.
So with the, you know, in Q3, tea, oat milk, protein shakes, and fruit snacks were the four growth drivers. So you can again see in that description just the diversity of the product portfolio and how we're able to pull on different levers to drive volume-fueled revenue growth.
That's great. And you mentioned at the end there nutritional beverages, protein shakes. That's a relatively new category for you guys. Obviously, you ended with a very high-quality partner there. Can you just give us an update, I guess, first of all, kind of your thinking around entering that part of the business, and then what you think kind of the growth trajectory is there moving forward?
So really strong growth trajectory. It almost doubled our TAM in getting into the protein shake category. Protein shakes, depending on how you cut it, is a circa $5 billion category. It has some unique dynamics. It's very... there are a lot of co-manufacturers, so most of the national brands are not self-manufacturing. So you have a fast-growing category, large number of co-manufacturers, tends to be a very undersupplied category, meaning there's more demand than supply, which is again, a category dynamic we like. And then it is a very challenged product.
Similar to plant-based milks, it is a challenging product to manufacture, and we like those kind of businesses 'cause if you're good at it, as a manufacturer, it creates the opportunity for real differentiation versus being in a kind of more commodity-oriented manufacturing environment, where it's hard to be great at something that simple. So you know, we're off to a great start there. You know, again, fast-growing category, great partner, and you know, fairly well competitively insulated. W e got into it because the manufacturing process for protein shakes is very similar to the manufacturing process for plant-based milks.
That's great. I wonder, just building off of something you said there, as investors think about, you know, the competitive moat that you guys have around your business, obviously, you have a strong kind of manufacturing base, but how difficult is it for someone else to replicate the capabilities that you have, you know, to make plant-based beverages and nutritional beverages and kind of across your suite?
Yeah, it's. The moat is very much around the intellectual expertise in product knowledge and manufacturing knowledge. So if it, if your only moat was something that was about dollars and cents, eventually somebody would come up with enough money to say, "Hey, I'm gonna replicate SunOpta's network." Our network is one of our competitive advantages. We have a very diverse footprint geographically. So we have a plant in the east and the west and the north and the south, and that diamond shape gives us really significant competitive advantages. But the real secret, if you will, is these are, again, very, very challenging. I've been in the food business 35 years. I've worked in probably over 100 categories in my career, and this is by far the most technically sophisticated, technically challenging operation.
And so if you're good at it, your people, your knowledge, your systems, your playbooks are real competitive advantages. Because in this space, being great... If you took the best player in our category and the worst player, the best player on the exact same manufacturing equipment literally produces twice as much. There's that much standard deviation from kind of the bottom quartile players to the top quartile players. The top quartile players with the exact same equipment will produce twice as much product.
So building on that, if we look at it from your branded partner's perspective, as they decide, you know, who to partner with to manufacture their products, what's at risk when they think about shifting producers if execution, you know, falls off or they're unable to maintain fill rates, and how does that position you guys as having really sticky relationships?
Yeah, I mean, service is so critical because, again, as I outlined, you know, from the bottom tier to the top tier, the top-tier players of which we are one, we have the data that says we're in the top 25th percentile of manufacturers in our space. Consistently delivering for your customers is of paramount importance. And if you think about it from their vantage point, from our customer's vantage point, they're selling a $3 product, and let's say they've got a 30%-40% margin, so they're making $1. So being out of stock is a massive sin versus, "Well, we switched suppliers, and we're saving $0.03 a unit, except we're out of stock 20% of the time," and that 20% of the time costs you $1 every single time.
So there's a huge risk in switching because it's possible that if you switched from a great operator to a poor operator, you're not gonna get your orders filled. There are some industries where that doesn't happen, where everybody are pretty good operators, et cetera, but I would tell you that... Every new customer we've picked up and every share gain that we have realized in the last three years has all come from, "Hey, we're working with XYZ company, and we're just not getting our orders filled," or, "We're not getting everything we're ordering, and we can't continue to be out of stock, or we're gonna start to lose distribution at," fill in the blank, Walmart, Kroger, et cetera.
So being able to produce the products consistently on time to the cost target is a really, really important part of our customers' value set.
Great. Maybe shifting gears to the fruit-based portion of the business, that you guys retained, you know, after the divestiture of the frozen fruit. Can you just... I guess, first of all, can you just give us some thoughts around what drove the decision to divest from frozen fruit, how long you guys have been thinking about that, and, you know, why we finally, finally came to a decision point?
