SeaFood Business

MAY 2013

SeaFood Business is the global trusted authority for seafood buyers and sellers. We are the seafood industry's leading trade magazine with more than 30 years of experience. Our coverage is based on the "business" of buying and selling seafood.

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Top Story Picked-up pieces Recent consolidation activity Red Chamber Co. of Vernon, Calif., purchased a Prince Edward Island, Canada, seafood processing plant from Ocean Pride. North Lake Fisheries will operate from May to October. The Barry Group in Corner Brook, New Brunswick, purchased the fshing business of P. Janes and Sons, based in Hants Harbor, Newfoundland. The snow crab, herring and mackerel harvests will complement Barry Group's groundfsh, shellfsh and pelagics portfolio. Cooke Aquaculture (No. 9) paid $20 million for a 54 percent stake in Invermar, a Chilean farmed salmon producer. Cooke also acquired sea bass and sea bream farming assets from Doramenor in Spain. Leading farmed salmon supplier Marine Harvest acquired a 48.5 percent stake in salmon processor Morpol. sales had decreased for four consecutive years, dropping from $460 million in 2007 to $256 million in 2011, but the company had access to Iceland's groundfsh supplies and a modern processing and distribution facility strategically located near major East Coast metropolitan areas. Te deal made High Liner the world's largest cod and haddock supplier. Keith Decker, president of High Liner Foods USA in Portsmouth, N.H., says the acquisition made sense not only for an aggressively growing company (now ranked No. 4 at CAD 942.6 million), but for its customers as well. "Te biggest impact for us was the ability to take a great brand or series of brands and a great portfolio of premium products, which matched up nicely with our FPI and Viking portfolio, and to consolidate that," says Decker. "From a customer perspective, it gives us the opportunity to help them with one less purchase order, one less truck and one less third-party food-safety audit. So for 26 SeaFood Business May 2013 them, there's a simplifcation of the process, which I think is an important aspect of the supply chain side." Decker, who calls the U.S. seafood industry "highly fragmented," says there's a lot of opportunity for further consolidation and High Liner will be pursuing further acquisitions. It's good for seafood buyers, he adds. "Tey're trying to buy dozens of species from dozens of vendors, they've got food-safety and quality and sustainability and traceability [concerns] and all the things a customer needs, and to have to parse it out among dozens of suppliers in order to accommodate that … when you look at a mature industry, whether it's beef, pork or chicken, the law of threes seem to rule, which is three major competitors. We're a long ways away from that in our industry." High Liner is knocking on the door of $1 billion in sales, but that milestone is not the goal, says Decker. Rather, the aim is to "continually improve earnings for our shareholders," he says. "We have an aggressive goal now, which was announced as part of our annual earnings report, to grow our earnings by another 50 percent in the next three years. Some of that will come by managing the business better, tighter, with better effciencies in the supply chain, etc. But some of that has to come from acquisitions." Not all deals have to be earth shattering to make a huge diference. American Holdco, parent company of East Coast Seafood (No. 22) in Lynn, Mass., acquired scallop supplier Seatrade International of Portsmouth, N.H., in mid-January 2012. Michael Tourkistas, CEO of East Coast Seafood, says the two companies shared a similar philosophy and corporate culture and the merger increased logistical efciencies and other operational advantages, like purchasing. It also boosted East Coast's sales from $150 million to $241 million. Consolidation isn't the only avenue for expansion. As president of Chicken of the Sea Frozen Foods in El Segundo, Calif. (No. 2), Bryan Rosenberg has overseen tremendous growth of the company's frozen seafood products, which include crabmeat, shrimp and ahi tuna, all during a challenging economic period. Its sales increased from $900 million in 2011 to $980 million in 2012. "In our core product categories we continue to increase share with current customers and have been fortunate enough to pick up some new ones," says Rosenberg. Like many large shrimp suppliers, the company will be keeping a close eye on the early mortality syndrome, or EMS, disease that is impacting farms in Tailand. Some reports put the nation's supply reductions at around 30 percent. "Reduced supply due to EMS will have a signifcant impact on pricing and resulting demand as we move through the second and third quarters," says Rosenberg. Chicken of the Sea Frozen Foods has three- and fve-year growth plans that are periodically reviewed by parent company Tai Union Frozen Products, PCL, he adds. Te Samutsakorn, Tailand-based corporation had $3.6 billion in global revenue in 2012. Elevated tuna prices throughout 2012 boosted the bottom lines for all the major suppliers. Bumble Bee Foods of San Diego passed the $1 billion mark for the frst time, while StarKist jumped from $630 million to more than $710 million. Tri Marine International's annual sales have roughly doubled since 2006, and the Bellevue, Wash., company is our top-ranked supplier at $1.5 billion in 2012 sales. Methodology Ranking seafood suppliers by annual sales is an inexact science. Te ranked companies operate on vastly diferent business models, but to simplify things we lump in vertically integrated suppliers with wholesalers and distributors. It's understood that, in some cases, the sale of the same fsh may be counted more than once, as certain companies on the list are known to do business with each other. For instance, Tri Marine International supplies tuna to the major U.S. tuna canners — Chicken of the Sea, Bumble Bee and StarKist — and all four companies are on the list. SeaFood Business asked qualifying-company executives to share their total seafood sales and reviewed the annual results of two public companies — Clearwater Seafoods and High Liner Foods, both based in Canada. Continued on page 45 Visit us online at www.seafoodbusiness.com

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