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Top Story: Bottom dollar
The Top 25 North American seafood suppliers had a strong 2008, but the future is in question
By James Wright
January 01, 1900
Recession, recession, recession. The weakened U.S. economy continues to dominate boardroom and dinner table conversations. Businesses are scrambling to generate revenue at a time when consumer confidence is the lowest in a generation.
Times may be tough, but the seafood industry should remain healthy, financial experts say. And, according to SeaFood Business’ annual ranking of the Top 25 North American seafood suppliers, sales for many of the continent’s biggest seafood companies grew in 2008. The ranked companies netted $11.45 billion in sales last year, a slight decrease from the $11.6 billion posted in 2007.
But what can be expected for 2009, when all signals point to a deepening recession? As consumers eschewed real or perceived luxury foods or simply traded down to less-expensive items, seafood sales in North America showed signs of dipping toward the end of 2008 and into 2009 as the global financial crisis hit the fast track.
The challenging economic climate has ushered in a mindset of tepid optimism. Several suppliers contacted by SeaFood Business said that a slight decrease in sales in 2009 — or even breaking even — wouldn’t be the grave disappointment it might have been in years past. However, despite the obvious obstacles, many see a down economy as an opportunity to increase market share or to reach out to new customers with new products.
Regardless of where the economy goes, there is comfort in the fact that people still must eat and that seafood’s healthful profile remains attractive.
“There are segments of the industry that will always be vulnerable, but overall it won’t be hurt too badly by the recession,” says Paul Schuldiner, senior VP of Wells Fargo Business Credit’s purchase order finance department. “Higher-priced items will be negatively impacted as people retrench and cut costs, but the industry should be able to hold its own.”
Schuldiner says disciplined businesses survive and prosper during lean times, even now with diminished availability of credit and insurance.
“I think ‘09 is going to be a challenging year. Like with any business, there are pockets of opportunity, but I think [companies are] going to have to be watching gross margins and speculative positions, buying closer to order instead of stocking inventory, and operating leaner,” Schuldiner says.
Seafood sales during the recession have been shifting to retail (see What’s In Store). For years, a majority of the seafood consumed by Americans — up to two-thirds — has been at restaurants. But the trend is gradually reversing as more consumers, especially those with young families, opt to prepare more meals at home to save money.
“I think seafood companies offering a modestly priced product with consistent quality, or a consistently priced and predictably available product that retailers can feature, will do well,” says Andy Gould, president of New York-based merchant and investment banking firm Arthur P. Gould & Co., which works closely with seafood companies.
“Seafood companies that can offer product clearly derived from a sustainable resource will do well — not only because of the marketing advantages of sustainability, but because of the basics of availability, predictability and product consistency that sustainability brings.”
Howard Johnson, president of seafood consulting firm H.M. Johnson & Associates in Jacksonville, Ore., says recent Consumer Price Index data from the Bureau of Labor Statistics show retail price points are hurting seafood.
“All the indicators show, based on what I’ve seen, that seafood is getting priced out of the [retail] market for cheaper proteins,” Johnson says, adding that casual dining, a major foodservice segment for seafood, is “hurting.”
“Restaurant sales were down in general, but retail sales were not spectacular either,” says Eric Bloom, president of shrimp importer Eastern Fish in Teaneck, N.J., which is ranked No. 19 on this year’s list. “[Retailers] are under pressure to keep inventories low and margins high.”
With greater attention on low-cost, shelf-stable products, canned tuna suppliers had a good year in 2008, as the “big three” tuna brands — Bumble Bee, Chicken of the Sea and StarKist — posted a combined $146 million year-over-year sales gain. According to numerous sources, the jump was not due to an increase in volume, but instead to tuna prices staying high; suppliers passed increased costs on to their customers.
The recession has also been kind to manufacturers of value-added frozen seafood portions or meals, including High Liner Foods of Lunenburg, Nova Scotia. The company’s sales increased 123 percent in 2008 on the strength of its acquisition of Fishery Products International’s value-added frozen seafood business in late 2007. High Liner vaulted from No. 20 on last year’s list to No. 6 on this year’s list, but the FPI acquisition was not the only reason for the company’s success, says Henry Demone, president and CEO.
“As expected, we saw a lift in sales in our retail businesses,” says Demone. “Perhaps more consumers are eating at home in light of the economy, but we are also executing our business plan with discipline.”