Yeah, great question. So we've been thinking about selling the frozen fruit business for a while. You know, going back to our Investor Day, we did identify it as one of our non-core businesses. It was quite the process. You know, we finally got it achieved. And it really changes now. That was our last commodity-based business. Now, we're more manufacturing value add. We used to... If you look at the non-core businesses that we've sold over the last few years, they were all commodity focused. Now, we're at full manufacturer value add. So what that does, it's increased revenue growth for us, increased margin profile. So that's the main reason, and the working capital. I mean, that, when we had that business, basically, 20% of our revenue was tied up in working capital.
Now, pro forma, we're 10%, so significant working capital savings. So those were the reasons to divest that business. And the business we kept, although they share the word fruit, they're nowhere near similar. So it's, it's a fruit snack product, high growth, kind of like bars, bars and twists, healthy label, clean label, low sugar added. Very high growth product for us, and, we're very excited to maintain that business.
I think recently on your third quarter earnings call, you mentioned you have new capacity coming online in fruit snacks. If you could just give us an update on that, and maybe talk about what the demand was for that capacity as you guys were getting that ramped, and how long kind of you had back orders lined up for?
Absolutely. We had multiple customers on allocation, as in we couldn't produce all the product that they wanted. So this capacity expansion increased our capacity in fruit snacks by about 40%. Just came online in Q3, and we're ramping that as we speak. So, you know, we're roughly a $100 million run rate right now in fruit snacks. That will provide another $40 million runway for us.
And maybe for some investors that aren't as familiar with the fruit snacks category, given, you know, relative size compared to plant-based beverages, what's kind of the growth trajectory there? Who are, you know, maybe some of the primary customers, and how should we think about that, you know, as kind of it expands as a piece of the business?
Yeah, total fruit snacks, which includes the better for you segment, which we compete in, and then a lot. A big chunk of it is what I would describe as faux candy. Where, you know, it's basically sugar and starch molded products, we compete. You know, fruit is the main ingredients on our products. The better for you segment is doing very well in retail channels, the sub-segment better for you. And overall, the fruit snacks category is also growing.
So, you know, we've seen several years of continued growth there, especially on the better for you side, which is great that parents are making a shift away from some of the faux candy type products to the better for you segments, where fruit is the principal ingredient and all the ingredient and, you know, very low or no sugar added.
If we zoom out from the individual segments and just look across the entirety of your business, better for you as a whole, you know, has been gaining popularity, obviously, at retail. How do you take the expertise that you guys have in better for you and help your retail partners or your branded partners develop kind of new innovative products bring new products to market that you think will, you know, help them expand kind of that better for you category?
Yeah, so, you know, one of the great things about the breadth of business that we do is we're we are able to help our customers see into products that they maybe didn't think about as a core part of their business. So, you know, we are passionate advocates for organic. We are always endeavoring to focus our customers on the organic opportunity, if they're not already an organic manufacturer, as well as staying on trend with new products. And especially when you think about the innovation in coffee and coffee-based drinks and ice-based drinks, I mean, it is a very typical playbook in packaged foods to take something that's working in food service and bring it to the grocery store shelf.
I mean, probably a third of the product innovations that get launched in any given year are trends that people see in food service, and they try to launch, packaged products there. So given our depth of expertise in coffee applications and our exposure to food service, you know, we are aggressively pointing both our own brands as well as our partner brands towards some of those opportunities to bring those coffee shop product experiences to the grocery store shelf.
Great. Why don't I pause again and see if there's any questions from the audience? You guys have recently opened your newest facility in Midlothian, you're ramping production there. Can you just give us an update on what lines you have in place, and then at kind of scale, what's the total capacity there? And what's the impact on the margin structure of the business?
... Yeah, we currently have two lines running. So as we mentioned on our call, we're roughly 60% of where we wanna be on those two lines. You know, we continue to improve every week as we ramp up on those two lines, and then the third line will be coming online next year in 2024. You know, margin profile, it's all about cost per case. That's how we view everything. So we did enter the protein shake category. Where it's a little different contract structure-wise, where some of the ingredients are provided for us, so you have a lower revenue amount. However, you still have the same profit per case, so it actually improves your gross profit on the gross profit percentage on those products.
But overall, you know, we have, as we call it, with the new expansion that we've done, not only with Midlothian, but we spent $230 million over the last few years to double our capacity in plant-based. And, you know, our view, as we said on our call, is by 2025 or 2026, that capacity will be full. So we do have some runway right now. Our focus is to run our assets, the cash flow, and to really get value out of the investments that we made.
Greg, you actually mentioned a key point there that might be helpful to unpack for investors. Can you talk about how your customers' procurement of, you know, commodities and packaging impacts the revenue versus gross profit line, and how that looks from your perspective?
Yeah, sure. So most of our contracts are pass through for commodities. So in an inflationary environment, we pass that on. Our gross profit remains the same gross profit dollars as structured for our contract. So yes, revenue may go up or down based on the commodity prices, but it's not an inflationary risk to us in most cases.
