Japan’s Yokohama Reito and Norway’s Hofseth International are set to buy Norwegian trout farm Fjordlaks Aqua for NOK 1 billion ($120 million). The two companies, who had established an alliance last year, are coordinating the purchase through a joint venture named HIYR. Family owned Fjordlaks will be split into two entities, with the trout farming business sold to HIYR, and the klipfish producing business kept under the original ownership of the Pedersen family. While current sales volume for Fjordlaks is unavailable, in 2014 the company experienced a 19.6% decrease in year-on-year revenue, down to NOK 350.31 million.
Established in 2001, Hofseth International is a rapidly growing salmon farmer and marketer- in 2014, the company reported NOK 412.33 million sales in the EU and NOK 500.78 million in the U.S., with sales in Europe up nearly 20 times those of the year prior.
In early 2015, Hofseth announced a new focus on the Japanese and Australian markets. CFO Ola Holen stated, “Our model in the past (has been to) find a partner in markets and take it on with them. A focus for this now is Japan and Australia. We have partners in both of these markets and are putting a focus on growing sales in these countries.”
Hofseth’s partnership with Yokohama Reito was announced in December 2015. The Japanese company, which operates through cold storage and international trade of fisheries and processed agricultural products, is a natural strategic fit for the Norwegian producer. In addition to the newly added capacity for sales of trout through the Fjordlaks acquisition, the partnership has also allowed Yokohama to begin to develop online sales of supplements made with salmon oil.
As global demand for fish continues to grow despite the availability of wild catch being extremely limited, the industry has responded exclusively through the increase in aquaculture production. In the last 20 years, while wild catch output has remained largely unchanged, aquaculture production has more than doubled, and currently represents nearly half of fish consumed globally. While the vast majority (nearly 90%) of aquaculture production is concentrated in Asia, production areas in Norway and Chile are focused on the production of higher-end carnivorous fish such as salmon. Together, the two countries accounted for nearly 70% of global aquaculture production of salmon and trout in 2014.
According to FAO data, production of salmonid (carnivorous fish including salmon and trout) has increased over the long term (6.9% annually over the last 25 years) and the short term (6.7% annually over the last five years). Growth in the large production areas of Norway and Chile is above the world average, with 5-year annual growth at 7.2% and 9.5%, respectively. This constant growth translates to nearly a three-times increase in output since 2000.
A major hurdle the salmon industry will struggle with is the decreasing availability of fishmeal, a key component in carnivorous fish feed. As shown in the graph below, in the same time period that salmonid production has increased greatly, global production of fishmeal has declined. While some plant-based alternatives to fishmeal have been suggested, nutritional requirements of the fish have limited their feasibility.
Cargill’s acquisition of global salmon feeder, EWOS for €1.35 billion in August 2015 is indicative of the importance being placed on feed for the global salmon feed. Apart from making salmon feed with traditional marine inputs, the company is producing salmon feed using vegetable-based proteins, specifically soy protein concentrate, through a sustainability initiative.
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Eric Francucci