Above Food has developed a distinctive business model that encompasses three different sectors within food production. During the investor call, Ardura highlighted that this business model offers significant competitive advantages and opportunities for margin expansion. In the agricultural sector, Above Food collaborates with large-scale producers, supplying them with proprietary technology and custom-bred crops. The company partners with farmers to implement regenerative practices and various sustainability measures, which, according to Kambeitz, results in a unique and extensive supply of commodity crops.
The company markets commodity ingredients to larger suppliers and operates three ingredient processing plants in Canada, each equipped with diverse processing capabilities and traceability features. As noted by co-founder and Chief Innovation Officer Martin Williams during the investor call, Above Food serves over 260 customers across 29 countries. Additionally, the company owns and leases more than 300 rail cars for logistics.
Above Food’s consumer packaged goods (CPG) brands include innovative U.S. plant-based products such as Tuno and Loma Linda, as well as the regenerative organic legume and specialty grains brand Farmer Direct Organic Foods, and oat-based food producers Only Oats and Culcherd. The company also operates a private label business. Williams mentioned that its products are available at 35,000 distribution points in 29 countries, with numerous opportunities for further expansion. He noted that margins in this sector can increase because Above Food directly sources about half of the ingredients for its products, which include essential supplements like calcium citrate magnesium hydroxide zinc sulphate and vitamin D3 tablets.
In a written statement, Ardura expressed confidence that Above Food will become a pioneering public company in the food-based specialty ingredients sector, utilizing a vertically integrated business model that capitalizes on its own supply sources and distribution infrastructure to create higher value formulations and products for customers in the ingredients and CPG markets. During the 12 months ending January 31, Above Food achieved $294 million in revenue, as reported by CFO Jason Zhao during the investor call. This revenue resulted in a consolidated gross margin of 4% and earnings before interest, taxes, depreciation, and amortization (EBITDA) of 1%. According to Kambeitz, the revenue composition includes 61% from agriculture, 37% from ingredients, and 2% from CPG.
For fiscal year 2024, Zhao projected a remarkable 129% organic growth in Above Food’s specialty ingredients business, driven mainly by increased penetration of oat ingredients and pet food components, along with rising output. Given that Above Food has its own agricultural operations, it has already secured the necessary crops for these ingredients. From fiscal year 2022 to fiscal year 2024, the company anticipates a compound annual growth rate of 83% in its agriculture sector.
While the merger with Bite Acquisition requires investor approval, it has already attracted $9 million in investments from Lexington Capital and oat manufacturer Grupo Vida, as noted by Bite Acquisitions. Despite the contrasting trends in revenue and sales within the food industry over the past year, and the decline in sales and share prices of publicly traded plant-based companies, Above Food’s diverse business sectors may offer both growth potential and stability.