Saputo Inc
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Saputo Inc
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Greetings and welcome to the Saputo Inc. financial results for the fiscal year ended March 31, 2021, and Global Strategic Plan Presentation Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on Thursday, June 3, 2021. I would now like to turn the conference over to Marlene. Please go ahead.
Good afternoon, everyone, and thank you for joining us. Taking part in the webcast are Lino Saputo, Maxime Therrien, Kai Bockmann and Carl Colizza. Today's webcast will be divided into 2 parts. First, Lino will provide an overview of our fourth quarter results before opening it up for questions on this topic. Lino, Maxime, Kai and Carl will then present an overview of our new global strategic plan and overarching organic growth strategy, followed by a second Q&A period. Analysts will be invited to ask questions during the designated Q&A periods, while other participants will remain on a listen-only mode. Please note that if you are joining us by phone, you will not be able to see the visual component of the presentation. You must join the webcast for full access to the content. Before we begin, I remind you this webcast is being recorded and will be posted on our website, along with the investor presentation we are showing. Please also note that some of the statements provided during this call are forward-looking. Such statements are based on assumptions that are subject to risks and uncertainties. We refer to our cautionary statements regarding forward-looking information in our annual report, press releases and filings. Please treat any forward-looking information with caution as our actual results could differ materially. We do not accept any obligation to update this information, except as required under securities legislation. I'll now hand it over to Lino.
Thank you, Marlene. This is an exciting day for us, and I'm pleased to be here with key members of our executive team for the special addition of our conference call and webcast presentation. In a year of exceptional challenges, I begin by saying I'm immensely proud of the resilience and the dedication of our passionate employees worldwide. Without waiver, they've remain focused on the job at hand despite the many changes we've all lived through. The effects of the pandemic, still present to date, lingered on during our fourth quarter with the ongoing shift in consumer demand, continuing to impact all of our sectors to varying degrees. Overall sales volumes were lower when compared to our fourth quarter last year, which at the time, coincided with the onset of the pandemic and the related surge in retail demand. Moreover, U.S. market factors negatively impacted adjusted EBITDA, a different story than we saw in other quarters this fiscal year. International market prices were also lower versus the prior year, putting downward pressure on results. Foodservice activities remained below pre-pandemic levels, with the U.S. sector mostly affected, although we expect demand to recover as vaccination efforts intensify. The industrial market segment performed well, and we recorded higher export sales while still contending with country-specific COVID restrictions. When I look at it globally, in an unpredictable and difficult environment, I'm satisfied with the solid performance we've delivered this year. We proved our ability to pivot our operations to new circumstances while supporting our frontline and staying on course with strategic investments aimed at fueling growth. Through the ebbs and flows of the fiscal year, we were forced to adapt and leverage our strengths like never before. We are now a more flexible organization on all fronts and we're certainly going to take advantage of this. COVID-19 may have cost us a year of adjusted EBITDA growth, but knowledge was gained and our business moved forward. Notably, this fiscal year, we merged our 2 legacy USA divisions and developed a concrete game plan to take our largest operating sector to the next level with guidance from our newly combined and enhanced U.S. leadership team. We believe putting the right talent in the right place is vital as we begin to write our next chapter. Consequently, I'd like to shine a spotlight on Leanne Cutts, who will join us later in calendar 2021 as President and COO International in Europe. Leanne will bring a wealth of expertise to our ranks. She is currently the Global Chief Marketing Officer at one of the world's largest banks and previously held senior management positions in Australia, Asia and the U.K. Leanne will bring to the table extensive experience in marketing, new product development, manufacturing and operations, having worked for global companies in food and beverage and in the consumer health care industry. In recent acquisition news, we're delighted to have had 2 files come to fruition. We welcome the Bute Island Foods team and their wealth of knowledge in dairy alternative cheese products to the Saputo family. Our commitment remains to expand our footprint in this space to meet the changing demands of customers and consumers. This investment marks an important milestone, allowing us to accelerate our growth in dairy alternatives globally. We're adding 180 new Scotland-based colleagues to our family, including the founders who have decades of experience under their belt. Now on this side of the pond, we recently closed the previously announced deal to purchase the Reedsburg facility of Wisconsin Specialty Protein. This facility manufactures value-added ingredients such as goat whey, organic lactose and other dairy powders. We're pleased to welcome its 40 employees to our talented Saputo Dairy USA team. This acquisition will enable us to broaden and increase the value of our ingredients offering, enhancing our product portfolio in the U.S. as well as internationally. Both of these acquisitions aligned with our M&A priorities and complement the objectives of our global strategic plan, unlocking new growth avenues for us. As you can see, we're already hitting the ground running in regard to the launch of our new global strat plan. It lays out how we will drive accelerated organic growth across our business as part of our three-pronged approach to growth in addition to strategic acquisitions and our commitment to the Saputo Promise. We'll go into more detail with this following the Q&A. Once again, I'd like to thank every Saputo employee for their ongoing passion and dedication. Although the pandemic continues to impact our business to some degree, our consistent results mirror the care and expertise of our exceptional team. So I'll pause here to answer a few questions you may have about Q4 and the year-end results before we get into our strat plan presentation. So Frank, you'll queue up our analysts for questions, please.
Excellent. So now we will transition into the second part of today's event. Before we do so, we have a short video for you. I hope you'll enjoy it. [Presentation]
All right. So now we will switch gears. We are getting into the exciting news that we shared earlier today, the unveiling of our new global strategic plan. So I'll kick it off with the presentation and I'll move right along into Page #6 of the presentation. Just sort of high-level snapshot of where we are. I won't go into too much detail here because I'm sure all of you know our evolution in the different parts of the world that we operate in. But just to let you know that we are in a leading position in all of the regions where we operate, whether that would be in Canada, U.S., Australia, Argentina and the U.K. All told, we are processing over 11 billion liters of milk a year, we have 61 manufacturing facilities in 5 different countries and we export product into 60 different countries around the world. So despite the fact that we had gone into a difficult pandemic environment, our business continues to build very solid foundations. If I move on to Page 7, we've got the history of our growth. So I'll remind you that in 1997, when we went public, we were selling for $450 million in sales. We have concluded 34 acquisitions, with the last 2 being Bute Island and Bioriginal. And we closed our fiscal year at $14.3 billion in sales. And I would say that all of these acquisitions, in some shape or form, have been strategic to us and have created a platform that allows us to be more diverse and, I think, more resilient. We closed our consolidated performance this year at $1.47 billion, slightly ahead of last year. And I point that out because I think it's important for us to note, as early as March 2020, we weren't quite sure what this year would look like for us. If somebody would have asked me back then, "Would you be happy with results equal to or slightly lower than the previous year in a COVID environment?" If you were able to continue to roll out the journey of SAP through our operations and that we would continue to be honor -- to be able to honor our ESG promises, I would have said it would have been a very successful year. And so I would say, looking back on this year, I view this as being a very successful year. We've been able to further strengthen the support of values and culture with our key stakeholders that are our employees. There was nobody who had lost a day's wage because of the pandemic. In fact, we've created an environment of safety and security -- enhanced safety and security through all of the manufacturing facilities that we've operated. And we tried to the best degree possible to deliver on the order fill rates that has been asked of us. I will say this though, over the past 5 years, we have not performed to the way that we would have liked. And there are a number of reasons for that. If I take you back to 2015, 2016, with the stockpiles and the oversupply in Europe of products that created competitive pressures and pressure on pricing, we lived through that. Then, of course, we had the devaluing of the byproducts where a onetime WPC for us was a real strong element to our revenues and profits. The byproducts, specifically in WPC, have been depressed of late with the increase of capacity on the market. Then of course, those of you that have been following us for the last 3 or 4 years, there were some price wars in the market, irresponsible behavior from some of our competitors in key markets. I would say some of the pain was self-inflicted, like the early-on days of the SAP rollout where we did struggle. We had some challenges I think we've -- since we've recovered and we've been on a track where the SAP rollout is going much smoother and seamless for our customers. Of course, we had some -- in between all of that, some geopolitical issues. And then to end things off, in the last 5 years, we had this pandemic of COVID-19. So would we have expected better performance in the last 5 years? The answer is yes. There are reasons for all of that. But I'm not going to be looking backwards, I'm going to be looking forward. We are very, very optimistic about the foundations that we built over those 5 years and how we can leverage those foundations into the next 4 years. We've got very healthy and very solid global revenues by market segment, where a good balance of our sales are retail, good balance are in foodservice and a good balance are in industrial, very healthy. Now within that, of course, there are certain sectors that have to improve that balance, which we're going to be talking about as we roll out this strat plan. So what we're going to be talking about is leveraging our strength to deliver competitive advantage. So what are the learnings that we've had over the course of this last year? Well, we know that the industry continues to grow. And that's not just in the U.S. or in Canada, but globally, dairy continues to grow at a rate of 2%, 2.5%, 3% per year. We know that we've got a very strong culture. We have a culture of operational excellence. We can produce product much more effective and much more efficient than most of our competitors. In fact, more than -- I would say, all of our competitors. Now that doesn't mean that there's not going to be more irrational behavior on the market, there will be. And if we choose to walk away, it's our choosing not because we can't compete with others but because we choose not to lose money in certain areas, in certain products, in certain regions. We know that our values are very strong. Our people are the cornerstone of our success. And I think we've got great talent within the organization that has opportunity to grow within the Saputo system. And from time to time, as you've seen, we will go out to market and hire the talent that we believe can help us look at things perhaps a little differently. And finally, I would say that our foundations are great with high-quality product portfolios but also very, very strong brands. And so if I think about leveraging our strength, talking to our brands, we've recognized through the COVID-19 environment that our brands do resonate with consumers. Not only do they resonate with consumers but our customers are finding and looking to us to offer solutions. And so we are innovative. We've got the innovation center in the U.K. We've got the innovation center in the U.S. And we're leveraging all of that to build resilient, strong, synergistic platforms. And so what does that mean for us? That means that we've got size and scale, some things that our competitors don't have. We've got diversified businesses. When I talk about diversified, it's geography, it's product portfolio and it's market segmentation. And what we like to do within Saputo is we challenge each other to come up with the best practices. So if the U.K. business has a better practice than the U.S., well then we'll apply that to the U.S. and vice versa. And so we're not afraid to challenge each other to determine and define what the best practices are. And as we looked at this strat plan over the course of the 4 years, it started off with our U.S. platform thinking about how we can bring things together under one umbrella between Dairy Foods and the Cheese business. And then as that exercise was ongoing, we thought to ourselves that, "Well, that's a very good practice. Maybe some of the other platforms can look at what their strat plan will be over the course of the next 3 or 4 years." And so this is how we rolled this out and we came to really, I think, very optimistic conclusion that we have all the elements in place to be successful and to deliver on those very ambitious targets. We have a very disciplined financial structure and cash management focus. Our balance sheet is clean and oddly through the pandemic has gotten even cleaner. Our cash flows are good, we're generating very positive cash flows. So we can reinvest in our business either through CapEx allocation or to continue to be the market consolidator, seizing opportunities where we see that there's value for us. And so I think that our foundations are better than they've ever been. We have expertise in operations. So our operational strategies, our efficiencies, our productivity, best practices, integration and synergies are as strong as they've ever been. We don't mind investing in ourselves. So we've got a very healthy CapEx strategy, which you'll see as we roll out this strat plan. That means investments to optimize our operations. We're looking at innovation to expand our growing markets beyond the healthy levels of growth we have within the industry. So the industry is growing at a rate of 2% to 3%. We're looking at high single-digit numbers or more than double where the industry is going. And of course, we're not going to forget that we got here through our M&A strategy. We still have a very, very strong appetite to look at businesses that make us bigger, better and stronger, whether that would be bolt-on businesses to our current platforms or new platforms that get us into new categories with new consumers. So I'll end it here, and I'll hand it off to Kai to take you through our well-defined growth strategy and our ability to be able to deliver on this.
