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Reeling in sales

North America's seafood suppliers positioned for growth

 - Illustration by Laura Lee Dobson
By Steven Hedlund
May 01, 2007

A favorable economic climate combined with increasing seafood prices and burgeoning seafood demand worldwide helped North America's Top 25 seafood suppliers reel in nearly $12.6 billion in 2006 sales, up about $1.3 billion from 2005, according to SeaFood Business ' annual Top 25 list.

Red Chamber Co., Trident Seafoods Corp. and Pacific Seafood Group are the leading firms fueling the $33 billion U.S. wholesale seafood business.

In addition to the Top 25 list and synopses of the Top 10 companies, this year SeaFood Business taps the insight of industry analysts, who paint a bright future for suppliers.

"Generally speaking, seafood companies are as healthy as I've seen them," says Tim Antilla, VP and senior relationship manager for Wells Fargo in Seattle, whose clients include seafood suppliers. "They're more efficient, better capitalized and more liquid than five to 10 years ago. They're very well positioned."

In addition to improving internally, seafood suppliers are growing organically, as well as through acquisitions and mergers.

The biggest transaction of the past year came in December, when Japanese seafood giants Maruha Group and Nichiro Corp. announced a merger, forming the world's largest seafood company, with about $8.4 billion in annual seafood sales. Maruha and Nichiro are Japan's No. 1 and No. 3 seafood suppliers, respectively. The country's No. 2, Nissui, owns UniSea and Gorton's, among other U.S. seafood suppliers.

The merger affected several Pacific Northwest seafood suppliers. Maruha owns Westward Seafoods, Supreme Alaska Seafoods, Alyeska Seafoods and Prime Pacific Seafoods, all of Seattle; Orca Bay Seafoods of Renton, Wash.; and Trans-Ocean Products of Bellingham, Wash. Nichiro holds Peter Pan Seafoods and Golden Alaska Seafoods, both of Seattle.

The merger, due to be finalized later this year, isn't expected to 
impact these seafood suppliers in the near term, say industry observers. But it's clear that the U.S. seafood industry is consolidating.

"There's a lot of liquidity in the financial market right now," says Jonathan Logan, managing director of North America for Glitnir, whose clients also include seafood suppliers. "The financial conditions favor borrowers and support increased consolidation."

As the retail food industry consolidates, so will the seafood industry, adds Antilla. "You need big companies to supply big retailers," he says.

The private, family-run businesses that have dominated the seafood industry for decades are thriving, while the food conglomerates that jumped into the business years ago have bailed out.

Only one food conglomerate, Del Monte Foods Co., owner of StarKist Seafood Co., remains on this year's Top 25 list. Just five years ago, five food conglomerates - ConAgra Foods, H.J. Heinz Co., Unilever, George Weston Ltd. and Aurora Foods (now Pinnacle Foods Group) - appeared on the list.

"The fact is that the food conglomerates are focused on uniformity and vertical integration, but the seafood industry is so fragmented," says Logan. "Most of the successful players [in the seafood industry] have strong access to the resource, and it's been a long road for them to get to that point."

"Seafood doesn't lend itself well to a neat, tidy balance sheet," adds Scott Etzel, a consultant with the agricultural industries department for Wells Fargo in Portland, Ore. "It isn't easy to predict."

However, acquisitions and mergers in late 2006 weren't quite as numerous as they were in early 2006, when a wave of deals were reached, including Trident netting Louis Kemp Seafood Co. from ConAgra Foods, Nippon Suisan USA buying F.W. Bryce and Rich-SeaPak Corp. purchasing WorldCatch.

"Consolidation may not continue at the same pace," says Antilla.

Also contributing to suppliers' continued financial success is high seafood prices. Pacific halibut, king salmon and American lobster are species fetching a pretty penny.

Plus, European whitefish supplies are tight, strengthening demand for Alaska whitefish such as pollock and Pacific cod, says Etzel. The dollar is depreciating and the euro is appreciating, making it less expensive for Europeans to buy U.S. seafood.

Thanks to the protein's healthy profile, demand for seafood is rising globally, particularly in the United States, where the growing baby boomer and Hispanic populations are fueling seafood consumption.

Methodology

Ranking seafood suppliers by annual sales is an inexact science. SeaFood Business asked company officials to share financial information and reviewed public companies' annual reports. We contacted about 35 companies to narrow the list to our Top 25. Some companies declined to participate this year, and those companies' sales figures are carried over from the previous year, which is denoted by one asterisk (*). Companies that fail to disclose sales figures for two consecutive years are removed from the list. Other companies prefer to provide us with a sales range, and, in that case, we use the median of the sales range, which is indicated by two asterisks (**).

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