December 6, 2016

Denmark’s BioMar announced that it has agreed to acquire 100 percent ownership of Chinese fish feed company, Haiwei through BioMar-Tongwei Biotech, its 50/50 joint venture with China’s Tongwei.

The deal is expected to increase BioMar-Tongwei Biotech’s volume by 60,000 tons per year while also giving BioMar greater exposure to the top end of China’s aquaculture market.

Haiwei has been owned by Tongwei for three years and during that time Tongwei has been successful in turning Haiwei around, with the company generated revenues of more than US$42.7 million last year, reports Undercurrent News.

“We are very pleased to have concluded this agreement on behalf of BioMar-Tongwei,” said Carlos Diaz, CEO of BioMar Group. “Haiwei has a very good reputation among fish farmers and we will continue to build on the Haiwei brand and carry on with the company setup.”

In addition, given Haiwei’s geographic location in the south of China near Macau – a key aquaculture region, the addition of the company aligns with BioMar’s growth strategy according to the company.

Turning Tide

The end-game of China’s aquaculture industry has shifted according to Feed Navigator. For years the goal was to produce fish at the lowest cost, however, the business model has changed along with the growing affluence of more discerning consumers.

BioMar vice president, Asia and business relations, Niels Alsted told Schouw & Co. that as consumers turn their back on fish that contain heavy metals or are produced in an unsustainable manner, resulting in demand for more expensive and premium products reports Feed Navigator.

Indeed, China is now the world’s top producer, consumer, and processor of fish according to the paper, China’s Aquaculture and the World’s Wild Fisheries, produced by a research team led by Stanford Professor, Rosamond Naylor and postdoctoral student, Ling Cao. Over the past two decades, China’s fish production has increased by 300 percent, with three-quarters of that production originating on fish farms reports Stanford News. This growth, which has reached 30 million tons each year, translates to correlated growth in demand for fish feed.

Growing to Meet Demand

To meet this demand, BioMar-Tongwei is also constructing a premium fish feed plant in Wuxi, China near Shanghai that will add an initial capacity of 50,000 tons per year to the company’s existing production from its site in Chengdu in south central China. Once operational in the second half of 2017, the Wuxi plant will have the potential to expand its annual output to 100,000 tons.

The Wuxi and Haiwei plants will be approximately 1,300 kilometers apart and will be dedicated to producing different feeds for the different species produced in each region, with feed being produced for hot water species such as seabass and snakehead in the south and cold water species such as trout and sturgeon in the north. Diaz explains how the Haiwei acquisition fits into this model, saying, “Haiwei facilitates us with a fully operational factory which already at this point in time can provide for the important market in the southern part of China,” Diaz told Undercurrent News.

He goes on to say, “BioMar balances on three legs: the salmon market in the North Sea region and Chile, several other species in the rest of Europe, and emerging markets, which comprises Asia. The latter constitutes the biggest potential for growth, and with the acquisition of Haiwei we are further speeding up the growth in China.”

—

Lynda Kiernan