Thank you, Lino. So with the strengths that we've established over the years, we've talked about our people, our global supply platform, our high-quality products, the phenomenal brands that we have, our operational excellence, you take that together with the strong foundations that Lino talked about, and we were very well positioned to not only develop a comprehensive growth strategy, but more importantly, it gives us a lot of confidence that we're going to deliver on this plan. So this comprehensive growth strategy is made up of 2 key growth drivers that you see on the slide here, organic growth and strategic acquisitions. The global strat plan is going to focus on accelerating organic growth. And that doesn't mean we're going to stop doing acquisitions because that's always going to complement our organic growth strategy. In fact, when you look at the acquisitions that we've materialized over the last 5 years, whether it's WCB, MG, Dairy Crest, even the specialty acquisitions like Montchevre, we wouldn't be in a position today to be able to accelerate our growth had we not materialized those acquisitions. So that's an important point to make. And finally, the Saputo Promise is going to continue to be an integral part of our overall strategy, and I'll talk to that in a moment. So in terms of our journey in getting to this plan -- and this is not a Lino plan, this is not a Max plan, it's not a Carl plan, it's not a Kai plan, this plan was built from the ground up. And work started last fall. The divisions, they all identified key initiatives to leverage their strengths and look at the opportunities that were out in the marketplace. And the plans were developed with a very high level of granularity. And so what we did is we took all of these initiatives and we created the 5 pillars of growth to make sure that our teams are laser focused. And this is in our first strat plan. A lot of similar work was done in Canada under Carl. And I'll ask Carl just to share some of the -- some elements of that journey.
Thanks, Kai. Yes. A multiyear strategic plan is not new to us. In fact, back in 2016, we began a journey in Canada that actually concludes this year with the commissioning of our new fluid milk plant and also the plant capable of producing plant-based beverages in Port Coquitlam. And over that 5-year span, we consolidated operations, we closed 7 facilities. Despite that, we increased our cheese capacity by over 15%. And we invested heavily in 2 key brands, both being Armstrong and Saputo, to take market-leading shares. So multiyear plans are not new to Saputo and you will hear more about that shortly.
Thank you, Carl. Moving on to the next slide, our 5 pillars. So we'll start from left to right. The first one is strengthening our core business, and this is all about our existing portfolio of brands and products. And we're going to get into each of these pillars to give you guys a little bit more color. The next pillar is accelerating product innovation. This is about new products, new SKUs, new formats, new packaging. This is -- this also includes our dairy alternatives push. And again, we'll get into some more detail in a second. The next pillar is increasing the value of our ingredients portfolio. These are around our ingredient-focused initiatives because right now we're operating largely in a commoditized space, so it's really about how do we move up the value chain. This includes goat whey, which we'll talk about, nutritionals. Next, we have optimizing and enhancing operations. This is really our bread and butter. This is something we've done in our history and it will be a big part of what we do moving forward. These are operations-focused initiatives not only around manufacturing but on the supply chain side, warehousing, logistics and so on. It's about network optimization. And finally, we have creating enablers to fuel investments. That's really doing more with less. So if we jump over to the next slide, we're going to give you a little bit more color on each of the pillars, starting with strengthening our core business, which is about our existing portfolio of products and brands. And you can see on the right, we've got some phenomenal brands, market-leading brands, whether it's Cathedral City, we talked about that one a lot. In the U.K., the #1 retail cheese brand, CHEER, the #1 everyday cheese brand; Clover, the #1 spreads brand; Frigo, #1 in the cheese strings space; La Paulina, market-leading in Argentina; and Montchevre and Frylight and so on and so on. So there's a long list of commercial initiatives that have been developed by each of the respective divisions. They're going to be looking to harness the power of these brands and taking them to the next level. From an international expansion standpoint, we've got some great brands that are doing phenomenally well. Example, Devondale in China. It's one of the leading brands in the e-commerce channel in the milk sachet side. So how do we take that brand equity and parlay it into other product categories that we produce from an Australian platform, which is very much in demand from our Chinese consumers? And then in the key export markets, on the retail side, I talked a little bit about Cathedral City when we answered the Q&A on the fourth quarter. But we're looking at phenomenal growth in North America. And in Germany, that's going to be one of our key markets on the export side where we see volumes tripling over the next 3 to 4 years in that very important market for us. I'm going to ask Carl to give us some examples of -- in North America in terms of optimizing our product portfolio and e-commerce as well, please.
Thanks, Kai. Well, for sure, we're going to go into this with accelerating the optimization of our brands. And it isn't necessarily about eliminating brands, that is part of the thought process, but some of it is about the types of products that we manufacture and we commercialize under each brand. We're going to go in with the mindset really of less is more, so that it allow us to invest more efficiently in our core strengths. Specific to North America, that being the string cheeses, deli cheese, goat cheese as well as allow us to amplify our spend in areas to broaden really our Italian cheese and snacking portfolio in that same geography. We will be a stronger player in the retail space through these brands as well as supply offerings to the private label. A little bit sort of emulating what we did and do today in Canada. Furthermore, we'll have additional investments in value-added beverage areas, such as investing in aseptic technologies, mixed-use facilities able to safely process dairy and other blended ingredient beverages. And we're going to leverage our existing network. We have an important and material network with brick-and-mortar, lots of resources, and we are going to leverage that here moving forward with our investments. From an e-commerce perspective, we're actively developing a robust IT platform to support our commercialization plans in the B2B2C and in the direct-to-consumer channel. We're live in a beta mode right now with a direct-to-consumer activity through what was launched early on in the pandemic with Le Frigo Saputo. And that was launched, if you remember, in the Montreal area. We've since expanded through Quebec and Ontario. And I got to say that by diving head first into this at the early onset of the pandemic, we learned a whole bunch about the ecosystem of e-commerce and it's making us a lot more confident in our next steps. In fact, with the SAP deployments advancing well through our divisions, our e-commerce capabilities will be enhanced and ready for some exciting new developments, specifically in the direct-to-consumer interface. We have plans to launch a second premium cheese experience platform as early as the fall of 2021.
The next pillar is accelerating product innovation. This is about introducing new products, flavors and formats. You look at Argentina, the new cream cheese flavors are looking to launch new snacking formats in Australia. So it's all about innovation in product development.If we look at packaging, that's becoming an area of great interest to consumers. If you look at the U.K. as an example, 85% of our packaging is recyclable. And we've leveraged the TerraCycle program, which is an initiative where consumers drop off their packaging for recycling at 500 points of pickup in the U.K. Our plans are to move to 100% recyclability in our packaging as we move forward, which will be a point of differentiation in the marketplace.And if we look at the big new initiative that we're all very excited about, product innovation would include the dairy alternative space. And this is a prime example of how we, at Saputo, are adapting our offerings to meet the quickly evolving taste and preferences of our customers and consumers.We recently announced the acquisition of Bute Island to help accelerate our ambitions. We've kicked off our global team with our newest teammates, which Carl is also a member of, because we've got to make sure we're operating in a coordinated fashion. And the focus will very much be on capacity expansion. We're looking to more than triple the capacity in that platform to help accelerate the development of that space, not only in the United States, but in the U.K. as well. We're also looking to optimize our operations on the supply chain front as well. Our intent, our ambition in this space is to become a market leader by the end of the strat year plan. So we have the know-how. We have the R&D. We have the customers. We have the sales infrastructure. And we've got an expansive network that we can leverage.This is a category that market intel is telling us is about $1 billion in size globally, showing tremendous growth at around 12% to 15% on an annual basis, but we feel that, that growth can be accelerated if the right product, with the right attributes, is introduced in the marketplace. So it's going to be a great growth category for us.And I'll ask Carl just to touch on some of the U.S. initiatives around dairy alternatives.
