With world population growth and a trend toward healthier diets, the global demand for seafood has jumped way past the available supply from both wild and farmed finfish and shellfish species.
For innovative seafood companies this means favourable market dynamics and opportunities for growth.
Ian Smith, Clearwater Seafood’s chief executive officer, said his company is doing well because of its ability to create value in its wild-caught seafood products and customer service. Ensuring the delivery of high-quality products to customers around the world, adapting products to meet a customer’s specific needs, investing in new technology, and ensuring the safety and comfort of employees are key.
Smith addressed the St. John’s Board of Trade during a luncheon at the Comfort Inn Hotel in St. John’s Sept. 29. Presenting partner for the event was the Canadian Forces Liaison Council.
“The chief challenge for us, is how do we get access to more supply?” Smith said during an interview following his presentation.
“The demand is there. We have the global footprint to market, sell and distribute, and so we are focused on growth through getting access to more seafood. And we are focused, of course, on our core businesses — high value, premium and super premium shellfish and crustaceans. That’s where we can add value.
“We are looking at opportunities to grow in Canada, but also internationally. Everywhere, when we think of growth, people think of acquisitions. It’s really not just about making acquisitions. A lot of our growth is happening through joint ventures, partnerships, harvesting contracts and royalty agreements. And we are open for business, and we are looking for like-minded companies that want to partner and create value in the fishery.”
According to its website, Clearwater has over 1,400 employees in its offices, plants and vessel operations in Nova Scotia, Newfoundland and Labrador and other parts of the world.
It operates on a concept of from “ocean to plate” in that it owns fishing quotas, vessels and processing facilities, including plants in Grand Bank and St. Anthony. Its products include scallops, lobster, clams, cold water shrimp and crab.
“It goes back to you are just not selling raw material — what I call the rates and dates game,” Smith said.
“It’s not about rates and dates. You take (for example) one of our customers, a major global cruise line. Their question on our lobster business was ‘what’s the price?’ You tell them what the price per kilo is or per pound, and they would say that’s too expensive. But when we actually stopped speaking just to the buyer and went and talked to the marketing folks and the operations folks within the business, we found out what problems they were trying to solve. How much room do they have in the galley on a ship to cook with? How much money are they trying to make per dish? Thus we were able to understand their business model and to come back to them and offer a product format that sits beautifully through their operations network. Whereas the cost of the product itself was outside of what they wanted to pay, the labour savings, the costs savings in terms of not having the same amount of waste to dispose of, all played into their decision. Now they are a regular major customer that buys hundreds of thousands of pounds from us.
“So it’s a focus on solutions and value service. The key is not just selling seafood, but provide the service. If you go and see a buyer and you have a conversation about what the price per pound is, that’s all that the conversation is going to be about. We like to elevate the conversation.”
Clearwater operates a 10-vessel traditional and state-of-the-art factory fleet managed from the company’s fleet office in Lunenburg, Nova Scotia. The latest of these ships, the Belle Carnell, was welcomed to the fleet at the St. John’s waterfront in July.
Smith noted the ship creates 70 additional year-round jobs and expands the processing operations at Grand Bank. The ship will harvest Arctic surf clams, cockle clams and propeller clams year-round primarily in the waters of the Grand Banks.
One of the challenges in operating such vessels, Smith said, is maintaining qualified crew in the midst of a competing and growing offshore oil and gas industry.
“It will sail with a crew of 37. Most of them are technicians operating multiple pieces of equipment on that vessel. Most of the manual labour is really out now, and so we need qualified seaman. A lot of them have gone through the school at MUN, so they come with some training, and we train them as well. We provide extensive training and they are operating equipment worth millions of dollars. So, we have to figure out how to be able to retain them because once they are trained they can go work just about anywhere, particularly in the offshore, so our salary levels are set to compete in that environment.”
“And also in terms of the class of our vessels, the size of our vessels, the amenities on our vessels, young men and women don’t want to go to sea and have issues around their safety. Or issues around their comfort. And when they go to sea, they still want their Wi-Fi and Skype and email. It’s the new offshore.”
