Maple Leaf Foods Inc. and its wholly owned subsidiary, Greenleaf Foods SPC, announced April 8 plans to construct a $310 million plant-based protein food processing facility in Shelbyville, Indiana. At approximately 230,000 square feet, it will be the largest facility and investment of its kind in North America. The company said it also plans to invest approximately $26 million to keep pace with ongoing growth in demand at its existing facilities. This strategic initiative will support Maple Leaf's continued growth and leadership in the rapidly expanding market for plant-based protein.
"With Lightlife and Field Roast, we own the leading brands in the North American refrigerated plant-based protein market," said Michael McCain, president and chief executive officer. "This investment will secure our ongoing leadership in this rapidly expanding market. By establishing a large-scale North American network, we will continue to meet rapidly growing demand for delicious protein alternatives and create a center of excellence for innovation. It will escalate the financial contribution of this business and advance Maple Leaf's vision to be the most sustainable protein company on earth."
The new Shelbyville facility will be supported by approximately $50 million in government and utility grants and incentives, including $9.6 million toward capital and one-time start-up costs, and approximately $40 million in 10-year operational support. Maple Leaf expects to incur one-time start-up costs of $34 million and will fund this strategic initiative through a combination of cash flow from operations and debt.
This expanded network will support the company's growth expectations through 2024, with future expansion expected. It will deliver an excellent return on capital for shareholders, in the range of 13-16%, based on underlying long-term growth estimates. By 2022, the Adjusted EBITDA margin of the company's plant-based protein network will be in line with Maple Leaf's overall EBITDA margin target of 14-16% and will continue to grow in the following years as capacity utilization increases.
The company said its acquisitions of Lightlife Foods Holding Inc. in Turners Falls, Massachusetts and the Field Roast Grain Meat Company in Seattle, Washington provided Maple Leaf with the no. 1 and no. 2 brands, a diversified product portfolio and an extensive customer base for refrigerated plant-based protein. The businesses have consistently outperformed expectations and are expected to reach full capacity utilization in 2020.
Plant-based protein represent a $1 billion North American market, according to Maple Leaf. Refrigerated products represent approximately 24% of the total market and delivered approximately 40% sales growth in 2018, significantly outpacing the broader category.
“High growth rates are expected to continue as people increasingly seek more protein in their diet and delicious options, and as innovation continues to increase product appeal and variety,” the company noted.
The new Shelbyville facility will be the largest and most modern of its kind in North America, solidifying Maple Leaf's leadership in the fast-growing plant-based protein market. It will double the company's current production capacity and support a rich pipeline of innovation to meet increasing consumer demand and fuel market growth. The facility will produce tempeh, franks, sausages and raw foods. This includes the recently launched Lightlife Burger, which offers a superior product that leverages the company's decades of culinary and market expertise.
The facility will service customers across North America, expanding and complementing the company's existing, extensive supply chain network.
Construction on the 57-acre property is expected to start in late spring of 2019, with production start-up expected in the fourth quarter of 2020. The site is well located with easy access for freight traffic and labor recruitment. The site supports future expansion with multiple phases of investment expected over the next decade to meet forecasted market growth. The company expects to employ approximately 460 people at the new facility once start-up is completed.