May 20, 4 pm EDT
China: the elephant in the room
“By 2030, 40 percent of the world’s seafood will be consumed by China, yet nobody in this room knows a lot about China,” said James Anderson, a World Bank advisor who has authored a report called "‘Fish to 2030," from which he cited this data.
“Twenty years ago China wasn’t even on the map – this is the elephant in the room and we need to talk about it,” Anderson said.
China’s appetite for seafood has struck fear in the hearts of many western businesses, given the reputation of Chinese consumers not caring about the sustainability of what they eat.
“I don’t fear any North American or European competitor,” said Henry Demone, CEO of High Liner Foods. “But what I do fear is the Chinese man who shows up and says ‘I want good quality seafood, I don’t care about any of the other stuff, and here is more money.'”
But is this perception about Chinese consumers fair, or even accurate?
Stein Alexander Aukner, analyst with DNB Markets, says no.
“There is a radical difference between consumers below the age of 30 and those above,” Aukner said. “Those below 30 are much more globally conscientious and responsible than our perception."
“Those who went to college post Tiananmen Square have a completely different mindset.”
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May 20, 2.30 pm EDT
Grobest: Making it big in Asia
Making it big in Asia is commendable given the sheer diversity of countries and cultures that comprise it. And the success story of Grobest Holdings -- a feed company which began in Taiwan in 1974 -- is one the western companies sure want to know more about.
Jennifer Kuo, VP and head of animal health at Grobest, gave a presentation which shed light on the scale and diversity of the company’s operations, and answered some tricky questions about what it takes to be successful in Asia.
“There are more species in Asia, and different production regions and provinces,” Kuo said. “There is a cultural difference, and business is done in a different way in Asia,” she replied to a question about the advantages of being on the ground and doing business in Asia.
“Companies need to connect with people and communities.”
Grobest, like all Asian companies, felt the brunt of EMS last year. It produces 600,000 metric tons of aquatic feed, mostly shrimp feed, and ranks among top five Asian feed companies.
“We learned our lessons in a tough way,” she said. “We learned not to push the environment, and the animal, to the limit.”
There will be increased production in Indonesia, Vietnam and India this year, due to the impact of EMS on Thai farms, she said.
Grobest plans to double its turnover to $1.5 billion by 2018.
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May 20, 1.50 pm EDT
Meeting Africa’s protein requirement
There was much talk at the forum surrounding China -- its astounding consumption force, its high demand for seafood, its vast production of aquaculture species. But sweeping generalizations about a country as vast and diverse as China is simplistic, even more when it comes to talking about meeting the protein needs of Africa.
Yet the two names were linked by Francois Kuttel, CEO of South African fishing firm Oceana Group.
“The only way Africa’s protein needs will be met if it is produced cheaply and locally, like China,” Kuttel said, also noting the heavy Chinese presence in different African countries.
Kuttel was discussing the future of wild caught premium fish, commenting “the wild fish will go to markets where they will fetch better prices.”
Salmon, the poster child of the seafood industry, wouldn’t be an ideal candidate when it comes to meeting protein requirements in Africa.
“Maybe some of the fish in South America that now go into the fishmeal business can fill the need in Africa,” Kuttel said.
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May 20, 1.30 pm EDT
To brand or not brand…
… was a question that popped up several times over the duration of the forum. Audience members heard competing views on the pros and cons of branding seafood and ancillary products, and its relation to capturing market share.
Rune Skjoldal, CEO of Amundsen Brands, a Norwegian company that sells Omega 3 products for both human and pet consumption, is a firm believer in telling a Norwegian success story that encapsulates the importance of right nutrition.
Amundsen and Obersten -- the world’s greatest polar explorer and his lead dog -- are the inspiration for the company, and developing this brand name is what Skjoldal believes will create premium for his products, and set them apart from the others on a supermarket shelf.
“Branding is where premium is created,” he said, before signing off with the famous explorer’s words: “What you eat is of the essence.”