Thanks, Kai. And maybe just to add a little color around that plant-based food category.It's now topping $7 billion in sales and has been growing at an accelerated rate over the last 3 years. And we do have very strong objectives here that are double-digit share globally. So lots of activity. In fact, we've invested quite a bit of time and money in 2 distinct streams for plant-based, of course, being cheese alternatives and beverages.I would say that, first, we will materialize financial returns on our nondairy beverage investments earlier in our multiyear plan. This is something that was active prior to 2021 with bottling capabilities that we've installed in the 3 key geographical areas of North America, specifically in British Columbia, in the Southeast and Florida and in the Northeast of the U.S. And we will be utilizing that platform to support our customers and our markets across North America. The focus is going to be on securing contracts to manufacture for major retailer private labels as well as key branded players. As for cheese, we currently have an excellent plant-based mozzarella style cheese product on sale in the foodservice channel in the U.S., in Canada and in the U.K., and our focus is on pizza applications.We've made significant progress in securing listings with the major foodservice distributors as well as some medium-sized regional pizza chains. And we continue to work with large multinational pizza chains to get plant-based on their menus across North America. But I got to say that our product has been received very, very well here over the last couple of months. Regarding the retail sector, I would say, following the acquisition of Bute Island Foods, lots of exciting opportunities are now available for us and to build out a portfolio. And that portfolio will consist of blocks, slices, treads and spreads. We are accelerating our plans and expect to be on shelf this fall under the Vitalite brand in the U.S., and that will be followed by Canada in the early calendar of 2022. And just to note that the Sheese, which is the brand that we acquired to the Bute Island Foods, is already on shelf in the U.K. and parts of Australia.And of course, we have a core business, and that's dairy, and we will continue to invest and innovate in this space. With the kind of offering and the portfolio that we have that spans blue cheese, Mediterranean cheeses, goat string and dairy food products such as aerosol and cultured, we're planning a bunch of line extensions and innovations. And really, that's at the center of our growth opportunities. We're already making important investments to support the growth in these areas. We're investing in some areas of the U.S., specifically Las Cruces and the Los Angeles area, to grow our string cheese business.We're also exploring different options for investment in cut and wrap facilities, basically allowing us the opportunity to be more flexible in what we supply to each of the sales segments as well as meet the consumer and customers' evolving needs for formats and convenience. So very exciting things that are going to happen in our portfolio, both dairy and nondairy alike.
The next pillar is increasing the value of our ingredients portfolio. And this key driver is about building internal capability to really be more aggressive when it comes to moving up the value chain. And Bute Island was a catalyst for us in the dairy alternative space. We've got another catalyst in Bioriginal, which Carl, if you could share a little bit more color around that, please.
Certainly, with the acquisition of this facility in Reedsburg, the intent really is to decommoditize a greater portion of our current whey portfolio. And we will begin with our goat whey solids, and to a smaller percentage, our bovine whey solids.And just to kind of provide a little bit of history. Now over 10 years ago, Saputo successfully invested in value-added whey protein offerings, like WPC80, through capital investments and, of course, acquisitions. And demand for more refined ingredients, extracted from both milk and whey, examples would include things like lactoferrin protein hydrolysates and so forth. It continued to grow and are emerging from the nutritionals and IF markets.We're going to really exploit the important quantity of whey that we generate from our North American operations to service these markets and complement our international platform. We're prepared to make further capital investments in this space for assets as well as acquiring new resources, onboarding new resources with the necessary knowledge. And of course, strategic partnerships and M&A will formulate part of our plan here in order to meet our objectives.
And the good news is that similar to the other pillars that we've discussed, there are already a lot of initiatives that are underway. This is not to say that the strat plan starts today, it's already started a while ago. If you look at the ingredient space, we've already developed some products to tap into new segments and new geographies, which will give us some further growth platforms.The next pillar is optimizing enhancing operations. Again, this has been our bread and butter. This has been about our network optimization efforts. It's about driving operational efficiencies. And a big part of those efforts are going to come from the U.S. So again, I'm going to ask Carl to give some more color around that, please.
Yes. And really true to our operational strength in our history, we're going to invest several hundred millions of dollars in our manufacturing network really to further enhance our low-cost, high-quality positioning in the market. And there's no better time than now with the kind of inflationary pressures that we have on our OpEx cost.We're not going to get the kind of relief through just price increases. Our customers and our consumers don't expect us to pass on every single cost. We do need to do our end, and the investments in our operations will benefit us for years to come.We're going to be investing in capacity, in retail formats and, of course, in automation as well as a number of other cost-out scenarios. And It shouldn't come as a surprise to anybody. There will be more investments in mozzarella as well. There's more for us to be doing in this space despite the competitive pressures.On the automation front, we've talked a little bit about the difficulty in accessing labor, and that is square into our priorities here. The ongoing concern, like I said, of ours and many other manufacturers in the space, is going to lead us to automate as many functions as we can that don't require really a dairy associate, okay? So there are still a number of areas in the plants that we know we can automate, and there are a number of other areas that we are going to explore new technologies and new ways of working.We're going to continue to optimize our operations platform and -- by expanding in the communities that we can, where there is access to labor. And quite frankly, potentially exiting in some of the areas where it is more difficult, and we can't hide behind that. In fact, I would say that unfortunately, there are some rural areas of Canada and the U.S. that are no longer sustainable for manufacturing operations, and we're going to need to solve for that in our multiyear plan.I would also add that the dairy supply chain is evolving quickly with the changes in consumer and sale demands. We're adopting and leveraging SAP tools in the sort of the sphere of integrated business planning or also known as sales and operations planning. We're going to maximize our forecast accuracy, our production planning really to consistently meet our customer promise fill rate and quality. All of this will, of course, contribute positively to our inventory positions and our working capital.Incremental investments will be made to leverage our dairy processing and bottling expertise to service the growing total manufacturing segment. Our Dairy Foods business was built on providing solutions to our customers, and we don't shy away from being a contract manufacturer. There is a number of start-ups that have emerged in both dairy and nondairy that do require that expertise.Let's not forget that the barrier to entry is high for bottling and for dairy processing, even for nondairy. And we have the brick-and-mortar, the expertise and the capabilities to service that area, and we are further investing here as well.
The last pillar is creating enablers to fuel investments, and essentially, this is about doing more with less. We've talked a lot about harmony and how much it's cost and so on. For us, it's about now looking to realize the value that the system offers us. We've got a lot of overhead cost reduction initiatives across all of our divisions. A big part of the enabler pillar is the One USA, which I'll ask Carl to give some color around.
Certainly, and we're several months into our journey of merging our 2 legacy U.S. businesses. And we are now a single operating unit. And we do feel we are better positioned to service our customers for today and tomorrow.We've been able to identify and materialize on a number of synergies in the sphere of milk and other dairy component procurement and, of course, optimizing some of our basic overheads. In a difficult labor environment, as we have today, this is welcome. Pooling of our resources is something that is a must as well as streamlining our business processes.And I would say that, in many ways, the basket of goods that we now go to market with, which is very comprehensive and complete, does mirror what it is we have in Canada when we provide solutions and products to our customers. And we are quite confident about our future with the U.S.And a little bit specific to the ERP, SAP continues to be successfully deployed through the U.S. operations. And as we come to the end of this journey, we'll be able to capitalize on what a fully deployed division can do and unlock some of the synergies as we mature with the tools that's offered to us. And I got to say that standardizing some of our business practices will be the catalyst for those future efficiencies in our supply chain as well as our administrative tasks.
So the next slide outlines our go get. So our accelerated strategic growth plan aims to deliver $2.125 billion by the end of FY '25.
Okay. So I just want to provide some comments here. So we expect our growth not to be linear. So our target is a compound annual growth rate, and that excludes EBITDA derived from business acquisition. So our commitment is to achieve a high single-digit organic growth over the next 4-year period, but doesn't mean the same growth percentage every single year. Just wanted to point that out.
Yes. I appreciate that color, Max, because you're right, it will not be linear. There will be a lot of heavy lifting early on in this 4-year plan, building the foundations, getting equipment, aligning our teams, but the work has already started.We've been in this for the last 2, 3 months. And I'm really excited about the foundations that we're building and that we have built to develop this accelerated organic growth rate that we expect to not only to achieve, but I will tell you I'm challenging the team to find ways to surpass this $2.125 billion number. So I'm optimistic about the ideas and the initiatives. I think with some of the leadership enhancements, talent that we brought into the system, a united U.S. platform, key learnings from COVID, I believe we have the talent, we have the structure, we have the road map to be successful. So I'm really excited about this plan that our teams have come up with. And I will move it on to Max to talk about CapEx allocation.
Sure. Thanks. So we work -- sorry, so we work our capital allocation on a cycle basis. Our F '20 was the end of a 3-year cycle that's completed that year. So F '21 was to be year 1 of a new cycle. We finished the year at $433 million in CapEx. But now with the start of the new cycle that coincide with the strat plan, F '21 becomes more or less a stand-alone year. So F '22 is the beginning of a new 4-year cycle.Our capital expenditure calls for $2.3 billion over the next 4 years to achieve the plan. F '22 will be at $637 million. That is for base and strategic CapEx.Just to give a bit of color. Base CapEx, everything that relates to stay in business, replacement of equipment, building maintenance, ERP, et cetera, relative to strategic CapEx, everything that touches the ROI project to fuel our pillars, capacity, innovation improvement, automation, everything that we talk to. The CapEx represents about $550 million above historical level over the last 4 years. But our capital allocation remained unchanged as we intend to maintain our usual approach to invest in our asset to a level which is similar to our depreciation and amortization expense over the next 4-year period.
