Tuna

Salmon prices, M&A drive growth of world’s top 100 seafood firms

There are some notable changes to our World’s 100 Largest Seafood Companies 2017 report, which saw salmon prices and acquisition sprees among the largest firms propel growth.

Our report ranks companies by size of seafood sales, which means that a handful of long-established firms — Japan’s Maruha Nichiro and Nippon Suisan Kaisha as well as Thailand’s Thai Union Group —  dominated the ranking’s top three slots for the fourth year in a row. The rest of the top ten was rounded out by some familiar names, most of which have remained the sector’s largest firms for years such as Mitsubishi, and OUG Holdings.

 

Many of these firms are Japanese conglomerates with major seafood holdings that make up a small share of their overall activities. Others are pure seafood firms that went the vertical integration route starting with fishing or farming and later moving into value-added production in their species of choice often on a global scale. Examples of this include what Norway’s Marine Harvest has done with salmon or South Korea’s Dongwon Enterprise has done with tuna.

However, sorting the top 100 by sales growth puts a new twist on the story. Unsurprisingly, the companies that saw the biggest year-on-year changes in their 2016 sales often benefited from higher salmon prices. Of the 11 firms that had growth rates above 30% — two firms, Norway Royal Salmon and Ecuador shrimp processor Santa Priscila each saw a 32% growth rate in 2016 — eight are highly concentrated in salmon farming. Much of the salmon firms’ growth can be attributed to the dramatic reversal in fortunes for that sector as the algal bloom disaster in Chile and sea lice issues in Norway in 2015 caused output cuts which sent prices soaring.

However, mergers and acquisitions (M&A) has also played a major part in sales growth for many of the firms that aren’t involved in salmon. Royal Greenland, which harvests and processes coldwater shrimp and Greenland halibut among other species, expanded in a big way in 2015, closing a deal for a majority stake in Canada’s Quin-Sea Fisheries.

Others such as Glenn Cooke, the Canadian seafood pioneer whose family owns Cooke Aquaculture and Cooke Seafood USA, have benefited from both better pricing and a furious pace of M&A that contributed to a whopping 90% growth rate. While still salmon-focused with farms in the US, Canada, Chile and the UK, the firms are a seafood conglomerate spanning aquaculture and wild-catch production across several species.

The completion of three major deals in recent months that weren’t closed in 2016 or only partially integrated — Cooke’s purchases of mini-conglomerate Icicle Seafoods, Uruguayan hake processor Fripur and Texas-based menhaden catcher Omega Protein — means that Cooke will almost certainly continue to rocket up the ranks of the top 100 report.

A look at the ten slowest growers, all of which saw sales slump between 5% and 23% compared to 2015, confirms two other trends shaping the seafood sector. The first is tougher times for value-added processors. The UK’s Young’s Seafoods and Canada’s High Liner Foods continue to see consumers shift away from breaded and battered fish. Both firms are transitioning away from this category but success has been limited to date. 

The second trend as of late has been that tuna remains a difficult business for some as volatile pricing and declining canned tuna consumption are taking a bite out of firms like South Korea’s Sajo Industries and Taiwan’s FCF Fishery. Sales for those firms fell 22% and 23%, respectively.

Other once mighty companies saw their sales slow as they are in the process of being dismantled. These include Icelandic Group, which owned major processing assets that have since been divested to several different players, and Hong Kong’s Pacific Andes International Holdings. That bankrupt fishmeal and fish oil-focused company will likely soon cease to exist in its current form if a sale of its lucrative Peruvian assets, China Fishery Group, is completed as planned. 


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