New Brunswick pellet plant to double domestic volume

By Katie Fletcher | March 26, 2015

Groupe Savoie Inc., a hardwood products supplier in New Brunswick, Canada, recently announced that it plans to double the volume dedicated to the domestic side of its pellet production at its Saint-Quentin pellet plant in the coming year. This company decided to increase pellet volume locally to address the shortage of pellets experienced over the winter, due to the compounded problem of unseasonably cold temperatures and seasonal customer buying patterns.

The company’s pellet plant produces a range of pellet-quality grades—from premium to industrial depending on the customer. The hardwood pellets produced are manufactured under the trademark Canawick and are sold in 40-pound pre-packaged bags or 1-ton bulk bags.

Last year, Jonathan Levesque, vice president of marketing and development with Groupe Savoie, estimates the company produced 70,000 tons, 65 percent of which was exported to European customers. The company plans to continue to export approximately 45,000 to 50,000 tons, but will add another 20,000 to 25,000 tons of pellets on the domestic side.

According to Levesque, many customers who were used to buying the Canawick brand were unable to buy the amount needed to heat their home, so began contacting the plant desperate for volume. “That’s why we made that business decision to say, ‘Let’s feed our local people first’,” he said.

Over a $1 million investment in the pellet plant will be made to maximize its output. The investment will include changing out a burner to increase the drying capacity, and some other equipment.

On the export side, Groupe Savoie plans to maintain current export levels because of the different fibers used to produce foreign and domestic pellets, and for market diversification Levesque said. “We don’t have domestic customers buying year round right now, but on the export side we’re doing five to six vessels a year,” he said. “Business is done on a continual basis, so we have a home for our pellets, since we are producing 24/7.”

In order to jumpstart pellet availability locally, Group Savoie recently loaded a vessel for export with about three quarters of the usual volume. “It’s a loss that we’re taking to keep growing on the domestic side,” Levesque said. “We’ve explained the situation to our customer overseas and they were understanding of our situation; the only thing is we had to pay the dead freight on the vessel.”

The company plans to change the blend of the volume that was originally supposed to go overseas and dedicate the production time to domestic pellets. Groupe Savoie and other pellet producers are working to ensure that a pellet shortage like this does not happen again. Besides increasing domestic volume, the company is encouraging its local customers to buy year round. “Buying pellets in the slow season helps the producer,” Levesque said. “If we could sell some domestic pellets in the slow season, it’s spreading the volume more evenly.”

Levesque said the company had pre-season sales last year, and is trying to be aggressive with selling pellets this summer. Also, producers, retailers and others in the space held an open roundtable to discuss the issue. The main takeaway was to stop advertising rebates for pellets during the high season, and do so in the slow season.

A few years ago, Groupe Savoie got involved with local wood heat in another way by partnering with Compact Appliances Ltd. to develop Biomass Solutions Biomass. BSB provides a range of boilers and stoves from residential to commercial and industrial applications. Levesque estimates they’ve sold over 100 units since late 2013, early 2014. “By us being the fuel manufacturer and them with their experience selling appliances, that’s how we got involved and decided to create BSB,” Levesque said.

Group Savoie also invested in a vacuum pellet delivery truck. Levesque said one of the company’s projects involved selling a boiler to a hospital in Grand Falls, New Brunswick. By providing the wood-heat unit and supplying it with its heat source the company hopes it can encourage others to consider pellets as a viable alternative. “That explains why we took the bull by the horns and canceled a portion of our export volume,” Levesque said. “We’re already committed on developing the residential market.”