Okay. So now I'm going to go into Irene's question about strategic acquisition. So we still have an immense appetite to continue on our journey through M&A activity. Our balance sheet is clean. Our financial flexibility is very, very good.And so there is no reason why we should not continue on the journey for acquisitions. I just want to point out the $2.125 billion target is not including acquisitions that will be added to our system or the EBITDA that we acquire.If I look at the pipeline beyond the 2 that we just announced, the pipeline still remains quite full. I would say that we're still actively looking at 2, 3, 4 files that will continue to create value for us and further propel this plan moving forward.The regions that we're looking at, well, of course, the key markets that we're in, and I've talked about this on many different conference calls in the past. Canada, very, very limited. U.S., lots of opportunity. Latin America, still some opportunity. Europe, outside of the U.K., perhaps even more opportunity there. And of course, Oceania to the degree that in Australia, we have the ability with ACCC limitations to make small tuck-in businesses, we will. And perhaps one day we might be in New Zealand.So the new markets are the EU markets that we're not currently in and possibly New Zealand. So we need to be where the milk is. Of course, very much in Saputo character and Saputo culture, these acquisitions will be strategic in nature. We will take a disciplined approach. We understand that the multiples that are being paid for businesses today are a little higher than what they may have been in 2005 and '06. We are aware of that. But by no means will we overpay for an asset that ultimately will be a liability for us down the road. These targets need to be accretive for us, and they need to be the right strategic fit.So where do our priorities lie? Our priorities lie in cheese. And let me be clear about this. We talked about dairy alternatives, which is a key pillar for us in terms of meeting demands of consumers. But we are still a very oriented business. And let me be even more clear about this. Even though we're focusing on brands and getting into some segments of retail, foodservice and industrial businesses are still important for us. And let me be even more clear than that, we are not shying away from the mozzarella industry. There's a lot of competition. We think, we know that we can win these wars as they come up. We're making heavy investments in mozz. That is part of our DNA. It's part of who we are. We're not going to shy away from that. And if there is opportunity for us to make acquisitions in mozz, we will make acquisitions in mozz, even if that is at the foodservice level.So I want to be clear that we are not shying away from our heritage as we're rolling out this strat plan. It is actually complementing the heritage that we have had over the last 67 years.Value-added ingredients is a positive consequence of manufacturing cheeses. And so when we think about the byproducts channels, we need to treat that byproduct and create some great value for us. And yes, we're looking at dairy alternatives. And yes, we're looking at retail. So we will build on our successful track record of executing acquisitions and integrating those acquisitions very effectively.
And the Saputo Promise on the next slide. This continues to be at the heart of our business as we pursue profitable growth. It's about creating shared value for all our stakeholders and ensuring the long-term sustainability of our business by managing key ESG elements, which can materially impact our financial performance.And I'd like to move to the next slide and bring your attention to the right side of this slide. The environment obviously top of mind. We launched some pretty ambitious targets around climate, water and waste last year. And as part of our 3-year $50 million commitment, we tackled 12 key projects that are going to bring some significant wins against our environmental pledges. And we got other very exciting projects on the go, and we're very confident that we're going to exceed our targets when it comes to our environmental pledges.We also recognize that the environmental considerations don't stop at our facilities and that we have a key role to play to ensure a sustainable food system. So we'll be sharing our supply chain pledges with you, which will be launched later this year.
Capital structure. Our capital structure is solid. Our financial position is strong. When we combine it with our disciplined approach to cash management and our steady cash flow generation, allowing aggressive debt reimbursement, we are well positioned to fuel our growth, both organically and through M&A. We will continue to deploy cash in a responsible manner towards CapEx, dividend, debt repayment, acquisition and share repurchase. We still have horsepower in terms of financial capacity to materialize acquisition, north of $2.5 billion to $3 billion. And we intend to bank on it to add on top of the strat plan that we just described.
So let me take us back in time a little bit. The early days of the COVID-19 and what our response was to that. I remember back March 12, was when the lockdown happened, I remember because it was my son's birthday. And we weren't quite sure how long or how deep this lockdown would be. But we knew that a lot of our employees were extremely concerned about their lives. And so we called it early on that the first and most important stakeholder we need to take care of are our employees.And so we said, we don't care how long this goes, we are going to be putting purpose over profit. We're going to take care of our people first and foremost. And so how we safeguarded the health and well-being of our employees. And then once that was done, we made sure that we were adapting our commercial initiatives to meet the demand of consumers. That was, of course, changing almost on a daily basis.We, of course, supported our customers as well as they were modifying their rollout plans to get product to consumers. And we never forgot how important it was to support our communities and provide either financial help or other kinds of assistance to the communities. We knew this crisis was going to be the ideal license for us to change, to think about things that we never ever would have thought of before. So we pivoted extremely well. We leveraged our brands once we knew that those brands were resonating with consumers. And we launched an e-commerce business. I would tell you that I would never have accepted our focus on e-commerce before we had this pandemic. And so our teams came to us with ideas that were somewhat foreign to us early on, but resonated with consumers and resonated with our customers. And so we made those strategic investments to provide our teams the ability to pivot effectively and execute exceptionally at every turn. So today, we're sitting in the enviable position to have a healthy balance sheet, and we do have great cash flow generation. So as I look at COVID moving forward or any other crisis, one of the things that we recognize is that we are resilient. And so it doesn't necessarily have to be purpose over profit. It could be profit with purpose, and that's what this strat plan is moving forward.We are living in volatile markets and volatile conditions, and of course, things change rapidly. And despite the fact that there are going to be labor shortages, it is incumbent on us to find solutions how to overcome them. So as long as we can control the controllables, we will maintain and enhance these solid foundations. The solid foundations, of course, starts with a solid balance sheet. That balance sheet provides us so many opportunities to be able to grow organically, to be able to make acquisitions and to be able to deliver on the Saputo Promise.And I say this with great confidence because I believe in our leadership team. A plan is only as good as the people that can execute it. So it's not words on paper that matter, it's the execution. And so if we look at our leadership team, there are seasoned individuals amongst this group. There are folks that have been with us for a long time that have grown their -- started their careers and grown their careers with us, and then there are others have joined us along the way.The last 2 hires, Lyne Castonguay and Leanne Cutts, are going to be valuable contributors to this plan and to the execution of this -- these ideas.So I'll take you to the last slide here. And I made sure that we continue with the bigger, better and stronger because that is the mantra we've had for the last 10 or 15 years. But we recognize the market, once more the market needs more content. And so the bigger, better, stronger is defined by a plan that is also identifying a target that we are going to shoot for.So we're talking about our goals, our growth ambitions. We're talking about our enhanced profitability and creating value for all stakeholders. This growth strategy, the pillars that Kai spoke to, the 5 different areas where we will derive that profitability, all is identified with very clear initiatives in every single one of our geographies. And then, of course, we're going to complement that with the acquisitions that we will have along the way.We will never waiver from our Saputo Promise. This is what our employees expect from us. This is what our customers expect from us. This is what we expect of ourselves. And finally, we will be true to the Saputo values. So what has made us what we are today will continue to make us successful in the future. So I will end the presentation on that note. We will get back to a Q&A session right after we show you a video regarding our Port Coquitlam, British Columbia plant. So you have seen through this presentation that capital expenditure is going to be key in enabling us to achieve our plans. I just wanted to show you how we execute on those plans with a very, very concrete example like Port Coquitlam. So if we could, I'd love to share this video. [Presentation]So that is just a snapshot of what Saputo is capable of. We have had other projects quite similar, greenfield. I can think of the Almena plant, which I know that a lot of our analysts and investors have already seen. And we've also had some upgrades to some of our other facilities like Saint-Léonard in mozzarella and Saskatoon in cheddar. So this kind of initiative is not foreign to Saputo. We're quite good at it. And we know that it's going to be part of our success as we roll out the strat plan and the objectives and the results as we move along in the next 4 years.So on that note, I'll pause here. And then maybe, Frank, you can queue our analysts for their questions, please.
[Operator Instructions] Our first question comes from Irene Nattel with RBC Capital Markets.
I was wondering if you could please provide just a little bit more color on what you saw through the course of fiscal Q4, particularly in the U.S., where kind of with the pace of reopening, I think that we all expected a little bit of a -- not a little bit, a somewhat stronger outcome.
Yes. Thank you for that question, Irene. So let me just say that we came out of this pandemic in great shape. Although as I indicated in my opening statements, there were ebbs and flows and there were some very strong points and some very, I guess, low levels of results in certain specific areas. I would say the U.S. business has been challenged throughout the 4 quarters. A lot of our sales and a lot of our volume was directed towards foodservice and industrial accounts, which had some difficulty adjusting to the new realities of consumer demand. And then, of course, we had other issues, specifically in the U.S., with labor shortages and some spikes in certain regions with COVID-19. I'm going to ask Kai, first, to lead the way in terms of what we saw in terms of market dynamics and perhaps maybe get Carl to add a bit of color for Q4 specifically.
I'll talk to international and then I'll hand it off to Carl since he's here with us today to talk to the U.S. If you look at our export business in Q4, just some context, a lot of our contracts in Asia Pacific primarily are longer term in nature, so quarterly to half a year in nature. And when these contracts were locked in, this was during -- this was at the peak of the pandemic, which saw depressed pricing across a large variety of the commodity products that we produce in our international platform. And we also had an issue in terms of the challenge of the shortage of containers, container availability. It's widely known that this was an issue facing our industry as well as other manufacturers and exporters. And we're, in fact, actually seeing a trickling of some of the volumes at those depressed prices as we enter this quarter. The good news is that as we enter the second quarter, that we really are seeing a lot more robust pricing agreements in place as a result of these key markets recovering from the pandemic as these markets continue to open up at an aggressive pace. With that, I'll pass it on to Carl just to give some color around the U.S.
Thanks, Kai. Yes, for sure, the reopening of the markets on the foodservice side was a welcome, but let's keep in mind that there are a significant amount, now over 10% of the restaurant businesses, that did not reopen. And that's the fact that we're going to have to deal with moving forward. So the smaller moms and pops and so forth that we have good business through the broad-based distributors. So that did not come back in full strength. We did have challenges and continue to have challenges around labor, less so around the impacts of COVID as far as impacted employees, but rather one of availability. And we're no different than many manufacturers right now in the U.S. that are struggling with this reality, the access and the availability of labor. I would also tell you that, in that quarter, we were hit with some material inflation in a number of areas, especially freight. So freight and distribution was a real problem on the U.S. territory with cost and availability of lanes put quite a bit of pressure on us. And then I would say, lastly, it's actually one of the only quarters that the market conditions as far as the block and milk price relationship was not favorable for us. So we welcome the opening of the markets, but we had some very unfavorable conditions. But we'll hear a little bit more about it for us here in our strat plan and how we're going to address some of these things.
Now inflation is a challenge that we're facing as a group. However, Carl together with the U.S. team and the Canadian teams are implementing price cost recovery initiatives to make sure that we capture those inflationary pressures.
So Irene, I think it's a little bit more than just the Q4 U.S.A. We've covered a little bit of the international markets. I'm wondering if you have any follow-up questions?
The follow-up questions are around the acquisitions and what you're going to do, but I guess we're going to hear about that in the next part of the call, correct?