Tri Marine International ( 1 )$1.15 billion | Bellevue, Wash. | www.trimarinegroup.com
Tri Marine is foremost a tuna supply company that captures and processes yellowfin, skipjack and albacore tuna, while offering logistics, quality assurance and other consultation services. The company supplies the nation’s top three canned tuna brands, among others, and operates 12 purse seiners and seven processing plants in Columbia, Ecuador, China, Kenya, Mauritius and Solomon Islands, in addition to a mackerel, sardine and squid processing plant in San Pedro, Calif. Tri Marine also operates sales offices and charters several reefer carriers worldwide. Founded in Singapore in 1972 by a federally owned group of Italian companies, Tri Marine was bought by its current shareholders in 1986.
Trident Seafoods Corp. ( 2 )$1 billion | Seattle | www.tridentseafoods.com
BRANDS: Arctic Ice, Louis Kemp, Portlock, PubHouse, Pure Catch, Rubinstein’s, Sea Alaska, SeaLegs, Silver Lining, Trident
Last year wasn’t quite as busy for Trident Seafoods in terms of acquisitions, when compared to the flurry of transactions the Seattle giant closed in 2007. Last fall, Trident partnered with Russian pollock harvester Gidrostroy Holding Co. to harvest, process and distribute pollock from the Russian Far East under the trademark Russian Certifish™. Trident has diversified its product mix to include species like tilapia, swordfish, mahimahi, wahoo and langostino lobster to go along with its staple Pacific Northwest species. Trident maintains a fleet of 30-plus fishing and at-sea processing vessels and a network of more than a dozen land-based processing facilities from Newport, Ore., to St. Paul Island, Alaska.
Bumble Bee Foods ( 3 )$900 million | San Diego | www.bumblebee.com
BRANDS: Beach Cliff, Brunswick, Bumble Bee, Clover Leaf, King Oscar, Orleans, Snow’s
In the biggest transaction of 2008, Connors Bros. Income Fund of Markham, Ontario, in September sold its operating subsidiaries, including the Bumble Bee canned tuna brand, to Centre Partners Management of New York for $423 million. A favorable currency exchange rate aided the brand’s sales last year, continuing the steady growth Bumble Bee has posted in recent years. The company was founded in 1899.
Thai Union International ( 4 )$820 million | San Diego | www.chickenofthesea.com
BRANDS: Chicken of the Sea, Genova, Sealect, Xcellent
Thai Union’s Chicken of the Sea brand was the only “big three” U.S. canned tuna company not to undergo a change of ownership in 2008. The supplier acquired the Ace of Diamonds canned seafood brand for about $200,000 last fall. Thai Union International obtained 100 percent ownership of Chicken of the Sea International, founded as California Tuna Canning Co. in 1914, from Tri Marine International and Edmund Gann in 2000. In 2003 it acquired Empress International of Lake Success, N.Y., one of the nation’s largest shrimp importers, and launched Chicken of the Sea Frozen Foods in 2006.
Nippon Suisan USA ( 5 )$740 million | Redmond, Wash. | www.nissui.co.jp/english/
BRANDS: F.W. Bryce, Gorton’s, King & Prince, Mrs. Friday’s, UniSea
Sales for Nippon Suisan USA dipped $10 million from 2007 to 2008. The company’s last major acquisition came in April 2006 when it added seafood importer and distributor F.W. Bryce of Gloucester, Mass., to its portfolio. Owned by Nippon Suisan Kaisha, or Nissui, Japan’s second largest seafood company behind Maruha Nichiro Holdings, Nippon Suisan USA has a major U.S. presence with Gorton’s of Gloucester, Mass., King & Prince Seafood Corp. of Brunswick, Ga., and UniSea of Redmond, Wash., all in the fold.
High Liner Foods ( 6 )$616 million | Lunenburg, Nova Scotia | www.highlinerfoods.com
BRANDS: Fisher Boy, Seafood Selects, Solo Selects, Captain’s Cut, Captain’s Classics
High Liner’s strong results in fiscal 2008 reflected a full year of contributions from the late-2007 acquisition of Fishery Products International’s North American value-added frozen seafood business. The publicly traded company avoided credit deficiencies despite the nationalization of Icelandic bank Landsbanki, one of three lenders under the company’s working capital credit facility. High Liner is now Canada’s largest seafood company and one of the top suppliers of seafood to the U.S. foodservice market with products like value-added shrimp, salmon, tilapia and pangasius.
