With its Feb. 13 deal for German seafood distributor and marketer Deutsche See, Netherlands-based fishing and processing firm Parlevliet & Van der Plas (P&P) takes a step further downstream and closer to retailers.
A few years ago P&P was firmly based upstream, but with a series of acquisitions has headed closer to the market in a number of different species; pelagics, whitefish, and shrimp. It has fishing operations in tuna too.
“For P&P it’s the next big step which puts them on the map of European processing,” Daniel Frijns of M&A advisor Oxeye Advisors told Undercurrent News. “It’s making a big transformation from fishing to packaging and selling to the retailer.”
He identified strong synergies from the deal when it comes to the retail market; something Diek Parlevliet also confirmed to Undercurrent.
“Our ongoing strategy is to be close to the market. With [shrimp processor] Heiploeg [International], P&P is close to retail, and there’s lots of synergies there in terms of supply channels from the fleet to sales, and with distribution costs,” he said.
Fryns noted Deutsche See has a strong position on the German retail market, and he said he expected there to be “cross-selling synergies” there for Heiploeg. “The combination of Heiploeg and Deutsche See should be helpful; it means you can ‘fill the complete seafood shelf’ for the retailer, as one supplier.”
At the same time, Heiploeg is more international, and more Europe-oriented, “so that may help the other way as well”.
Generally, retailers “set the rules” when it comes to supply deals, Frijns said. “That’s completely different from what trawler firms are used to – they catch and sell to processors, they have the strong position. Selling to retail is the opposite.” P&P’s position as a supplier of a wide variety is a strength, though, he said.
Torben Foss – director with PricewaterhouseCoopers in Norway – told Undercurrent there weren’t many firms large enough to consolidate the way P&P has, but those that are are taking a “very wise” step in covering more parts of the value chain.
“They are able to see the whole picture, they reduce risk, and they control the whole process from catch to retail, and actually to the consumer now with Deutsche See. My opinion is that this is a wise step for P&P.”
P&P already has whitefish processing operations on-board its fleet, owned via a joint venture with Iceland’s Samherji, UK Fisheries. Deutsche See represents its first step into whitefish processing on land, and at scale. Again, this should fit within the supply channels it has built between fleet and retail, Parlevliet said.
“What we tend to see more on the continent is more like the UK retail model; the retailer decides who supplies raw material to which processor,” said Frijns. “That’s typical for Tesco and some others in the UK, and its getting more common on the continent.”
He hypothesized that seafood companies may be looking at that trend and looking to vertically integrate, rather than be told who to buy from, who to sell to. “You can keep the whole chain under control; it means more margin for the manufacturers. Making the supply chain completely transparent to retailer leaves less room for profit ‘sticking’ somewhere.”
He added this has been a good development which is making the seafood category more professional, and perhaps means greater margins to the manufacturers; something in which the seafood category tends to lag behind other proteins, he said.
Parlevliet, meanwhile, said he was excited to be going into business-to-consumer sales for the first time. Deutsche See has a fleet of home delivery vehicles and has been increasing its online sales, the firm said at the North Atlantic Seafood Forum in 2017.
Parlevliet said P&P would simply allow the firm to continue the work it has been successful in thus far.
More to come?
Parlevliet told Undercurrent that in terms of further vertical integration, the company remains on the lookout for opportunities both up and downstream.
At the present time it has no interest in looking to tuna processing, though, he said. The pelagic, whitefish and shrimp catching business did a deal for a majority stake in French tuna fishing fleet Compagnie Francaise du Thon Oceanique in 2016.
He also noted there was no intention to expand into processing outside of Europe. At present P&P has fishing operations off Africa, and has operated in Australian fisheries, but each step into processing has been within Europe.
“Our processing is concentrated in Europe as this is where the majority of our market is. We want to be as close to the market as possible,” he said.
He also gave no comment on the stories that P&P are involved in the sales process for China Fishery Group.
“We have seen this sort of move from upstream to downstream before, mainly in salmon,” observed Frijns. “Marine Harvest is the clearest example, they were the first and most prominent ones to do the growing of salmon and also process and package it for retail.”
A further source, based in the M&A sector, noted “you don’t often see companies doing both the upstream and downstream activities”.
“I can’t yet say it’s a trend, but I think quite a few more salmon farmers are thinking about it. Leroy is doing it too, to a more limited extent, with some smokers selling direct to retail.”
More deals like it wouldn’t come as a surprise, Frijns said. “Seafood is a difficult species, can be more tricky to trace – or at least retailers can be more suspicious of its supply chain. Whitefish can come from everywhere, so it may be helpful if you have the whole chain under one ownership, you can secure retail and guarantee where it came from. That’s definitely a benefit when dealing with retailers.”