Absolutely. But let me tell you that the pipeline still remains full. Our balance sheet is clean. So beyond the strat plan, and you're giving me a great opportunity to talk about this as well. I mean we're focusing a lot on the strat plan today, but beyond the strat plan, we still have a strong appetite to materialize acquisitions in those markets where we think they could complement our plans for organic growth as well. So yes, more to come on that front. I'll give you a definition of the different geographies and areas we're looking at once we get to our presentation.
Our next question comes from Mark Petrie with CIBC.
I just wanted to follow up actually on that comment with regards to pricing to offset some of the inflationary pressures. Is it your expectation that sort of Q1 would be a bit of a transition period and then Q2 would more fully reflect those price increases in a more normalized balance? Or how should we think about that?
Yes. I would say that from a quarter perspective, we will be taking some actions and have begun taken action here in Q1. Q2 would better reflect both in the U.S. and Canada the pricing actions that we are going to take throughout our portfolio.
On the international front, pricing initiatives have already taken place. And the good news is that retailers, it's not -- they're expecting price increases from their suppliers because we're in an environment that is -- there's significant inflationary pressure. So that bodes well for us and we will continue to roll that out across the other divisions as well.
And Mark, one final comment that I would make there, too, is that compared to historical levels of balance between supply and demand, solids available and demand, there is a much better balance in the industry globally today than there has been, I would say, in the last probably 4 years or so.
Okay. And that sort of segues to my second question I guess which is just a general outlook, Lino, if you could, with regards to the commodity environment. Obviously, it has been volatile. As you noted, Carl, the market factors in the U.S. have bounced around a lot. What's your general expectation? Obviously, with the caveat that nobody knows for sure, but your general expectation with regards to the commodity environment over -- for fiscal '20?
Yes. I'll take that one, Mark. From a commodity standpoint, as Lino alluded to, we're seeing a better balance from a supply and demand standpoint. If we look at total global milk production, we're looking at 1% to 1.5% growth. And with the key markets opening up, we're seeing increased demand. And we are seeing a firming up of prices across the key commodity products not only on the cheese side but also on the ingredients. And we are seeing this reflected in the prices we're securing for our orders moving into Q2 and the balance of the fiscal year. Carl, I don't know if you had something to touch on in the U.S.?
No. I would say the same is occurring here in the U.S. The abundance of -- there is an abundance of milk in the U.S. So it's -- it has grown at low single digits throughout the year. I would say that if we look a little bit forward to some of the inflationary pressures on the feed side for milk, no farming is going to get more expensive. So we're going to see some of that dynamic play into the availability of milk and the pricing of milk, which would be subsequent to the pricing of block. But overall, the supply of milk has been right where we needed to be.
Our next question comes from Michael Van Aelst with TD Securities.
I want to start by clarifying a few things. On the international side, you talked about pricing being down year-over-year although the commodities I look at, the spot prices were at least higher year-over-year. Cheese was flat, the other ones were a decent amount higher. So when you're -- in your commentary, is that -- are you basically alluding to the 3- to 6-month contracts that you've locked into on international and therefore you're pricing at margin?
That is correct, Michael. There's a lag effect, and we were in a situation where we had to move volumes in -- at the peak of the pandemic. And as I mentioned earlier, we're seeing a little bit of that volume trickling into the first quarter. But we're anticipating Q2 moving forward that the pricing will improve noticeably.
All right. And then in the U.S., so when we look at other foodservice suppliers, a lot of them are talking about the level of activity being pretty comparable to 2019 levels during at least kind of February, March, April. And I'm wondering, is it -- are your foodservice lower year-over-year because of -- just because of the timing, like you don't really have April and April is starting to pick up? Or is it because you have a decent amount of business that goes to that 10% of restaurants that didn't reopen?
It's a good question. And I would tell you it's a combination of both. Again, with the broad-based distributors that we work with, we do have a material amount of volume that goes to that kind of full-service restaurant. That is not the ones that are rebounding right now, what you're seeing is those that still offer the most of conveniences. It's a lot better now than it was in Q4, but I got to tell you it was a slow ramp-up from that perspective. And in some cases, we -- some of the majors that we work with on a national level did not perform as well as others. So we got to bear that in mind. But we are a lot more optimistic about Q1, Q2 here for the entirety of the foodservice sector.
Okay. And then finally on Europe. I understand that you had some pantry stocking last year, but can you help us understand how much of the decrease in revenues and profits year-over-year was tied to the pantry stocking versus how much is due to lower industrial business and whether or not that industrial business is still on track to come back in Q1?
Yes, Mike, this is Max. So the down, about $20-plus million on the revenue side for the U.K., is really attributable to volume. And within the volume, not so much ingredient, it was cheese, butter and spread type categories.
Okay. And on the ingredient side, has that -- have you started to see any benefits from expanding your customer base?
Well, we're -- it's sort of we're pressing the reset button on the ingredient side because the efforts that -- we had some struggles last year in terms of landing certain key accounts, and China was in a situation where demand was on the downside. But as of this quarter, we're seeing a pickup in volume. So we're seeing better conditions as we move forward on the ingredient side.
And Michael, just on that note, probably what you're referring to as well is are we controlling our own destiny there? And the answer is yes. We've gotten out of some of the limitations we had relative to the contracts that were signed before we acquired the business. So we are now in a position where we can control our own destiny.
Okay. But I'd assume you're not -- you're still ramping up and you're not back to where you were before in ingredient sales for the infant formula?
No. We're definitely ramping up, Michael. And what we're doing is we're diversifying our portfolio of customers and markets and not trying to put -- not trying to rely on all of our eggs in one basket.
Our next question comes from Peter Sklar with BMO.
I'm sorry to belabor the point about the U.S. performance. And Carl, you've done a good job outlining all the factors that impacted the U.S. business in the fourth fiscal quarter. But what I was curious about, if you look, like in the fourth fiscal quarter, the U.S. business had $94 million of EBITDA. If you look at Q3, the immediately preceding quarter, the U.S. business had $171 million of EBITDA. And Carl, I would have thought that many of the things that you talked about that negatively impacted Q4 results would have also impacted -- negatively impacted Q3 results, the decline in foodservice, the labor shortage, restaurants not reopening, freight costs, et cetera, et cetera. So why was it -- I'm just trying to understand why was there such a significant decline in the profitability performance of the U.S. in Q4 versus Q3?
Peter, this is Max. Just to put in perspective, when we compare Q3 to Q4, we called out at Q3 our market factor led by the spread. It was favorable to the tune of $34 million. And this was driven by a positive spread of around $0.18, $0.19. That positive spread did not materialize in the Q4. In fact, it was negative about $0.11. That's creating us a negative impact of the market factor. So when you combine the negative $4 million in Q4 versus the $34 million plus in the Q3, the delta is around the $38 million, just to put it in perspective when we're comparing Q4 and Q3. So maybe, Carl, do you want to add on that?
Yes. I won't go back to the market factors, but I will say that January and February were particularly difficult months, even on the fluid side of our business. We were impacted by a couple of different weather events in the U.S. and no one ever likes to blame weather for anything, but it was real. And we ended up having to shift supply from our network to different parts of the country to keep our customers and consumers satisfied. But that comes at a material cost at a time when the availability of freight lanes and the cost of those lanes were really not in line with the historical rates. So for, of course, our supply commitments, we do what we do. But all of that was negative. So I'll tell you that in some, it would be the milk side that was not as performing as what it had been in the earlier quarters.
Yes. Peter, I just want to clarify. When Carl talks about fluid and milk, it's really the dairy foods. He's got his hat on from when he used to be the Canadian President and dividing the 2 businesses between fluid and cheese. But when he refers to fluid and milk, it's really dairy foods business. I just wanted to clarify that up.
And then my last question, as the U.S. recovers, as society climbs out of COVID and people start going back to restaurants, and so as you get -- you'll see some weakness in the retail channel and that will be offset by the strength in the foodservice channel. So net-net, how do you think Saputo's businesses in U.S. will perform? Because your -- the proportion of your business that's foodservice as opposed to retail channel is about the same. So I take this a lot more complex than just "in one pocket, out of the other" and you think you're going to be net positive. If you can just kind of go through how the recovery looks?
Yes. It's a really good question. And we -- you heard us say that over the last fiscal year through the pandemic, the gains in the retail side did not offset the losses we had in our industrial and foodservice sector. And you would expect that now that there's that rebound, we would benefit. And I'm going to say that, yes, we will. Yes, the retail sector is slowing down. The demand is not as high as it used to be. But what we're going to see specific for Saputo is our customer base in foodservice is coming back with the kinds of demand that we are used to. And on the retail side, we struggled throughout this pandemic year on supply in some key categories of our products on the retail shelf where the demand was very high. We have solved and are solving for some of those supply shortages, and we'll be able to actually, despite a lower demand in retail, be in a better position for supply of our brands and our products. So I expect this change in the consumer channels to be favorable for us.
Our next question comes from Vishal Shreedhar with National Bank Financial.
With respect to the price increases implemented, are those being followed in the market? I know, Lino, in the past at several junctures you've talked about irrational competition. So I'm wondering if you're seeing competition follow these inflationary price increases as well?
Specific from a North American perspective, I would say that our pricing protocols vary from customer to customer and channel to channel overall. And you would have heard other CPGs speak of this and the need to come to market with price increases because of these inflationary pressures. So from the -- I'll say, the reconnaissance that we have in the market space, it is a generalized increase coming from all angles. And the same is true in Canada. Canada is not shielded from these inflationary pressures and we are building that into coming price increases. A little bit different in Canada, of course, because of supply management. But overall, the pricing protocols that we have, we will see some benefits of that, as I mentioned, through the end of Q1 and into Q2.
Okay. So is it too early to tell if there's been an elasticity of demand effect on the products where you increased price and at the cost end as well?
I would tell you from the information we have today, which is very early, there has been no changes in demand because of that nor would I expect it truthfully to change with the kind of price increases we're talking about.
Okay. And I don't suppose you can reveal this but could you give us an idea of the net price increase year-over-year that Saputo has taken?
Well, yes, for a sensitive reason, this is not an area where we're going to go, but certainly we'll be acting responsibly as we move forward with our customers.
Our next question comes from Patricia Baker with Scotia Capital.