American Seafoods Group ( 7 )$600 million | Seattle | www.americanseafoods.com
BRANDS: American Pride, Frionor
American Seafoods Co. is the nation’s largest harvester and at-sea processor of Alaska pollock and hake, holding approximately 45 percent of the catcher-processor share in the U.S. Bering Sea. The company exited the catfish business in September when it sold the biggest U.S. catfish processor, Southern Pride Catfish of Greensboro, Ala., to Heartland Catfish of Itta Bena, Miss. A management group led by Chairman Bernt Bodal in 2006 purchased American Seafoods Group from Centre Partners Management of New York for nearly $82 million. The management company had acquired American Seafoods Co. and Frionor USA in New Bedford, Mass., in 2000.
StarKist ( 8 )$560 million | Pittsburgh | www.starkist.com
In another big transaction, Del Monte Foods Co., which acquired StarKist in 2002 from H.J. Heinz Co. of Pittsburgh, last summer sold the iconic seafood brand to Dongwon Enterprise Co. of South Korea for $363 million. Dongwon is maintaining an office in Pittsburgh for StarKist, which posted a modest sales gain of $16 million in 2008. StarKist, which has focused its marketing efforts on the health aspects of tuna, donated 10 cents for every pouch of tuna sold in February to the American Heart Association’s Go Red For Women campaign to fight heart disease.
$513 million | Jacksonville, Fla. | www.beaverfish.com
Beaver Street Fisheries ( 9 )
BRANDS: HF’s Outstanding, Island Prince, Island Queen, Marquis, Pair of Dice, Sea Best, Sea Best Gold, Sea Est
Founded 60 years ago as small retail seafood outlet, Beaver Street Fisheries has become one of the country’s largest seafood importers and wholesalers, bringing in product from more than 50 countries. The company’s repacking facility is certified by the Aquaculture Certification Council, which audits seafood farming and processing operations according to the Global Aquaculture Alliance’s Best Aquaculture Practices. Beaver Street last year launched the Sea Best Gold brand, with a supporting Web site at www.seabestseafood.com.
Ocean Beauty Seafoods ( 10 )$423 million | Seattle | www.oceanbeauty.com
BRANDS: Ocean Beauty, Sea Choice, Echo Falls, LASCCO, Three Star, Nathan’s, Icy Point, Pillar Rock, Pink Beauty, Port Clyde, Neptune
Ocean Beauty, which sources product from around the world, is back in the top 10 for the first time since 2004. The company operates nine distribution facilities across the Western United States, supplying retailers and foodservice outlets, as well as seven production facilities in Alaska. The supplier boasts proximity to some of Alaska’s key fishing grounds, including the Copper River. Ocean Beauty is also the largest smoked salmon processor in the United States, according to its Web site.
Associate Editor James Wright can be e-mailed at email@example.com
Ranking seafood suppliers by annual sales is an inexact science. SeaFood Business asked qualifying company executives to share their financial information and reviewed public companies’ annual results.
Trident Seafoods of Seattle reported 2007 sales of more than $1 billion but did not disclose its 2008 sales. For companies that choose not to participate, their sales carry over from the previous year, but for only one year; companies that do not participate two consecutive years are removed from the list.
Therefore, this year’s list is nearly as notable for who is not on it. Three of the industry’s biggest companies declined or did not respond to requests seeking information, including the company that has anchored the No. 1 spot for the past three years: Red Chamber Co. of Vernon, Calif. One of its known subsidiaries, Tampa Bay Fisheries of Tampa, Fla., reported its results and ranked No. 16 with $305 million in sales. Red Chamber’s annual seafood sales are estimated to exceed $1 billion, having posted $1.016 billion in sales in 2006.
Two other large companies also failed to respond to phone calls and e-mails seeking their sales figures: Pacific Seafood Group of Clackamas, Ore., and Maruha Nichiro Holdings, a Japanese conglomerate with its U.S. headquarters in Seattle. The participation of Red Chamber, Pacific and Maruha would represent up to $3 billion in additional sales, dramatically changing the landscape of the Top 25 list.
Rich Products Corp. of St. Simons Island, Ga., which markets the SeaPak brand of frozen seafood, provided a sales range of $170 million to $200 million. Therefore, the median of the sales range was used.
Otherwise, the Top 25 list stayed fairly intact from last year. Odyssey Enterprises of Seattle posted $176 million in sales in 2008, earning the company a spot in the rankings for the first time.