Ten weeks after laying off its remaining employees in late October, the fate of Brandon’s Shape Foods is still unclear.
The flax crushing and bottling company that promoted its innovative processes and superior tasting flax oil remains in receivership. It is uncertain if new investors will reopen Shape’s $17 million processing plant.
However, Sandy Trudel, the economic development officer for the City of Brandon, remains hopeful that someone will buy the facility and rehire some of the 60 employees that once worked at Shape Foods.
“I still firmly believe that the product, the processes that they were using and the location that they chose, were all ideal,” she said. “From the city’s perspective, what we want is to see that facility up and running in its entirety, not parceled off.”
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As reported in the Western Producer last fall, $4.5 million from Vanguard Credit Union, $4.1 million from the Manitoba government and money from local investors provided the capital for Shape Foods’ expansion.
The Winnipeg office of Deloitte and Touche is managing the receivership, Trudel said, and it has issued a tender on behalf of Shape Foods’ creditors.
“They (Deloitte) have put out a list of all of the assets, and they’ve said ‘come back with a tender on these assets. Basically, what would you pay for them and what would be the use,’ ” she said.
The conditions and deadline for that tender are not clear, however, as Deloitte and Touche did not return phone calls before the deadline for this issue.
How Shape Foods’ business model quickly disintegrated, after opening its 6,300 sq. metre plant in 2007 is also unclear.
According to the company’s website, which is still up, the flax processor had its omega 3 and omega 6 rich oils on the shelves of many specialty shops and supermarkets in the United States.
Although he has not closely examined Shape Foods’ marketing plans, Jared Carlberg, associate professor of agribusiness at the University of Manitoba, said value-added processors can get caught in a familiar trap.
“These businesses often get the cart a little bit ahead of the horse,” he said. “Opportunities in the market tend to be a lot more scarce than we realize …. What seem like really promising businesses get felled because marketing is really hard.”
Shape Foods’ bankruptcy came as a surprise to Curtis Rempel, research development manager for the Richardson Centre for Nutraceuticals in Winnipeg, given that there is demand for flax oil.
“I believe the market exists. There are enough consumers who want the product.”
But, he added, Shape Foods may have been sideswiped last year when diesel prices soared into the stratosphere.
“If your market is in New York, and your market is in L.A. or San Francisco … then your shipping costs kill you sometimes.”
That doesn’t mean that value-added cannot work in Manitoba, Rempel added. It means local companies must find creative ways to overcome transportation costs.
“That’s only one factor and we shouldn’t be discouraged about developing value-added (industries),” he said.