Drew Cherry of IntraFish Media had a few questions about the efficacy of brand names among a “sea of names” selling omega-3 products.
“What about competition from instore own brands, say in a Costco,” Cherry asked.
“Names are not the same as brands,” Skjoldal said. “The US omega-3 market has lost 15 million customers in the recent past because the products did not deliver what they promised – and who wants to have omega-3 products with the same brand name as the socks they buy?”
Also, building a brand takes time. “An 'overnight' success story in branding is 15 years,” Skjoldal said.
What about the geographical restrictions of creating successful seafood brands? It was interesting to hear Henry Demone, CEO of High Liner Foods, North America’s leading supplier of frozen value added products, commenting “seafood is still a local food.”
Talking about his company’s nascent steps into the Mexican market, Demone said it was possible to have “regional branded leaders” in markets such as Latin America, but pointed out for many North Americans of a certain generation grew up eating seafood that came from the local coast.
An opposite view was voiced by Francois Kuttel, CEO of South Africa’s Oceana Group, who said, “do not underestimate the power of brands.”
Kuttel was referring to his company’s hugely successful and easily recognized Lucky Star brand in South Africa.
“I have no fear of my Thai suppliers taking away my market share,” Kuttel said.
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May 20, 1 pm EDT
What is salmon’s secret?
If you live in the western world , you could be forgiven for thinking salmon is the most voluminous fish – it’s the most visible one on supermarket shelves at least.
Marine Harvest’s VP Finance and Treasury Henrik Heiberg gave a presentation on salmon that put in perspective the reason for the dominance of farmed salmon in global aquaculture.
“It is the most industrialized fish -- in relative terms farmed salmon is only a small percentage of the overall aquaculture production.”
Carps are the most voluminous among farmed species, but salmon trumps others for a number of factors.
“It is a high quality, easy to digest protein, and has relatively low production risks,” Heiberg said. “Salmon production sees efficient use of resources, and fares better than cattle, poultry and swine production on several counts.”
Though the United States and Europe remain the main markets, new markets are evolving at a rapid pace.
“There is strong demand in Asia and Brazil, and Russia’s salmon consumption has doubled,” he said.
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May 20, 12.30 pm EDT
Opening the ‘Cooke black box’
Canada’s Cooke Aquaculture was billed as the ‘world’s next protein leader’ in its introduction at the forum, and anybody who keeps up with seafood news will know why.
The company made news for a spate of M&As in the recent past that bolstered its global presence and production numbers significantly.
The family-run company is not very voluble when it comes to its operations, something that CEO Glenn Cooke addressed in IntraFish Media Seafood Investor Forum, shedding light on its recent acquisitions and future plans.
The company is bullish on further acquisitions in Spain, after its recent buy out of an insolvent bass and bream producer.
“We have a profitable business in Spain,” Glenn Cooke said, adding the country is ripe for consolidation.
Cooke Aquaculture also acquired salmon farms in Scotland, thus entering the UK market and positioning itself on Europe’s doorstep.
Cooke Aquaculture has also been a success story in Chile, becoming one of the most profitable salmon companies there.
“We will have close to a billion dollars in sales this year,” Glenn Cooke said, attributing the company’s success to total vertical integration, and it’s positioning on America’s doorstep.
“We control the entire value chain, down to logistics and mending our own equipments, boats,” he said. “We have our own cages, own nets – and we want to further develop our in-house feed production.”
The company gets the best price for its salmon as it does not have to fly in the fish from overseas, Glenn Cooke said.
Commenting on Marine Harvest’s move into feed production, Glenn Cooke said, “they are doing the right thing – feed is a key component [of the value chain].”
What plans for the future? “We see ourselves as integrators, so further acquisitions and acquiring more assets.”
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May 20, 12 pm EDT
Seafood as Natural Capital: going beyond the clichés
Golden hearts are all admirable, but the question asked in world economics is: why should investors sink money in fishery improvement projects (FIPs)? This issue and other related issues were delved into the Seafood as Natural Capital panel discussion at the forum.