I just want to follow up on the European discussion and the performance in Q4. I certainly understand the dynamics behind the revenue in Q4, but you had a 150 basis point decline in the EBITDA margin in European operations. Can you just provide us with some more information on the specific dynamics that drove that decline in the margin?
Well, as we alluded to earlier, the ingredients business was a key part of the downturn in the U.K. performance. And in terms of what we were seeing coming off of the pandemic, there was reduced demand from our partners. If we look at the 3 major partners that we do business with that are focused on the Asia Pacific part of the world, for some accounts, they were down close to 50%. The 2 other accounts were down in the double digits. So they were significantly impacted in their infant formula business, which is the key components that we produce that go into these products. So that ingredient piece of the business had a big impact on the U.K. performance. And Max has some more color around the other segment.
Yes. So relative to the volume that we provided comment on cheese, butter and spread on the retail side, that volume was the one that was most mainly down and that created that reduction in revenue. And this is where the highest margins that we can generate from the product and that drives the EBITDA margins down by the 1.5 points that you're talking about.
I just wanted to add another -- some more color. If you look back at the beginning of the pandemic in the U.K., there was a lot of pantry loading that was taking place. And what we saw in Q4 for the U.K. business was more of a normalization in terms of purchase on the retail side. So there wasn't that same level of panic-buying in that last quarter.
Yes. No, I would have expected that, Kai, and anticipated that, but I wouldn't have thought that, that specifically would impact the margins, but more would impact the revenue and the volumes. But I understand it's just -- it's the ingredients that disproportionately impacted the margin in the quarter. I just want to ask about Bute Island Foods. You'll be rolling that up into your European results, presumably you will be. And if you can just talk about what the mix is in that business between foodservice and retail?
Yes, we will be rolling the Bute Island result as part of our U.K. sector and this could evolve pending the growth of our -- the evolution of our business on the plant-based side.
You know what, we'll go into more detail with Bute Island and how strategically it fits in the strat plan because I know you've got a lot to say on that. But just from a rollout perspective in terms of numbers, yes, it will be part of the U.K. European sector.
Our next question comes from Chris Li with Desjardins Securities.
I was wondering if you can give us an update in terms of what you're seeing in the competitive environment in each of your key regions?
Yes. So I'll have Carl start with the U.S. That's probably a market where we're seeing the most competition, and then Kai will give you the rest of the world.
Thanks, Lino. Yes, I would say that -- maybe I'll just speak to one category in particular being mozzarella. The competition in mozzarella is still very active. Lots of capacity in the system. In fact, I would say, excess capacity. So we don't anticipate that to change anytime soon. And quite frankly, the volatility that we've seen in the markets in milk pricing and so forth is creating a number of challenges with the cheese inventory positions that the industry as a whole is holding. And in itself, it's creating a lot of uncertainty and people wanting to bulk buy and/or bulk unload, if you like. So that volatility has created a lot of competitive pressures and more specifically to mozzarella. I'll say the overcapacity continues to be something that we navigate through.
Carl, why don't you talk about the categories outside of mozz as well, if you don't mind, please?
Sure. In the less-commoditized areas, we're in a good place. I'm going to say that the -- there's healthy competition in the U.S., a variety of brands that are out in the marketplace, but cheese consumption continues to grow. And I think that's the key to remember. With the 2% to 3% growth in the overall cheese category, it continues to be -- and I'm talking dairy here specifically, right? So it continues to be an area where we will be investing in, in innovation and so forth. You'll hear a little bit more about that in our strat plan on the areas that we will exploit in the U.S. and in Canada.
Okay. On the international side starting with our Cathedral City brand, we talked a lot about it, but it continues to perform extremely well, hitting record revenue figures this last fiscal year. And even on the spread side in the U.K., we're seeing very strong performance with our Clover brand. We don't talk about Frylight a lot but that's hitting record levels as well, 15% growth year-over-year on that side of the business. If we go to Argentina, La Paulina, continues to perform extremely well. Our competitors are having a tough time in that geography. There's a lot of COVID-related angst. But as a result of our export platform, La Paulina does perform very well in other markets as well including Brazil and then Russia. And then when you go down under, we're excited about the CHEER rebranding, and that's the #1 brand on the everyday cheese side. That continues to perform very well for us. Devondale, Liddells on the lactose-free range continues to lead the market. And then our specialty brands are also performing very well on the Lion specialty legacy side. So there is increased activity, competitive activity when it comes to milk supply in Australia. So we are seeing some of our competitors that are offering higher milk prices, but we do have initiatives underway to ensure that we protect the milk base that we have and to continue to grow on the base of volume that we have.
Very helpful. Maybe just a follow-up just on the U.S. mozzarella competition. Do you expect maybe the volatility or the intensity of competition start maybe to ease a little bit as foodservice sales volumes hopefully improve later in the year to absorb some of the excess capacity?
Certainly, the increased demand will help as well as the increased demand internationally. Let's not forget that we have players in the U.S., including Saputo, that do sell internationally. And international markets have been struggling with COVID, no different in here in North America, and outlets for some of that cheese had been diminished. Some of that is on the rebound and we do expect that also to help. But I would also underscore that pre-COVID, we were also in an overcapacity situation. So the -- I'll say the -- it will take a few more -- it will take a little bit more time due to COVID to get it back in line with supply and demand.
Okay. That's helpful. And then my last question, just on a very high-level basis, if you're able to execute on these pricing initiatives that you have planned to offset the input cost pressure, just on a high-level basis, do you expect that to more or less fully offset those pressure and therefore it will be mostly neutral on the EBITDA line? Or do you still expect this to be a net negative on EBITDA, at least for the current fiscal year?
Yes. So Chris, it will be a combination of 2 things: pricing action, one, and then cost containment on the other. So -- and we'll talk a little bit about that in the strat plan moving forward. Just some of the continuous improvement initiatives that would require some CapEx allocation to get there. But it would be a combination of the 2 things, price increases as well as cost containment or continuous improvement in our operations.
There are no further questions at this time.
[Operator Instructions] Our first question comes from Mark Petrie with CIBC.
Yes. I guess, first, just with regards to the high single-digit EBITDA growth target. Wondering if you can give a little bit more granularity with regards to what assumptions you're making there in terms of revenue growth. So how much of it is top line driven versus margin? And then maybe just specifically on the cost side of the business. Are you able to give any kind of specific numbers with regards to the opportunity on the cost side from the One USA initiative or the Harmony project?
Okay. So I'll start, Mark. Relative to the revenue growth, yes, the model definitely assumes a growth revenue. But as you know, the revenue line could vary pretty much from the market fluctuation perspective. So we are not looking at providing that number, although the margins that are within the 10% range today are expected to grow as part of this plan. This is to the extent that we're prepared to share. And from a cost perspective, Kai or Carl, you want to take that one?
Sure. Certainly, a, I'll say, material amount of the investment will go to optimizing our platform and our operations, as I shared earlier. And that's going to result in material cost outs. So improving our overall cost of manufacturing.And I would say that it doesn't mean that we're not investing in innovation and in our brands. It's that not all of our brands require significant investments. Some of it is really getting to market with the appropriate portfolio. And I'll say that the majority of the investment in the U.S. is going to be centered around our operations, and we will see some of that from a cost-out perspective.
And just from a revenue standpoint, I just want to point out that the focus in this exercise for all the divisions was focus on profit, not revenues. So -- and the other point I wanted to share is that the plan is -- a lot of the plan is going to be derived from the U.S. platform. Obviously, it represents a significant part of our profitability. But we are getting a lot of equal participation, if you will. So we've got a diversified plan where all of the divisions are contributing to the overall objective.
Okay. That's helpful. And then with regards to the dairy ingredients opportunity specifically, can you provide any context for the size of that opportunity? And is there potential for returns before the capital is deployed? Or is that the sort of key step to unlocking the opportunity?
We're not prepared to divulge the EBITDA contribution as a result of that initiative. But I would say that if you look at the Bioriginal acquisition as an example that, that is going to be a catalyst to help us accelerate in that space. And we are already underway in terms of looking to commercialize and have that translate into profitability in this current fiscal year.
If I could just maybe add, Mark, to Kai. Certainly, Bioriginal is a stepping stone, but it goes way beyond that of what Bioriginal can -- I said Bioriginal, I'm sorry, this Reedsburg facility, which is we acquired from Wisconsin Specialty Protein. In the end, we are exploring a number of other avenues, and I'll say, customer bases for different uses of the ingredients that we can extract from both milk and whey. So we will see right out of the gates in fiscal '22, improvement to our bottom line with the acquisition in Wisconsin. But you will see in the out years of our multiyear plan better returns coming from the choices we're going to make on the markets we're going to service and the ingredients that we will commercialize.
And there are opportunities that are being pursued on the international side of our business. If you look at sort of the declining birth rates in China, we understand that it's an aging population, and that provides an opportunity for our business. As a result of the MG acquisition, we picked up a nutritionals business. We had not had a lot of experience in that space previously. Since that acquisition, we've been able to leverage the knowledge that the business offers and through our commercial teams have been able to tap into new opportunities in segments like the growing-up milk powders.
Okay. Helpful. And then just one last one. With regards to M&A, I mean, obviously, you guys have deployed a significant amount of capital over the last number of years. It has generated sort of minimal net contribution. Have you refined your approach to M&A at all? Or are you comfortable that this is as a result of shifts in the commodity environment and other circumstances that really couldn't have been anticipated?
Yes. So if I look at our track record on the acquisitions that we've made, there is not one of them that I would not have repeated. I'd say in the last -- perhaps the only one, I would say, in the life of our publicly traded life would be the Vachon business, which is no fault of Vachon. It's just a category of product that didn't fit well with Saputo. But every other acquisition we made, for one reason or another, had a great strategic fit.So Mark, what you alluded to is, at the same time that we made those acquisitions, we derived the EBITDA that we had expected to. However, in the last 5 or 6 years, there were some headwinds that made it difficult for us to elevate that EBITDA. So it seems like we've been spinning our wheels in the mud here. But the reality is, is that we've built really solid foundations. If I think about just some of the categories that we invested in, some of the geographies that we're currently present in, if I look at some of the diversification outside of the industrial-type businesses into more value-added branded businesses, there is not one of those acquisitions that I would not repeat again.Now we're hoping moving forward, that the market conditions will be better than they were in the last 5 years. But irrespective of market conditions, we are holding to that $2.125 billion EBITDA.
