VANCOUVER – The Very Good Food Company Inc. (CSE: VERY) announced that it has signed a lease to secure a new production facility in Vancouver, British Columbia.
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.
The Very Good Food Company Inc. is an emerging plant-based food technology company that designs, develops, produces, distributes and sells a variety of plant-based meat and other food alternatives.