Due to overwhelming demand, The Very Good Food Co. has just signed a lease to launch its largest production facility to date. Also located in Vancouver, this new facility is expected to come online in Q1 2021.
This facility is expected to provide a 2690% increase to overall capacity, based on expected annualized production from their current (and only) Victoria facility.
In addition, VERY has signed a new U.S. wholesale broker, while providing an update on the other signed facilities in B.C. and California.
Continue reading for details on all the included updates!
1. Rupert Mega Facility – Production Increase
VERY has almost all the pieces to become a household name across North America, if not the world. The only thing lacking is their ability to produce the quantities necessary to fulfill demand and continue expanding at the pace consumers (and shareholders) know they can. To address this, VERY has signed agreements for facilities in Mount Pleasant, Vancouver, and Patterson, California that can produce 125,000 lbs. per week and 550,000 lbs. per week, respectively.
The newly announced facility in Vancouver, known as the “Rupert facility”, is an immediate-term solution to addressing capacity limitations, while the company waits for their other signed facilities to become operational. The Rupert facility is expected to be able to produce an annualized amount of 37,000,000 lbs. per year, which breaks down to just over 711,500 lbs. of product per week. This amount represents an almost 27x increase to the current Victoria facility’s capacity of 1,375,000 lbs. per year and represents the largest signed production facility to date.
Due to its previous configuration as a plant-based food production facility, operations are expected to come online in Q1 2021, thus allowing the company to bridge the supply-to-demand gap roughly 4-6 months sooner than they would otherwise be able to.
2. Wholesaler Relationships
In the last update, VERY announced their new relationship with UNFI Canada – one of North America’s largest food distributors and retailers. Now, VERY announces another partnership, which takes a different form.
VERY has engaged with Good Now Foods, “an established sales and marketing agent specializing in placing health food products in retailers across the West Coast of the U.S.”. This announcement signifies a return to growth positioning, with the company looking once again at future prospects, rather than simply meeting current demand.
Good Now Foods’ website states that their primary regions served are Seattle, Tacoma, Bellevue, Spokane, Portland, Greater Los Angeles, and San Diego. They also have a presence in Phoenix, San Francisco, Singapore, and Hong Kong. This relationship could expedite wholesaler adoption of the Very Good Butchers brand within the Western U.S. and represents the potential for international expansion in the long-term.
By leveraging Good Now Foods’ relationships with national and regional chains in the Western U.S., VERY is pre-emptively lining up sales contracts to create momentum for nation-wide adoption of their foods over the mid-term, once the Patterson, CA facility is operational.
3. Operational Update
With the largest facility to date announced in the same city as a previously announced, smaller facility, it’s logical to think that this renders the smaller facility redundant. However, the smaller scale Mount Pleasant facility was never intended to be a high-volume food production operation. The Mount Pleasant facility in Vancouver is now going to be utilized as an R&D facility, with public-facing elements. The facility is expected to house a second restaurant (with their first in Victoria, B.C.) and a “unique vegan butcher shop concept”, with the rest of the facility being used for R&D and professional purposes, allowing the company to significantly scale its efforts to launch more unique products.
The design and layout for this facility have been finalized and the company is undergoing the City of Vancouver’s permitting process for construction. VERY is anticipating that the permitting process will take another 6-8 months, with facility opening planned three months after that; altogether, the company is anticipating that this facility will become operational in 9-11 months.
The Patterson facility (which requires fewer modifications before becoming operational) has finished its initial layout design and, from previous accounts by management, is expected to come online in spring/summer 2021.
Lastly, the company has recruited a plant manager with “extensive experience in the food manufacturing industry” to oversee operations in Patterson, as well as set up the Rupert facility over the next six to eight months. After all facilities are online, the plant manager will ensure cohesion between all production facilities as the company moves forward.
Read the Full Press Release Below
The Very Good Food Company Announces New Production Facility, U.S. Wholesale Broker Relationship and Operational Update
Vancouver, British Columbia–(Newsfile Corp. – November 11, 2020) – The Very Good Food Company Inc. (CSE: VERY) (OTCQB: VRYYF) (FSE: 0SI) (“VGF” or the “Company”) is pleased to announce that it has signed a lease to secure a new production facility in Vancouver, British Columbia (the “Rupert facility”).