And this accelerated organic growth plan, again, would not have been made possible, will not be possible, without having materialized the most recent acquisitions. That's really what's going to be -- allow us to deliver and execute this plan.
Our next question comes from Patricia Baker with Scotia Capital.
Just want to go back to the ingredient component of the organic growth plan. And just curious, if at the end of the 4-year growth plan, will we see the ingredients segment representing a bigger portion of the business in each of the markets? Or will you be seeing similar organic growth from the retail side and the foodservice side that it won't change the mix? Or is there a built-in mix shift here?
Maybe I can answer part of that, which would -- from a total solids perspective. So our ingredients business will be fueled by the whey solids that we have. And so I'm not -- from a tonnage standpoint, we may not see material shifts in tonnage, but what we will see is, I'll say, margining up. And with the choices that we're going to make for the types of ingredients that we're going to look to manufacture and commercialize. So you'll also see an increase in -- aside from the general market conditions, you will see an increase in revenue as a function of that. But I would not -- from a tonnage perspective, I don't see that or expect that to change much versus what we have today in the foodservice and -- or the cheese and dairy side.
Unless, of course, Patricia, we make an acquisition of a cheese manufacturer. And with that, we have more whey solids to process. We'll, then, of course, will process those whey solid in value-added categories of product. But the byproduct market, the ingredients market really is a consequence of cheese manufacturing.
Okay. Understood. And I like that term margining up to help me understand it better. Just have another question on the innovation. And you mentioned that you have an innovation center in the U.S. and of course, Dairy Crest came with an innovation center. I'm just curious about your view on your track record of innovation. And do you believe that you have exploited the opportunities in innovation as much as you should have? Or did you learn from Dairy Crest that perhaps there were -- you wouldn't expect there's further opportunities to exploit innovation in all of your markets?
Yes. The innovation center in the U.K. was a great addition to the overall group. And I would say that our track record has been very good. If you take a look at the plant-based cheese opportunity, the ask was to develop a product that was superior to what was already out there in the marketplace, a product that would deliver on performance that wouldn't taste bad -- that didn't taste bad, that had good mouth feel, that had all the properties that consumers are looking for. And they were able to hit that one out of the park in less than 60 days. And it took some time to commercialize those efforts.Now the second phase is about adding nutritional benefits, qualities to our recipes. And the team is on that, as we speak, because we know that this space is changing very, very quickly. And there's only one opportunity to establish a first-mover advantage, and we feel that we have, through the innovation center and the knowledge, and now with the Bute Island acquisition, we feel we're very well positioned. Together with all the core competencies that I talked about earlier, whether it's our supply chain, our relationship with our customers, our sales infrastructure and so on, I would say that we're extremely well positioned.In terms of innovation, leveraging that experience, and bringing it to our other groups, we have learned a lot from that process and how they do things. And SDF, when we inherited that business, they had a very healthy innovation agenda. We have the innovation center in Dallas that we leverage to win with our customers and consumers. And it's proven very helpful for our business down there. And in Canada, we have a lot of examples where we try to accelerate our innovation agenda. And that's why it's one of our key pillars. We do have an innovation agenda that has a long list of commercial initiatives that will be tackled by each of the respective divisions.And Carl has some more commentary on that.
Yes. If I could just add that innovation comes in different forms. And for several years, we were focused on the sort of the inward innovation. So not the things that you would necessarily see out in the marketplace as a consumer, but the innovative things that we were doing and how it is we manufacture our products and so forth.And in fact, SDF was, in our Dairy Foods business in the U.S. had a very high focus on this and brought a number of exceptional products to the market without it being under our brands. That will continue of course in the background, and we're going to amplify our investments and our focus in the brands that we now own. And I know you've heard Kai say this several times already, but we do have, through the years of the acquisitions that we've made, an excellent platform to work with now. And we -- that's why we feel so confident about the commercial plan ahead of us because we have the right mix of tools, brands and capabilities to go hard at this in the commercial space.
And the other benefit, especially when we look at our recent acquisitions is that innovation in those markets, products that they've launched in their respective divisions, we're able to leverage that and introduce those products that have been successful in other markets and introduce them to our legacy divisions. So there are a lot of examples where we're going to be looking to tap into the playbook that the other -- the recently acquired businesses will be able to offer us.
Okay. And then one last question. You gave us a targeted goal for where you think EBITDA will be at the end of this strat plan. And of course, there's been a fair bit discussion of, in the past, where market factors and other things -- and other, I guess, the uncontrollable have gotten in the way maybe of achieving targets that you guys may have set. So in setting this target, what did you assume for uncontrollables and you try to stress test that number so that we should have a fair degree of confidence that you can achieve that independent of some of these market factors? I won't allude to something like a pandemic, but the normal disruptions that you've seen in the past.
Well, the assumption that we've used are derived from what we recently experienced. So we do feel confident that when we're going into the next 4 years, we have the ability to navigate true. So those have been quantified to a certain extent and factored in. So we do not intend to use that as an excuse not to meet the number or the growth rate that we're targeting.
Our next question comes from Peter Sklar with BMO.
So there's been a lot of discussion on ingredients. But bottom line, like your ingredients business has been commoditized for quite a few years, and you've been talking about that on the calls for quite a few years. So like why is it now that you're able to margin up? And like why hasn't that transformation in the business taking place over the last 3 years? Is it you have new capabilities now because of acquisitions? Or it's -- you've decided to focus on this business? I'm just trying to see why -- like why things are changing now?
So there are a couple of factors that position us well moving forward. First, you mentioned the [ first ] acquisitions. We didn't have capability in whether it was D90, whether it was GOS, whether it was lactoferrin. These are all examples of margining up in an ingredient space. And what we tried to do over the last couple of years is look to partner with the majors in trying to forge an alliance to be able to develop, enter into arrangements where we would enter sort of into a joint venture-type arrangement where we would lead the manufacturing side of the equation and leveraging the brands that some of these majors had. What we've quickly realized is that they don't operate at the same as we do. So we have made the decision, as part of the strat plan, to internalize the capability. We're not going to be waiting around anymore for a partner to step up. Not to say that we're going to abandon commercial partnerships, but we're not going to leave our faith in the hands of others. So we will be looking to build that capability internally. And Bioriginal is an excellent example of that to act as a catalyst for us to build that capability.
Okay. I also wanted to ask about dairy alternative products. You talked -- kind of talked a lot about that on the call. Can -- just go back and I'm just a little confused, like, what capabilities do you have now in terms of alternative products and cheeses? And what are the capabilities you got through the Bute Island acquisition?
It's Carl. So let me try and clarify it. So on the beverage side, we, basically, are utilizing the assets and invested in some of our brick-and-mortar in North America, in particular, to be able to accommodate the kind of blending and processing and bottling that's required.Now as far as the cheese alternative sector goes, we were working with our R&D group in the U.K. who already had a presence in the nondairy space through its Vitalite brand and different customer relationships or supplier relationships to develop the mozzarella style cheese that we wanted with the attributes that you heard Kai shared for the marketplace.And along the way, we were able to forge a strong relationship with what is Bute Island Foods and come through the -- would come through with an acquisition. So those things were happening sort of in parallel. And now we have access to a broader portfolio of products through the Bute Islands acquisition to some IP. And we will absolutely deploy that IP and that technology in manufacturing that product to different geographies, and it will begin with North America. So...
Let me add to that, and I'll take you back in time a little bit, Peter. On the beverage side, we did highlight and we did indicate that we were late in the game to come out with a brand. And so on the beverage side, when you think about going back to the early 2000s when it was soy beverage, and then it was the almond beverage, and now it's the, oat beverage. While we never really deployed any resources, whether that would be marketing talent or marketing dollars to develop a brand, and so we're sitting here saying, "This is a now highly developed category." I think where we can add value for ourselves is to be a co-packer for others that have invested in brands but don't have the manufacturing capability to support their growth. A lot of these companies are asset light. We are asset rich.And so that's our strategy for beverage. Very, very different than the strategy we're taking to market on the cheese alternatives. We're still in the infancy here. There is not a product on the market that is suitable for performance or suitable from a taste profile perspective or suitable from a nutritional perspective. So we're saying we are experts in cheese. We have the innovation center. We acquired a business in the U.K. that had a brand and a product that was going to market, why not leverage this and come up with IP that will ultimately, not just get into the sort of the cheddar cheese alternative, but also the mozzarella cheese alternative that performs well on a pie in a market that we're in every single day. The mozzarella market going to the pizzerias, if we can offer them a natural cheese product and cheese alternative for those vegan pies that they want to make, well, no better supplier than Saputo. So our strategy for the cheese alternative is very different than beverages. We are going to lead this category. That's the difference there. And we are still in the infancy here.
One thing, Peter, we got to remember too, that we didn't have the manufacturing capability prior to this acquisition. All of our products were co-packed by others. So whether it was in Continental Europe, and then we partnered with Bute Island, and that's how we developed the relationship and got to a point where we were able to consummate a transaction.
Okay. And then during the discussion, I got confused about a couple of numbers you threw out there on the size of the market. I heard a $1 billion number. And I think I heard a $7 billion number. Can you clarify those 2 numbers? What their [indiscernible]?
The $1 billion is the plant-based cheese category globally. The $7 billion is plant-based food category, which would include beverage, cheese, everything.
Okay. And then my last question was just like when you showed the video at the end of the new Coquitlam facility, which looked really impressive, I thought I saw in the plan, it said something like blow mold. Are you blow molding your own containers in that facility? And is that something new for Saputo to manufacture its own containers?
We -- it's certainly not new. So I would say that what we have is a partnership with a third-party that does that blow molding for us. And that's been kind of the same approach we've utilized in Western Canada for a number of years now. So we've carried that over into our new facility.
Our next question comes from Irene Nattel with RBC Capital Markets.
Sorry to continue to, I guess, beat the drums or I don't know whatever they beat in Scotland or play the bad pipes on the Bute Island transaction. But it sounds from that last answer that one of the keys is there's something about the manufacturing process for cheese alternatives like it is sort of very challenging and now you have that. And that sort of -- that's really what you wanted. Am I getting that right, like that's sort of the special thing about Bute?