Can you maybe talk about how certain customers will procure commodities and send them to you and other ones you guys procure the commodity, and so that, you know, can have an impact on revenue versus the, you know, gross profit percentage?
Sure. So most of our contracts, we do procure most of the ingredients. Protein shakes is a great example where we do not, you know, some of the larger ingredients are provided to us. In those cases, our revenue would be lower, because we have a tolling arrangement for what our cost, our profit per case is. So gross profit dollars per case remains the same. Gross margin would increase because the base revenue would be lower-
Mm
... in those scenarios.
Great. As you guys build out production at Midlothian, what are some of the other lines you're thinking about? And kind of at full, you know, run rate, how many lines would you guys have there? And, you know, what's kind of... Whether you wanted to use EBITDA dollars what, what's kind of your full capacity there?
So we put in three production line. We built the shell of the building, the four walls, so to speak, to be able to have five end-to-end production lines. We put in three to start, so we have room for two more before we have to start moving walls. But, the property we bought is 30 acres, so we have the opportunity to punch a hole through the wall and keep expanding if we would need to do that, call that 2028. But, in the meantime, we've got a great shell space for, call it 40%, additional capacity without having to do major construction. And, you know, we're excited about the volume-fueled growth that that is teeing us up for.
I mean, we shared an initial forecast for 2024 for the total company of high single digits to low double-digit revenue growth. I will point out, all of that will be volume driven. So all of our growth next year is volume. So that's high single digits to low double-digit volume growth expectations for next year, and that is without any new business.
That's a helpful point at the end you made there, Joe, is what's your visibility when you talk with your customers, in kind of their demand for the next year, and how do you guys help, you know, build out a demand forecast as you look at, you know, your 2024 numbers?
Yeah. So, you know, some customers are better at forecasting than others, as you might expect. But overall, you know, the way that we... So we do a bit of forecasting the forecaster. And, you know, we feel like we put out a 24, view of the business that is a more conservative approach than we took in 2023. So in 2023, we had all this new capacity coming online. We had all these new customers teed up. We made... You know, based on when they told us they were gonna move the volume over, we built our plan, and therefore our forecast to all of you about what we saw coming for 2023.
We took a different approach in 2024, which is we said: Hey, we're gonna share numbers that are just based on customers that we have in the barn right now. We're making these products. We know what the volume is, or the contract is signed, and we know we're gonna start on this date. It doesn't mean we don't have a great pipeline of new customers and new business in development for 2024, but calling the quantum and timing of that has proven to be more challenging than we thought. So what we've shared in terms of high double-digit, or excuse me, high single- to low double-digit volume growth for next year is built off of existing customers today. Doesn't mean something couldn't happen to a customer, or they lose some distribution or something.
But to the degree possible, that is informed only by existing business.
... Great. Can you maybe offer us some thoughts around, you know, what you see end market-wise into 2024, kind of, you know, plant-based on, on the food service side, plant-based on retail side, and just kind of broadly speaking, you know, what you're seeing from the consumer?
Yeah, I mean, we, you know, we're seeing a bit of bifurcation or have seen bifurcation between what's happening in food service and track channels. And it would appear that our national brand customers have forecasted—have not forecasted a significant improvement for check-track channel performance. So if track channels do bounce back, that would be some upside for us. Again, it's not... It's roughly a fifth of our business, so, but, you know, we'll take tailwinds versus headwinds any day. But the bifurcation I mentioned is, you know, we've seen really very steady growth in plant-based milks in the food service category.
I think it comes down to just a simple human behavior, which is, you know, in the with all of the food inflation and pressure on real wages, what you see when somebody goes to the grocery store, if they're shopping for themselves or, you know, a family of three or four, they've only got so much money to buy groceries. T hey have to buy food, and laundry detergent, and paper towels, and all this other stuff. And so, you know, if they've got $150 for the week for groceries, they're making trade-offs. I mean, they're absolutely making trade-offs about how much money they have to spend and where they can save money. And that's why I think you're seeing track channels just down, is that's more of a stock-up trip.
When the consumer's in, you know, banner grocery store, that's a stock-up trip, and stuff's expensive, and they only have so many dollars to buy stuff. Contrast that to you're on your morning routine, whether you're at the drive-thru or at the coffee shop, and you've got your standard drink that you order, your Grande oat milk Frappuccino with a double pump of caramel sauce. That's your order, and whether that is $0.20 more expensive than it used to be, you're not changing your order. I mean, people are very routinized around what they order at a coffee shop.
And we saw this in the last recession, where, you know, consumers said, "Hey, I know I can't afford a new car," or, "I can't afford to take the family to Disney World this year, but I'll be damned if I'm giving up my oat milk latte with a double pump of caramel sauce." You know, things aren't that bad, right? So that's what you saw in the last recession, and I think you are seeing a similar pattern play out.
