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Mike Walton, the CEO of Lantic, in Montreal on Dec. 17, 2024. The New Brunswicker has worked at Rogers and its predecessor companies for 40-plus years.
Andrej Ivanov/The Globe and Mail On the banks of the St. Lawrence River in Montreal’s East end, Mike Walton is trying to steer a sleepy sugar refiner toward a surprising new renaissance. Here, in a historic red-brick factory built in the late 1880s, the chief executive officer of Rogers Sugar Inc.
RSI-T is overseeing a $300-million expansion project that he bets will bolster its Lantic subsidiary and reawaken Canadians’ interest in one of the country’s bedrock industries. After all, much of what we eat contains the sweet stuff. It’s the first time in 20 years that the Lantic Montreal plant has received a large-scale upgrade, an effort that will boost output 20 per cent and bring a significant portion of its infrastructure up to modern building codes.
Everything from German-made batch centrifugal machines to walls with better fire resistance and a new rail loading station are being installed – all of it made possible by the sugar and maple syrup maker’s growing profitability. The rationale for the project is clear, even if U.S.
president-elect Donald Trump’s tariff menace threatens to complicate it. Rogers needs to increase production capacity to 650,000 metric tonnes of sugar to meet demand from multinational food producers serving the domestic and U.S.
market from plants in Canada, Mr. Walton said. “There are a lot of plants that have been announced in the last 36 months in Canada – new expansion,” he told The Globe and Mail last month, in his first major media interview since he was named CEO in 2021.
Mike Walton and Christian Nassar, Lantic's plant manager, overlook the boat where they unload the sugar from Brazil. Andrej Ivanov/The Globe and Mail “Generally, they phone the sugar industry to see if there’s available capacity first. That’s how important a stable sugar refining industry is to food manufacturing.
” Mr. Walton’s enthusiasm, and the quarter-billion-plus the company is spending on capital expenditure, suggests that sugar’s predicted demise has been greatly exaggerated. Sure, consumers are putting fewer teaspoons of white stuff in their morning coffees and per capita consumption in Canada is in slight decline.
But as the population swells, so does overall demand. At the same time, wider industry dynamics are playing out on the continent. Canadian sugar refiners such as Rogers and Redpath are buying raw cane sugar under a futures contract known as No.
11., considered the benchmark for trading raw sugar globally. They then sell refined sugar to food makers in Ontario, Quebec and other provinces, giving them access to an alternative sweetener source than the currently higher-priced No.
16 sugar contract that’s standard in the United States. A weak loonie, reliable ingredient supply and trade agreements are also bolstering food production in Canada. As Rogers states in a recent presentation to investors: “As our customers grow, we grow.
” The factory's expansion project is driven by demand from multinational food producers serving the domestic and U.S. market.
, says Walton. Andrej Ivanov/The Globe and Mail Recent moves made by three chocolate makers illustrate the point. Hershey Co.
bought back its former chocolate factory in Smiths Falls, Ont., from cannabis producer Canopy Growth for $53-million. Blommer said it would shut down a manufacturing site in Chicago and expand in Ontario.
And Swiss-based Barry Callebaut AG announced it would invest US$100-million in a multiyear expansion of its Canadian factory in Chatham, Ont. It’s all pretty positive in the eyes of Mr. Walton, a New Brunswicker who’s worked at Rogers and its predecessor companies for 40-plus years.
Sugar, he says, is a natural ingredient that’s been around forever and too difficult to replace in food-making. Without it, you don’t get the browning of breads, for example. Sugar is also a preservative and bulking agent.
None of the Lantic expansion would be happening if Rogers wasn’t itself on solid footing. The company used to be an income trust but shifted to a corporation structure in 2011. Despite the change, it continued to be run like a trust, with a priority on keeping a lean operation and security of cash flows to fund a dividend.
In the years when cash was insufficient to fund the distribution, the company sometimes borrowed rather than cut it. Mike Walton speaks to a line manager at the Montreal factory. Andrej Ivanov/The Globe and Mail Mr.
Walton has pushed things to a higher gear and changed the refiner’s strategy to optimize profitable growth, something he says he’s achieved by winning better pricing and bearing down on execution. Over his three years as CEO, Rogers has boosted annual adjusted earnings before interest, taxes, depreciation and amortization to $142-million from $91-million and increased free cash flow to $73-million from $46-million. Revenue now tops $1.
2-billion a year. Walking with the CEO through the Lantic factory is an exercise in contradictions. Old equipment is interspersed with new; loud industrial spaces lead to quieter corners with caramel smells – the entirety of it housed within brick walls that were laid more than 100 years ago.
Most of the company’s expansion project is taking place in a section of the plant that was previously used for bone char bleaching, a process that’s been replaced with a better system for removing organic impurities. A substantial amount of design and engineering has been done in advance to plot every step of the revamp, so that tradespeople do the work without interrupting existing production. Employees work on the line.
Andrej Ivanov/The Globe and Mail Rogers sources raw sugar from Brazil, and it’s unloaded from ships a stone’s throw away at a pier attached to the factory. From there, it goes by conveyor belt to the factory roof, where it drops down into hill-sized piles. The sugar, which looks like beach sand at this stage, is then melted and filtered, crystallized and dried.
The plant runs 24 hours a day, seven days a week. In addition to the Montreal plant, Lantic has a sugar refinery in Vancouver, a beet growing operation in Taber, Alta., and a distribution centre in Toronto, which serves food manufacturers in the GTA.
Executives expect that boosting sugar capacity in Montreal will eliminate the need to move sugar from the company’s Western Canadian facilities to supply demand in the east, opening up further export opportunities for the Vancouver site. Rogers is also the largest distributor of maple products in the world, operating under The Maple Treat name. “The biggest risk for us in Canada is we have old assets,” Mr.
Walton said, adding the challenge is investing enough money into the facilities to make them stable and reliable. “We’ve got probably a few more years of pouring cap-ex into these plants.” A large bulldozer moves piles of sugar.
Andrej Ivanov/The Globe and Mail The 25-per-cent tariffs that Mr. Trump is threatening to slap on Canadian imports wouldn’t affect Rogers directly because its exports to the United States are minimal. But it could be a big deal for some of its customers, who export their sweet goods south and would see their business economics upended.
“If you look at the numbers, we’re basically selling and buying for over $70-billion worth of food between the two nations. We’ve never seen that before,” said Sylvain Charlebois, a food policy specialist at Dalhousie University. “I think there’s a clear possibility of seeing more near-shoring or on-shoring as a result of a Trump regime coming back to Washington,” he added, referring to the possibility U.
S. companies will move operations back home. Mr.
Walton sees the likelihood of Rogers’s food-manufacturing customers reversing their investment decisions as remote. The U.S.
does not have enough sugar nor do food makers have enough American production capacity to make such a move feasible, he said. “People in the food business play for the long term,” he said. “I’ve been here 44 years.
We’ve been through all kinds of trade tussles. In the end, logic prevails, supply and demand prevails. And I’m confident that we’ll get where we all need to be at the end of the day.
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