Well, not exactly, Irene. The intellectual property was developed by our team in innovation. So the ingredients to use to bring it together, that is something that we are bringing to Bute Island. The unfortunate thing is that we did not have the processing capability or the equipment to produce a dairy alternative product in our current facility. Now we could have very easily invested in it, but it would have taken us 12 to 18 months before we get the equipment, install it, debug the process and get things running. So we went to a third-party, which was Bute Island with our intellectual property to manufacture the product for us because they were equipped and they had capacity.In so doing, we got to know the Bute Island founders, their ambitions, their ideas, their culture, and we thought that there were so many commonalities between what they were doing and what we wanted to achieve. And so it was there that we engage with them to acquire that business.Overall, their key people, their 2 of their 4 founders are going to be instrumental to us in terms of further developing the plant-based strategy for us. So they do have some knowledge that our innovation team does not have that will help us further develop products beyond the mozzarella and the cheddar that we have.But for us, it was a question of speed to market. We want to be first movers. We couldn't afford 12 to 18 months to get installed and go to market. So we were heavily relying on Bute. And if we're going to rely on a third-party, might as well own the third-party, and that was our thought process.
Now in making that acquisition as well, the Sheese brand has already exported to over 30 countries and it's actually the #2 player in Australia. So it has an established presence in a lot of key markets. In the U.K., it does business with -- it's the private label supplier to all of the major retailers. So it already has a head start on that front.Papa John's, pizza service, pizza operators, pizza chains, they already have a business with them. So that gives us -- that provides a catalyst to get into that space because that is our aspiration is to penetrate the foodservice space and provide a product that performs well in a pizza. So this, again, has acted as a tremendous catalyst to accelerate our ambitions in this space.
I will also say, maybe going back to Peter's question relative to our strategy to go-to-market. Beverage, we are not quite sure if all -- actually, we know for sure, that not all players in the beverage space are profitable. I will guarantee and I will confirm that in the cheese space, cheese alternative, it is a lucrative business.
That's really helpful. And presumably, okay, would you -- with sort of the strength of the Saputo global relationships and your reputational franchise behind now what is actual tangible capability to produce the product, that package together has to be very powerful as you go to market in the foodservice space, right?
Absolutely, Irene. In fact, as we're rolling out this product, we have some of the larger pizza chains that had asked for exclusivity. That's how good our product is. We are not going to get into an exclusivity agreement because, look, we're going to pizzerias every single day to deliver our natural product. We are going to be offering this nondairy alternative, high-performing product as a complement to the natural cheese that we're bringing to market.
Yes. And you're absolutely right, Irene. And bringing this into our supply chain is another area of strength for us. And we will be manufacturing and size reducing these products for both the retail and foodservice space in the geographies where we plan to accelerate our business. So right here in the North America, we will use our brick-and-mortar in order for us to manufacture products. We're going to leverage the -- I'm going to use the word the overhead that we have here in North America, the resources, the talent and our commercial relationships to bring to market. So absolutely, we are going to have -- we're going to be able to make a lot of inroads in this space because of our current relationships.
And we're well positioned in that we offer the -- I was just going to add, Irene, that together with our plant-based beverage business, we also have the dairy alternative cheese business. And most of the dairy alternative cheese players do not have a plant-based beverage business, which gives us some leverage. And then when you look at our pizza chain partners, we can act as a one-stop shop, and that we provide not only the mozzarella but also a dairy alternative and not a lot of players have that competitive advantage at this point.
That's really interesting. And that's very -- that's really helpful. Now that we've resolved this big strategic thing, I'm sorry, but I need to bring it back to -- I hate to bring you back to some numbers here. So going back to a comment that was made earlier about the path from here to the $2.125 billion, you noted that it won't be linear, but presumably, there's a step-up that should happen as we come out of COVID to kind of get you up to where you would otherwise have been if COVID had not interrupted the path forward. And does it then kind of plateau a little bit then kick up? Like how should we be thinking about the cadence of here to there because the 8% is not going to be linear? Or they're sort of the high single digits, won't be linear?
Irene, it's Max here. So we intend to provide a market with regular update as to the various milestones that we will be going through. There's some competition sensitivity around providing quantums of pillars and certain milestone that we'd like to reserve our right, but be sure that, on a regular basis, we'll be providing update that will help you understand where we're at.
Our next question comes from Vishal Shreedhar with National Bank Financial.
Just on the materiality of some of these initiatives, there's a lot of initiatives disclosed. And it's incumbent upon the analysts trying to figure out where and when and how these all come through? So I understand you don't want to provide specific numbers, but could you give us some sense of materiality? For instance, this plant-based food initiatives, while very exciting over the long term, over the course of your strat plan, it doesn't sound like it will be more than 1% to 2% of revenues, if my initial math is correct. And I'm wondering if there's any other big initiatives that pop out that we should pay attention to.
Okay. So I'd like to address maybe the question around maybe the quantum from a pillar perspective and the color I could provide. The pillar that is optimizing our network, and this is our operation. This is what Kai referred to as our bread and butter. This is the -- maybe the most important pillar from a growth perspective, from the generation of EBITDA perspective. But you have to understand that this is a full organic strategy. So all the pillars are linked one to the other. I think if we -- we -- you go out with having that pillar as the biggest one as well as the U.S. sector being one of the major contributor, that's to the extent that we're prepared to share from a quantum of the strat plan and the various initiative per se. And from a revenue perspective, yes, this is definitely -- there will be volume increases. There will be revenue increases. But certainly, like Kai mentioned, we are focused on EBITDA. And we are focusing on improving our EBITDA margin, and that improvement goes for all the sectors that we operate in, yes.
Okay. And I understand the competition sensitivities that Saputo have. But if you were -- and I understand that you intend to provide some more information. But if you were in our shoes and we're trying to evaluate Saputo's progress against some of these initiatives, intra-year knowing that it's lumpy, but we don't know the cadence of how these initiatives kick in and when, what metrics would you point us to evaluate Saputo's success against it other than the final fit or the comments that Saputo may provide that are more qualitative in nature?
Well, I would then look at our EBITDA. That's our first and foremost metric, and we could measure ourselves when we would be releasing our EBITDA from a quarter perspective. And obviously, this is a journey for us for the next 4 years, this is where we're in, and we will provide color as to where we stand and how we progress towards achieving these goals. And that should be helpful on your end.
Our next question comes from Michael Van Aelst with TD Securities.
So I guess I wanted to go back to the plant-based first, if I can just to clarify a few things. You had said that you had won a double-digit market share globally. Was that in the $7 billion market or the $1 billion market?
That's in the $1 billion market. And just to clarify, we would like to be market-leading in all the geographies we currently have a platform in. So that would be Australia, the U.S., Canada, the U.K. and Argentina.
And market-leading would be double digit. So I'm going to push Kai on that one.
Well, Lino, I was going to say...
And it has more...
Low single double digits. That's [ fine ].
And then the brands that you plan on using, I see Vitalite in the U.K. Do you say you're going to use Vitalite in the U.S. as well?
Yes. So we -- early on, we did a number of market studies to see what resonated best, and we're very confident that the Vitalite brand is what we will come to market with here in North America. Sheese will continue to exist in the markets that it's in today. But yes, it will be Vitalite here in North America.
Okay. And on the milk side, during the video, I think the -- I'm not sure if it was a plant manager who was -- but I think someone said that Saputo will be 1 of only 3 processors of plant-based milk in North America. Is that accurate?
No. So what you saw there was one of our production supervisors, say that the Port Coquitlam facility will be 1 of 3 within Saputo's network to process plant-based beverages.
That makes more sense. Okay. And what's the status of the other 2 in terms of ramping up? I know Florida has already done. So is the Connecticut one up and running?
Connecticut will be up and running in August as well, so right around the same time frame as Port Coquitlam.
Yes. All right. And then getting back to Irene's question regarding the cadence of the -- if not -- of the improvement in EBITDA. I had a similar question, but I guess I want to ask you a little bit different. Is there -- yes, it does -- what Irene does seem -- does make sense in that you should have a bit of a bump postpandemic as those headwinds disappear and the foodservice industry recovers and the volumes go back up. But are we to believe that there are some upfront costs as part of the strategic plan that might push some of those improvements or might hide some of those improvements in the early years?
Well, the early years, yes, there will be the favorable impact of maybe exiting the COVID environment, but that some investments are going to take place over the next year or even the next few years. You could expect the higher margin or the higher EBITDA to be generated likely more on the year 3 and year 4 rather than year 1 and year 2?
Okay. So you have some benefits from one USA coming this year. The ERP sounds as like it's not going to be done in the U.S. until the end of this year. And then the optimization of the U.S. of your operations, in general, can you talk about some of the timing of when some of those equipment is going to be available or be commissioned?
Yes. What I would say, as a general comment, in these times or most recent times, the -- it takes 18 to 24 months for any sizable installation to come to fruition, including the commissioning phase. So you got to expect that as we embark on some of the more ambitious investments in the network optimization, you have an 18- to 24-month lag, and that is true, whether it's Canada, the U.S. or other parts of the globe.
And are there any major projects that have actually already started so that we'll see them come in staggered? Or are they all 2 to 3 years out then?
No. I mean there are a couple of them. Of course, the plant-based beverage side is well underway. So we're actually at the tail end of those. And I would say that the investment in the string cheese area and the choices that we're making there are probably about halfway through at this stage. And we have begun on 1, maybe 2 actually, of the most intense capital investments. So again, that cycle though will continue to be 18 to 24 months.
And as part of our strat plan, the -- in terms of CapEx investments, I think reflects sort of the lag in terms of the start-up of some of these activities. But we're heavy upfront in year 1 and 2, and it sort of levels off in year 3 and 4 from a CapEx investment standpoint. So that gives you a little bit of an indication in terms of when we would expect to materialize the benefits as a result of those investments.
There are no further questions at this time.
We thank you for taking part in this webcast. We hope you'll join us for the presentation of our fiscal 2022 first quarter results on August 5. Have a nice day.
That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone.