UG: Senecrus was the first one that we bought just a little more than a year [ago]. The second one was CenSea, which is getting closer to a year now, and we just recently closed Koral, which is the Polish brand. As we speak, we're exploring two more brands in the US and one more brand in Europe.
UG: We are over-indexed on growth, as you can imagine, because the thesis that we carry is that this is a commodity... and in any commodity business, scale is what wins you the superpower, and we continue to scale rapidly.
We believe this is just day zero, from a size standpoint. We are around $600-$650m in terms of our annualised quarterly revenue update... we continue to grow 50% to 60% every year, and we hope to get around the $1bn mark in terms of revenue in this financial year, that's the current calendar year.
UG: It's a little bit earlier than that, we are aiming for an IPO in 2025, so the process is just about getting started. I think the logic rationale is that largely the large question marks that one would have around the business model, profitability, scalability... I believe they have some convincing answers at this point in time. We have the comfort to have ourselves scrutinised in the public market. India is a logical market for us to aspire for in terms of getting a stake.
UG: Yes, we are profitable the last two quarters, so the profitability has become very steady. We are clocking anywhere between $5m to $6m of quarterly costs at this point in time, and every quarter we are seeing implemented profitability.
In terms of equity fundraise, yes, we continuously are in discussions on equity fundraise given that we are looking at growth opportunities in terms of acquisitions, as we speak... we are just in a process of closing a pre-IPO round, the private round, which should be the precursor to the IPO that we are contemplating.
UG: US and Europe are the most important markets and continue to be so in the next three-to-four-year horizon. The US currently is around 60% of the market and will be in that ball park, in Europe around 30-35% in the next four to five years. On balance, we are also in the Middle East and some parts of South-East Asia, but from size of opportunity, US and Europe are clearly dominant.
UG: We are not looking to enter any new markets. We are going deeper into the existing markets. When I say deeper, we will be unlocking a few more channels in the current, existing markets. We are very strong on the foodservice trend in the US, we are looking to unlock the retail channel.
On the other side, we are also unlocking more and more species in our offerings portfolio. We're strong in shrimp, we're strong in salmon... We will double down on species like tuna, species like white fish, in the next 12 odd months.... that's the line of thinking, where on one axis we go expand the product portfolio, and on the other axis we go deeper in terms of channels, adjacent channels, in the existing markets.
UG: Foodservice is not as much a focus at this point in time in Europe.
In Europe there are 20 large retail logos that typically make up for 80% of the overall consumption. We are today having access to seven of them. The idea is to expand the logo access that we have. Also, from a market standpoint our presence is largely in central/eastern Europe and Germany, and some parts of western Europe. So southern Europe is something that we are looking to get our exposure up through acquisitions.
UG: Actually, it plays to our advantage. While the market is quite large, if you put things in perspective, seafood is as large as beef or poultry or pork from a global opportunity standpoint.
Where we see opportunity is that, if you take poultry for example, the largest player is a $50bn giant, like Tyson. If you take the largest player in fish and seafood, it's a $6bn or $7bn play... If you take the top five players in fish and seafood, there are less than a couple, [making up] less than 4% of the overall global market share, whereas in pork, the top five players make up for 20-25% of the market share.
There's something that's unique about [the] seafood industry, which means that there is this amount of fragmentation that's still there in this industry, which is the opportunity that we see.
UG: It's the structure of the company, and... some overall business model standpoints. We call ourselves a multi-species, multi origin, vertically-integrated platform in seafood.
This multi species [element] essentially unlocks the entire seafood basket as a... opportunity for us. If you take the largest player today, let's say Mowi, which is a specialist in salmon. While fish and seafood is a $450bn industry, salmon is a $40bn, $50bn industry, which means their addressable is a fraction of the overall opportunity. Similarly, there is shrimp, which is $40-$50bn, tuna is $30-40bn. Given the way we are looking at this industry, which is from a consumer standpoint rather than a supply standpoint, our addressable is much larger.
The second distinction is that we are... equally focused in the Indian Ocean, Atlantic Ocean. We are not as much focused, but we have the competency set to expand assets into the Pacific. In a way, we are origin-agnostic, compared to the incumbents who take a very asset-heavy approach, whereas we take a very asset light approach for supply aggregation.
These two things really make the difference in terms of our ability to consolidate versus the incumbents' ability to consolidate, which is the ability to look at the consumer standpoint of the market and ability to unlock supply from any part of the world, which is technology-led, rather than hard assets-led.
UG: We are looking at acquiring more brands which have specific value propositions to a specific segment of the market. It could be in retail; it could be foodservice. In terms of market presence, it could be registered in the US or south-east US... That's one way of looking at it.
The other way of looking at it is in terms of the whole species focus, something complementary to the basket we have today, the few things I hinted [at] were tuna, white fish.
The third is... we are looking at competencies that will help us in terms of this whole innovation product basically pushing the product mix up the valuation curve. Brands or teams that have done better work on those competencies, we would love to get them on board.
UG: In the next six to nine months.
UG: I'm the largest shareholder, but I don't own the majority. I own around one fifth of the company, four fifths are with institutional investors, names like Accel, Tiger Global Management. There is also [a] meaningful proportion of 5-6% which is for the management in the form of ESOPs (Employee Stock Ownership).
UG: One portion of our business is to manufacture for private-label brands of chains like Jeronimo Martins, Lidl, etc.
Private label is reasonably big for us... I would put private label [at] $200m, so that's close to one third of the business. If you look at the growth in the next 12 odd months I think private label is expected to grow much faster given the visibility that we have on certain large contracts.
UG: In a market like Europe there is a shift that's happening from the fishmongers' counters to retail chains. Particularly, if you go to the south of Europe... in Valencia, Malaga, all of these cities now you see a lot more shift towards retail channels where the fish is sold through traditional channels and even within these channels there is this whole movement from commodity shift to standard prepack varieties.
I think convenience is a large driver for some of these shifts, and as these shifts [happen] there is scope for private label, there is scope for a supply chain player like us, specialised in being present across the value chain and being able to provide the necessary service set to support a private label brand.
UG: To take a long-term view, I think seafood is a pretty secular growth sector. Given the underlying consumer dynamics there is a clear shift from red meat to seafood that's playing out. But if you take a short-term view, there are affordability shocks, inflation, supply chain disruptions because these are longer supply chains.
If you force me to hazard a guess on the outlook in the short term, it's what I would call it as one to three years, the industry is going to consolidate without much growth because of the short-term factors like inflation, affordability etc., but in long term this is an industry that definitely has a lot of fundamental sectors supporting growth.
That's the opportunity, and the challenge is that as you make this commodity more and more affordable, you broaden the base of consumption... Given the kind of cost pressure that is going to play out in [the] near term, the fact that we have presence across the value chain and we have levers to optimise the cost structure, we see this as an opportunity where maybe we can provide better cost performance and hence help ourselves in terms of incremental market share.
""We believe this is just day zero from a size standpoint" - Captain Fresh on becoming "principle player" in seafood" was originally created and published by Just Food, a GlobalData owned brand.