Can investors or seafood companies really expect returns from putting money into developing fisheries, or should these be seen as simply CSR initiatives and ‘impact’ investments, IntraFish Media’s Drew Cherry asked the panel, and was answered from different perspectives.
Kelly Wachowicz, Partner at EKO Asset Management gave tangible examples where FIPs improves the lives [and fattens the wallet] of not just those directly working in it, but also for the investors in the long term.
EKO Asset Management Partners is one of the recipients of the Bloomberg Philanthropies foundation which has directed $53 million (€38.9 million) to combat overfishing. EKO Asset Management is to work with investors to fund fisheries projects that can demonstrate stock improvement in developing countries, in particular Brazil, the Philippines and Chile, both in artisanal and industrial fisheries.
Giving the example of small-scale fishermen in these three countries, Wachowicz highlighted the “vast inefficiencies” as they supply their local markets, which are characterized by poor infrastructure, thus stripping their catch of considerable value.
The plan is to upgrade such infrastructure so the fishermen can get higher returns for their efforts, and make the fish more marketable.
But this is easier said than done. Panelist Caroline Hermans, Head of Environmental Stewardship at Clinton Global Initiative, commented on the difficulty to get differing factions under a single umbrella.
“It is tough to get investors on board,” Hermans said. “On one hand there are those who want to fight for marine protected areas, and on the other, the industry people who want to get FIPs going.”
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May 20, 11.30 am EDT
The story of how Brazilians took to salmon
Brazil’s name came up more than once as a country of interest, both as a market and as a producing region for aquaculture. The story of how Brazilians got their first taste of farmed salmon was revealed by Marine Harvest’s VP Finance and Treasury Henrik Heiberg.
“After the crash in Chile production due to ISA, farmers had to harvest really small fish, which the American market did not accept,” Heiberg said. “These small fish went to Brazil, and thus emerged a strong underlying demand for salmon.”
Brazil was bigged up by Nutreco CEO Knut Nesse as well as a country with a "great future as an aquaculture nation."
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May 20, 10 am EDT
Just a pile of pellets – how difficult can that be?
Biomar’s Group CEO Torben Svejgard highlighted the industry investment in finding fishmeal replacements in salmon feed in the last 15 years.
“The industry R&D on fishmeal replacement cost more than $175 million,” Svejgard said.
The results are more than worth this investment, as he showed in his presentation.
“The global salmon farming industry saves $1.3 billion as a result -- not just in feed costs but in overall industry knowledge as well.”
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May 20, 9.40 am EDT
Driving change
Innovation and R&D aren’t just buzzwords that jazz up company presentations – in the case of the feed industry, these forces pushed through dramatic changes in the production value of aquaculture species, allowing these species to compete with wild-caught fish.
And it’s not just salmon that drives the global feed industry, representatives from both Nutreco and Biomar stressed.
“Right now there is 50-50 split in volumes between salmon and non-salmon feed,” said Knut Nesse, CEO of Nutreco.
“Shrimp production volumes are equal, even a bit more than salmon numbers, and together with tilapia is expected to double in volume in the next 10 years.”
Apart from species diversification, new production regions are something industry leaders are keeping a close eye on.
“Latin America, especially Brazil, is very exciting,” Nesse said. As is the whole continent of Africa, though there is an acute lack of technical knowhow that impedes any substantial production efforts.
This is where the technology and knowledge developed by feed companies can play a role in extracting value in potentially promising regions. “We are well positioned to transfer our knowledge to different sectors,” Nesse said.
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May 20, 9.15 am EDT
Innovate or stagnate
R&D is the backbone of industry growth, but this is not a seamless process -- often there are competing views about new raw materials, old prejudices to be overcome, and understanding the impact, if any, of final consumers in determining what goes into fish feed.
“I am a strong believer in innovation,” said Nutreco CEO Knut Nesse. “We need maximum freedom to formulate and innovate, as that is the main driver in the feed industry.”