Smith noted the average salary on a scallop trawler is upwards of $100,000 per year.
In 2016, Clearwater will celebrate 25 years of operating in Grand Bank. The facility in the Burin Peninsula town processes about 500,000 pounds of masago (roe) and 10 million pounds of arctic surf clams, cockle clams and northern propeller clams annually, in a 52-week operation.
“In Grand Bank we’ve invested millions of dollars. It’s a purpose-built facility. It has 120 employees but still highly automated,” Smith noted. “We have patented software in there, high-speed optimal grading lines, automated packing equipment. The Belle Carnell is going to increase the through-put through that facility by 30 per cent. Our biggest challenge is finding labour.”
The plant in St. Anthony employs about 200 processing and quality assurance staff who process about 5.5 million pounds of cold water shrimp each year.
St. Anthony Basin Resources Inc. (SABRI) was formed in 1997 as a local economic board to help manage shellfish resources and create employment in the area.
“In St. Anthony we are a smaller player in inshore shrimp and crab. We’ve been a partner in the offshore with SABRI for over 20 years now and we’ve just renewed a 10-year agreement with SABRI,” Smith said.“We are committed to the community in St. Anthony. We are hoping with the (expected) return of the northern cod stocks, St. Anthony — beyond doing shrimp and crab — can become a cod processing facility again. And Clearwater is prepared to make that investment to make St. Anthony a world-class processing facility and we won’t need any government money to do it.
“The catch word here is ‘patience.’ There’s no sense jumping the gun and conservation has to be our number one concern. When (the stock) is ready, we’ll be ready. The No. 2 concern is planning. In order to bring a high-value product to land it and then make it attractive to the global consumer, there’s going to need to be significant investment in both new vessels, gear and the at-sea and onshore processing capabilities, as well as the logistics network in order to maximize the value out of that fishery when it comes back.
“We have to be competitive globally, not compete with the next cove.”
Photos by Glen Whiffen.
Clearwater Seafoods Reaches Deal To Purchase Leading UK Shellfish Company
In a bold move aimed to help Clearwater Seafoods boost its product supply to meet growing global market demand, the Nova Scotia-based seafood company announced October 9 an agreement to acquire 100 per cent of the shares of Macduff Shellfish Group Ltd. — a leading shellfish company in the United Kingdom.
The 98.4 million pound (about $195 million Canadian) deal was expected to close Oct. 30.
Clearwater says the acquisition provides an immediate 20 per cent expansion of supply (about 15 million pounds) of high quality shellfish including scallops, langoustine, whelk and crab. It also opens up access to key distribution channels in multiple markets including the U.K., Italy, Spain and Portugal.
Ian Smith, Clearwater Seafood’s chief executive officer, said the acquisition brings together two of the world’s leading and fastest growing vertically integrated wild shellfish harvesters.
“The transaction will allow Clearwater to integrate its vessel management and sustainable harvesting practices, innovative processing technologies along with its global sales, marketing and distribution footprint into Macduff, a company that already possesses a talented local management team, excellent resource assets and a strong presence in the EU, the world’s largest and most valuable seafood market,” Smith said in a news release.
“Our companies have been building a working relationship for more than three years and we are confident Macduff represents a highly attractive investment with a strong strategic fit for Clearwater.”
The purchase price includes 94.4 million pounds, plus approximately four million pounds in seasonal working capital debt.
In addition, there may be additional consideration paid in the future dependent upon on the future performance of Macduff.
Euan Beaton, President of Macduff Shellfish Group, said the agreement benefits both companies.
“This deal is great news for our operations in the UK, bringing investment and access to new markets within an extremely successful and respected business,” Beaton said. “It provides learning and development opportunities for our staff as we share best practice with Clearwater and it gives fishermen access to more markets.”
In the deal, Clearwater will acquire Macduff’s 14 mid-shore scallop harvesting vessels and production plants in Mintlaw and Stornoway, Scotland. The U.K.-based business specializes in scallops, langoustines, whelk and crab, has sales of approximately 52 million pounds and trades globally, employing over 400 people at the seasonal peak.
