Ultima Foods, which is equally owned by Agropur and Agrifoods, is providing C$10.8m (US$8m) of the investment and Investissement Québec is contributing a C$3.6m (US$2.7m) interest-free loan. The investment adds to the C$12m (US$8.9m) the company spent in 2016 on its R&D and marketing divisions.
Opportunity in drinkable yogurt
While spoonable yogurt dominates the Canadian market accounting for 91.5% of consumption, according to the Canadian Dairy Information Center, drinkable yogurt is on the rise.
Sales of yogurt drinks are expected to grow US$13bn worldwide by 2020, a CAGR of nearly 8% each year a report by Technavio said. It is also perceived as a healthy and more convenient snack compared to spoonable yogurt that attracts interest from millennials and baby boomer consumers alike, according to Nielsen.
With the new production line, Ultima Foods aims to innovate and expand its drinkable yogurt portfolio, which currently includes two different yogurt drink formats under its IÖGO brand.
Boosting production and innovation capabilities
Ultima Foods produces 30% of the yogurt consumed in Canada, the largest yogurt manufacturer behind Danone. The success of its yogurt drinks is the main reason behind the investment coupled with the fact that company had reached the limit of its drinkable yogurt production capacity.
Martin Parent, president of Ultima Foods, said in the highly competitive yogurt market, innovation drives growth.
The investment will boost weekly production at its Granby facility from 2.7m units to 4.8m units, the company said. The upgrade will also create 35 to 40 jobs.