R&D plays a “key role” Torben Svejgard of Biomar reiterated, which led Drew Cherry, IntraFish Media’s editorial director, to suggest people are often not aware how crucial a role fish feed plays in fish health.
This led to the debate surrounding GM products -- a divisive topic if there ever was one, especially in Europe.
“European consumers are not ready for GM feed,” said Marine Harvest’s Henrik Heiberg, “which is a paradox, as many imported products use GM in feed.”
Fish feed in Europe does not use GM components, at least in salmon feed, said Svejgard. “Perhaps people will begin to see the advantages of GM components in EPA and DHA.”
Cherry drew the discussion towards cheap filler meals such as blood meals and feather meals meat giant Tyson sells to fish producers, often at half the cost of conventional feed.
“Tyson is selling blood meals and feather meals at $750 per metric ton,” Cherry said. “Is this a raw material the feed industry will look at?”
These raw materials aren’t used in the salmon industry in Europe, but has been used very successfully in Chile, said Svejgard. “It is a very good material, but the question is, do the CEOs want to take this risk, especially if the conventional feed is well-accepted by customers?”
Heiberg, however, maintained there should be no compromise with feed raw materials.
“Do the consumers care what they eat?” Cherry asked “We HAVE to assume the consumer cares,” Heiberg replied.
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May 20, 8.45 am EDT
Marine Harvest versus feed producers
Marine Harvest’s move to dive into feed production ruffled quite a few feathers in the aquaculture value chain -- audience members at the forum witnessed Marine Harvest answer questions about industry reaction to this step.
“We are still the largest feed customer of the industry,” Marine Harvest’s Henrik Heiberg said. “But [the move into feed production] made sense from a cost point of view.”
The company’s feed plant in Norway promises “high efficiency” and “room for knowledge growth,” Heiberg said.
His views were countered by Biomar’s Torben Svejgard. “It is not a big surprise that the panel does not agree [with Heiberg],” Svejgard said.
“Producing salmon and fish feed are completely different,” he said.
Marine Harvest's feed production plant in Norway is due to open in June or July this year.
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May 20, 8.35 am EDT
Feed: ‘Part of the solution’
With a panel discussion named "‘Feeding the Blue Revolution," it would have been easy to slip into a comfortable zone of mutual back slapping and hand pumping, and mouth platitudes about the great growth percentages the feed industry has been seeing.
Not so from our panel of industry heavyweights; while panelists did highlight the financial health of the feed industry, they not mince words when thrashing out the multi-faceted challenges facing the industry.
“I personally believe in the future of the industry,” said Knut Nesse, CEO of Nutreco, parent company of feed giant Skretting. “It is part of the solution.”
Top line growth isn’t a problem for the feed industry -- it’s been growing at nearly nine percent year-on-year for the past several years to make it the fastest growing food industry in the world.
“The growth in the feed industry is higher than in the aquaculture industry,” said Torben Svejgard, Group CEO of Biomar.
But it is the high demand for aquaculture products such as salmon that drives the growth in the feed industry, Henrik Heiberg, VP Finance & Treasury at Marine Harvest, pointed out.
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May 20, 8.30 am EDT
Seafood industry leaders gather in New York City
The world's largest seafood companies and investors return to New York City for the IntraFish Seafood Investor Forum, at the Roosevelt Hotel in New York City, sponsored by DNB, Norway's largest lender to the seafood industry.
Top executives will discuss how investment opportunities in the seafood sector can play a key role in ensuring the security and sustainability of the world's food supply and meet other challenges.
Confirmed companies and organizations presenting include: Nutreco, Marine Harvest, High Liner Foods, Multiexport Foods, AquaChile, Paine & Partners, Permira, EKO Asset Management Partners, Biomar, Bakkafrost, Kverva, The World Bank, AGR Partners, the Clinton Global Initiative, Oceana Group and Cooke Aquaculture.
-- IntraFish Media
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