Shape Foods | New investors bring flax oil processor back from receivership
Dane Lindenberg’s job as marketing co-ordinator for Shape Foods is relatively easy, thanks to the well publicized health benefits of omega 3 fatty acids.
“In the U.S. right now, there are two top health claims (for foods). Number one is fibre and number two is omega 3,” Lindenberg said at the company’s seed crushing and flax oil bottling plant in Brandon.
It helps that flax is recognized as one of the best sources of omega 3 fatty acids, but the business climate for Shape Foods hasn’t always been sunny since the flax oil processor first opened its doors in 2007.
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Built in 2007 at a cost of $17 million, the 70,000 sq. foot plant produced its first flaxseed oil in that year.
However, Shape Foods announced in the fall of 2008 that it was going into receivership, putting 60 employees out of work.
The fate of the plant, which was partly financed with $4.1 million from Manitoba taxpayers, was in doubt until local investors bought the company in 2009. Jim Downey, a provincial cabinet minister in the 1990s, led a group that bought the plant for $5.1 million from the original owners, who were based in British Columbia.
Shape Foods re-opened in the spring of 2010 and now employs 30, including management and processing staff.
The 2007 version of the company planned to sell its branded flax oil to health conscious consumers in the United States. However, the 2008 recession and the challenge of marketing a relatively unknown vegetable oil derailed those ambitious plans.
Taras Sokolyk, who became Shape Foods’ chief executive officer in April, said the company still wants to promote its own brands, but it’s also focused on the food ingredient industry.
“We’re looking at doing our brands, Heart Shape and Royal Harvest, bottled here in Brandon but distributed by others…. Our strength is in production. There are others that are better at distribution systems,” said Sokolyk, who was CEO of Canad Inns, a Manitoba hotel chain, before joining Shape Foods.
“A huge piece of the enterprise will be in the (food) ingredient market, working with other food processors looking at our product as an omega 3 enhancement in a variety of different food products.”
The company’s new direction is reflected by the tagline on Sokolyk’s business card — Shape Foods, Flax Oil and Meal Producers.
As an example of how the company has amended its business model, Lindenberg placed a one-litre container of flax milk on the boardroom table at Shape Foods.
A Wisconsin company called Good Karma Foods makes the flax milk, which is sold at Walmart, other U.S. grocery chains and Superstores in Canada.
“A couple of different companies are making flax milk,” Lindenberg said. “Our flax oil is the only one that can survive pasteurization. So we’re the only product that can go into it.”
Shape Foods also collaborates with food processors to develop new uses for flax oil.
“We’re taking a look at things that people are producing now and adding an omega 3 enhanced product,” said Sokolyk, who was chief of staff to premier Gary Filmon in the 1990s.
The marketing team at Shape Foods has also had success selling flax meal, the byproduct of the crushing process. Food processors are using the meal to make healthful food ingredients that replace traditional products such as guar gum, an additive used to thicken and stabilize food.
“What they (food processors) are doing is making these alternative products with our ingredients, that have the added value of the omega 3,” Lindenberg said.
“We haven’t had a whole lot of problem moving the meal…. There’s just as much interest in the meal as there is in the oil.”
Sokolyk didn’t have figures on how much flax is crushed at the company per month, but the amount of processing is expanding. The processing plant has been running 24 hours a day since March. Previously, it operated 12 hours per day.
Shape Foods is selling flax oil and meal to the U.S., China, Taiwan, Hong Kong and Japan, but it also wants to establish its own brands in North America.
The company bottles two brands of flax oil: a line of oil used as a food supplement and a line of culinary oil for seasoning.
Sokolyk said Shape Foods brands, Royal Harvest and Heart Shape, should soon be more visible in U.S. grocery stores.
“We’ve had more penetration in the United States,” he said.
“We’re now in the process of developing a stronger distribution system with a partner.”
He also wants the marketing staff at Shape Foods to target Canadian grocery stores.
“From my perspective, coming in with a new set of eyes, it’s something we need to spend more of our energy on. The Canadian market is something that hasn’t been completely cultivated.”