Great. Maybe one more question on kind of new business opportunities. Could be more high-level thoughts, but obviously, you guys have some really strong partnerships in food service. Is there still incremental opportunity, like big wins available for you in food service? And then maybe in the retail or club channel, are there still big opportunities for you guys to win large customer relationships?
Yep, we're always optimistic, and I think we've got a very demonstrated track record of growing market share with existing customers. If I look at our top five customers, we have grown share with four out of our top five customers. And so we continue to believe there's upside there. There's upside in oat milk and food service for us. We are underdeveloped in the club channel as a company, and so that is a sales priority for us going forward. So we're excited about that and focused on that. So yeah, we continue to feel like there are. You know, we have three growth drivers: grow share with existing customers, bring on new customers, and then drive TAM expansion into new categories like creamers and protein shakes.
Great. We touched on the sale of the frozen fruit business earlier, but maybe to highlight some of the benefits from that transaction. You guys reduced your leverage significantly. Can you just give us an update on where the leverage sits now, kind of the progression of that moving forward, and then maybe what your capital allocation priorities are?
Yeah, absolutely. So after we received the proceeds from the sale, we did pay down debt. On a pro forma basis, it was around 3.2x . You know, as we stated on our call, our first priority is to get our leverage under 3x , as we'll pay down debt until we get under 3x . From there, you know, based on what we see today at our stock price, it looks very attractive for a share buyback. So if things remain the same, after we get to that leverage point, share buybacks become an attractive opportunity based on today's price.
Then other alternatives for the cash flow that we're going to generate, that we expect to generate, you know, would be additional investment and capacity, as we look to expand our network further once we fill up our network here.
Greg, I think on the most recent earnings calls, you also talked about the refinancing transaction that you're targeting by year-end. Could you just walk us through what that'll look like in terms of, you know, structure and maturity, and how that compares to what you guys have right now?
Yeah, absolutely. So as I discussed earlier, one of the big benefits from divesting the fruit business is the significant decrease in our working capital. So again, going from 20% of revenue down to roughly 10% now, our current ABL structure doesn't really make sense for us going forward. So we're gonna move to a term loan and revolver structure. You know, weighted average debt will roughly be the same, but it creates a lot more flexibility for us in the short term here. So we look forward to that. And we are on track to get that done by the end of the year, as we have great banking partners and we're well on our way to getting this completed.
... Excellent. Maybe as we wrap things up the business has gone through a lot of transformations over the last couple of years. You know, divestiture of sunflower business, divestiture of the frozen fruit business, entrance into nutritional beverages. As investors who are familiar with the story or perhaps new to the story, think about kind of the new look SunOpta moving forward, what are some of the key points that you want them to come away with, in just kind of sizing up the growth opportunity that the more kind of narrowly focused business has as moving forward?
You know, the company has a very consistent track record of delivering revenue, revenue growth, volume growth, and EBITDA growth. And if you look over the last eight years, most of the uncertainty or volatility in the business came from the frozen fruit business. The investments that we made in 2021 and 2022 are fueling the growth that we have delivered in 2021 and 2022 and 2023. So this isn't a betting on the come story. This is a very consistent track record of delivering volume and EBITDA growth, fueled by the investments that we've made in expansion. And we're a focus company in really attractive categories that have long trajectories, long histories of growth, and some really significant competitive moats for us around manufacturing expertise, the supply network that we built, and the length of partnerships that we have.
I mean, our biggest customer, we have been supplying them plant-based milks for 20 years. This is our 20th anniversary of supplying our largest customer with plant-based milks. Well, for sure, all of our top 5 customers have multi-year contracts with us. Many of those have been renewed in the last 12 months, and not only encompassed an extension of the contract term, but also more business, meaning a larger share of their business. And I think that really speaks to the confidence that they have in us, in our ability to produce their products consistently on time, and also have capacity available for them to grow.
So in capacity-constrained categories, partnering with somebody like SunOpta, who's making investments in capacity so they can continue to grow, is hugely important because the last thing a national brand wants to do is run out of runway, right? If you're partnering with somebody and they don't have any head space for you to continue to grow, you're then in a situation where great, now we got to go find somebody else to work with, and now we're working with three people or four people, and the complexity of doing that is a house of cards. Versus working with one big manufacturer like us that has competency, expertise in product innovation, can drive growth, runs the plants well, keeps costs under control, and importantly, has capacity for them to grow.
Because again, despite what you see in retail channels, category up mid-single digits, and within that, you obviously have players that are growing significantly faster than that.
Great. Joe, Greg, thank you guys for joining us today, and if there's no questions, I think we'll leave it there.
Great. Thank you.