Already built-out as a food production facility by its previous plant-based operator, the Rupert facility comprises approximately 45,000 square feet of production, refrigeration, warehousing, R&D and office space. The Rupert facility is expected to be capable of producing up to 37,000,000 lbs of annualized product to be phased in over the next year representing an approximate increase of 2690% over expected annualized production capacity of the Company’s Victoria facility of 1,375,000 lbs per year.
The commissioning of the Rupert facility will become the key focus of the Company in the near-term. The Company anticipates the Rupert facility will benefit from close proximity to the Company’s executive team and the comparatively less severe impact of COVID-19 currently experienced in Vancouver, British Columbia, than in Patterson, California. The Company believes these benefits will lead to a much shorter timeline to ramp up production with the Rupert facility’s operations expected to commence in Q1 2021.
“The timely availability of the Rupert facility has presented us with a unique opportunity to address near-term demand while we work to operationalize our facility in Patterson, California,” said Mitchell Scott, Chief Executive Officer. “We expect to be able to bring the Rupert facility online swiftly and add significant capacity to address current production shortfalls arising from strong demand for our products in Canada and the U.S.” continued Mr. Scott.
The expected production capacity of the Rupert facility along with the various initiatives to optimize and increase production out of the Company’s Victoria facility will help meet the continuous rise in wholesale demand for the Company’s products currently anticipated. VGF’s products are currently sold in approximately 275 retail outlets which represents 6% of the total number of retail stores of both smaller independent grocers and national grocery store chains including Whole Foods Markets, Fresh St. Market, Choices Markets and IGA. With a waiting list of more than 50 prospective wholesale partners, the demand in retail is driving our expected change to sell 70% of VGF’s future production through wholesale channels, compared to 20% year-to-date, with current gross sales per pound ranging from $7 to $10 ($15 to $22 per kg).
The Company has signed a lease for the Rupert facility for an initial term of ten years with renewal options for two additional five year terms. The Company will take possession of the lease mid January 2021. Annual lease payments will be approximately $881,528 in the first two years of the lease, $961,306 in years three and four, $1,007,177 in years five through seven, $1,053,048 in the eighth and ninth year and $1,098,919 in year ten. VGF will also pay a management fee to the landlord equal to 5% of the applicable base rent. The Rupert facility will require $3 million in leasehold improvements over the next 12 months to improve process workflow, drainage and heating, ventilation and air conditioning. As assessment of the equipment needs and commissioning costs is underway with equipment orders for the first production line already in place.
Commissioning of the Rupert facility is dependent on, among other things, the mitigation of identified operational risks such as, but not limited to, onboarding the necessary labour and expertise, securing new wholesale relationships and meeting COVID-19 protocols going forward.
New U.S. Wholesale Broker Relationship
The Company is also pleased to announce a U.S. wholesale broker agency relationship with Good Now Foods, an established sales and marketing agent specializing in placing health food products in retailers across the West Coast of the U.S. Good Now Foods has been engaged to secure wholesale partnerships in the U.S. in advance of the production ramp up scheduled for 2021.
Update on Mount Pleasant, British Columbia, Canada and Patterson, California Facilities
With the signing of the lease for the Rupert facility, the Company has decided to strategically shift its use of the Mount Pleasant facility to be mainly that of R&D. The Mount Pleasant facility is expected to house the Company’s second restaurant, a unique vegan butcher shop concept, along with space for R&D and offices. The Company believes that this investment in product development will allow for the rapid introduction of new innovative products into the market.
The design and layout for the Company’s Mount Pleasant facility have been finalized. VGF is working with the City of Vancouver on the construction permits needed which are expected to be approved in the next six to eight months; with the opening planned three months following.
The Patterson, California facility has finished its initial layout design and the Company has recruited a plant manager with extensive experience in the food manufacturing industry to oversee its operations. The Patterson facility manager will undergo training at the VGF’s Victoria facility and will help set up the Rupert facility over the next six to eight months to ensure cohesive practices throughout all of the Company’s production locations.
Disclaimer: The Very Good Food Company is a communications client of Edge Investments, and we own shares in the company.