SunOpta shakes up quality assurance and begins strategic review

By Vince Bamford

- Last updated on GMT

SunOpta to 'significantly enhance' quality assurance. Photo: iStock - BrianAJackson
SunOpta to 'significantly enhance' quality assurance. Photo: iStock - BrianAJackson

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SunOpta – the business at the center of a sunflower kernel recall that affected snacks manufacturers including Treehouse Foods, General Mills, Clif and PepsiCo – has announced a change of management for its quality assurance.

Dozens of products containing sunflower kernels supplied by SunOpta have been pulled from shelves over the past six weeks over fears the kernels may contain Listeria monocytogenes, a bacteria that can cause listeriosis​.

The Canadian business this week said it was aiming to “significantly enhance​” its food quality and safety processes and procedures by transferring oversight of quality assurance to Jim Gratzek, its senior vice president of research and development. Quality Assurance was previously overseen by the company’s operations department.

Extensive food quality experience

SunOpta said Gratzek, who will continue to lead the company’s R&D work, has extensive experience in food quality, process improvement and technology development.

"The same disciplined, focused approach which Jim has employed so successfully in our R&D function will help us to more rapidly address the process challenges at the root of our recent quality issues​,” said SunOpta president and chief executive officer Rik Jacobs.

This change will also allow our operations teams to more single-mindedly focus on efficiency improvements in our plants and in our global supply chain, thereby enhancing our ability to achieve our goal of increasing gross margins​,” he added.

Rothchild to lead strategic review

SunOpta also announced it has hired advisers Rothschild – and legal advisers Davies Ward Phillips & Vineberg LLP – to review its operating plan and evaluate strategic and financial actions it could take to maximize shareholder value.

The move follows calls by major SunOpta investor Tourbillon Capital Partners for the business to put itself up for sale.

In a statement, SunOpta said: “Recently, management and some members of the board of directors met directly with many of the company's largest shareholders. Following these consultations and reflecting the views expressed by a number of these large shareholders, including that now is not the right time to commence an outright sale of the company, the board of directors has hired Rothschild Inc​.”

There is no set timetable for the completion of this review process. SunOpta does not intend to disclose or comment on its review, unless and until the Board of Directors approves a specific action, or otherwise concludes its review​.”

Headhunter appointed

Following encouragement from shareholders, SunOpta has also appointed headhunters Russell Reynolds Associates to find potential directors “who can add additional operating, industry and capital markets experience” ​to the SunOpta board.

"With these steps today, we are responding to our shareholders and taking the necessary steps to review SunOpta's strategic opportunities and improve the Company's operational performance to create value for all shareholders​," said SunOpta chairman Alan Murray.

"These announcements today enhance SunOpta's ability to achieve operational excellence, maintain financial discipline and pursue innovation to drive growth​."

The SunOpta sunflower kernel recall


SunOpta initially recalled sunflower kernel products produced at its facility in Crookston, Minnesota, between February 1, 2016 and February 19 over fears they may be contaminated with Listeria monocytogenes.

This prompted recalls by US business including Treehouse Foods – which pulled dozens of products from Kroger, Trader Joe’s and Giant Eagle.

SunOpta extended the recall period a few weeks later to include products produced February 20, 2016 through April 21, 2016, and again on June 1 to cover May 31, 2015 to January 31, 2016.

That extension brought recalls from businesses including Clif, PepsiCo and General Mills, in addition to new and extended recalls from previously affected manufacturers.

Production of roasted sunflower kernel products has been resumed at the Crookston facility after SunOpta halted it following the discovery of the contamination. The company said it has reviewed its manufacturing processes and has identified and eliminated the root causes of the contamination.

The business has adequate insurance to help mitigate the direct and indirect costs of events such as a recall, said SunOpta, adding the roasted kernel products from the affected Crookston production lines represented less than 1% of the company’s annual sales.

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