Sector Report – Seafood

Seafood producers are being forced to focus more on adding value as consumers become wealthier and have less time to cook. HA THU and the Asian Agribiz team spoke to some industry leaders.

Thai Union is just one of the big seafood conglomerates that are being forced to compete in the value-added market, as tuna and shrimp prices decline.

Thai Union CEO Thirapong Chansiri (left) and Rittirong Boonmechote.

With a value of around USD 13 billion, this segment dwarfs the frozen raw seafood market in Thailand, which is estimated to be worth just USD 650 million. To seize on this potential, Thai Union has introduced its first domestic brand, Qfresh.

Qfresh’s processed seafood is targeting urban consumers with busy lifestyles so they can quickly prepare quality and healthy dishes for their families. It also trades on its safety and sustainability credentials, and takes an innovative approach to processing and storage. By doing so, it can make sure that freshness and nutrition are maintained without flavor enhancers and preservatives.

Thai Union anticipates that Qfresh, which is sold through its online store and modern retail channels, will be worth over USD 32 million in sales by 2022.

Thai Union’s Qfresh seafood focuses on quality, safety and sustainability.

“In line with growing seafood consumption, Thai Union sees a huge opportunity in bringing fresh and premium seafood to Thai consumers at affordable prices,” said Rittirong Boonmechote, who is in charge of global frozen shrimp and seafood sales at the company.

Investing in innovation

Since 2015, Thai Union has been working with Mahidol University on the development of new recipes and packaging to add more value to its business.

Tunyawat Kasemsuwan

Tunyawat Kasemsuwan, Thai Union’s Global Innovation Director, said this investment in research and development has resulted in some unique products, such as pasteurized yellowfin tuna slices in biodegradable transparent packaging that saves space. The packs feature easy-peel lids and a resealable and recyclable single-serve cup that contains wild-caught tuna, along with a built-in fork.

The company has also opened a tuna oil refinery plant in Germany to bring to market premium tuna oil, which it also uses in its processed seafood.

“Looking forward, innovation will play a bigger role in our business and contribute positively to revenue growth,” said Dr Tunyawat.

Value-added milkfish

Being one of the Philippines’ leading seafood processing firms, Fisher Farms has been making headway locally and in export markets with its value-added products that feature milkfish.

Imelda Madarang

“We’d like to be known as the ‘king’ of value-added,” said Chief Executive Imelda Madarang.

Indeed, the bulk of Fisher Farms’ offerings are ready to cook, as these generate higher margins than raw products. Current global and local market trends have been prompting the company to develop more of these lines.

“We currently have over 500 SKUs representing over 100 distinct products, most of which are high-value-added,” she explained, adding that they are always looking to introduce more.

Even before she took the helm at Fisher Farms, Ms Madarang was familiar with the growing trend towards value-added seafood, especially in other regions. At the same time, Filipino consumers have been calling for healthier and more convenient options.

“The trend here is being driven by millennials and younger consumers, albeit at a price-point suitable for the D-E market of the Philippines,” she said.

Value-added producers embrace automation

More Vietnamese producers are embracing new processing technology to improve efficiency and make their value-added seafood plants more productive.

They are also aware that the HACCP, ISO and BRC certifications needed by American, European and Japanese markets require improved working conditions, though these can be costly to introduce. Still, to meet the requirements, they are increasingly switching to automated processing.

Vietnamese shrimp producer Minh Phu is currently building two new factories with a combined annual capacity of 80,000 tons. Around three-quarters of all their processes will be automated.

Nguyen Van Quang, Minh Phu’s Chairman, said human resources are scarce in the seafood sector, and manual labor is costlier than automated processing lines.

Minh Phu will also bring in artificial intelligence to further reduce labor costs. It aims to increase productivity by reducing the time it takes to sort shrimp, while also accurately calculating ingredient quantities and developing production plans.

Efficient production

As Fisher Farms’s lines grow in number and its sales increase, the company has been overhauling its machinery. Production is now highly automated and uses conveyors to reduce the need for human handling.

It is also about to install descaling and splitting machines at its milkfish plant. Once installed, the only manual labor needed will be for deboning and packaging.

Chief Executive Imelda Madarang has created an “Operations Engineering Management” group to focus on technology and facilities management. Besides presiding over the upgrades, the group will also improve existing information management systems and install new ones that are compatible with the arrival of new technology.

“In a business like this, logistics is very important, and in order for us to further improve our systems and processes, we have installed an inventory management system that interfaces with our current systems,” she said.

Packaging

Fisher Farms is downsizing and repackaging its products.

In response, Fisher Farms is now downsizing and repackaging products for both export and local markets, with a clear rationale.

At home, offering both value-added single-serve and smaller-pack lines will save much needed storage space in Filipino fridges. To this end, Fisher Farms now has ready-to-cook products that are affordably priced from USD 1.33-1.90.

Smaller packs also make it easier to attract export consumers who might be wary of trying new and unfamiliar products. Ms Madarang pointed out that this is especially true for milkfish, which is not a well-known species outside of the Philippines, Taiwan and Indonesia.

Her company has also been moving towards more affordable packaging that draws consumers’ attention. It is now using colorful material, with graphics that make it easy for consumers to identify flavors, nutritional facts and how to prepare the products.

Qfresh seafood is available through Thai Union’s online store and modern retail channels.

Raising exports

Malaysia’s Golden Fresh plans to increase exports to 17,000 tons/year by 2023. For this, a new 41,000-sqft production plant and a 7000-ton cold storage facility will be completed in Penang this year.

The company has a tradition of delivering value-added varieties, including breaded fish fillets, marinated prawns, battered squid rings and seafood pastries. These are currently sold in 26 countries, and are expected to penetrate more markets over the next few years.

Golden Fresh recently received an award to recognize the convenience of its prawn with  Thai hor mok coconut sauce. It can be quickly microwaved or oven-baked without thawing and is served with zero waste.

Two years ago, it’s Pacific West branded Kuro Prawn was recognized in Belgium, for the dining experience, innovation, nutrition and market potential.

Not less important, in 2005 Golden Fresh became the first seafood company in Malaysia to be awarded the Marine Stewardship Council’s Chain of Custody certification. Since then, its products have been introduced to food service and retail markets in Australia, Britain, France, South Africa and Singapore.

Automation in South Asia

In India, Abad Fisheries has invested up to USD 3.65 million over the last two years to automate production of its breaded products, pastries and dumplings.

“There are very few manual processes involved in overall production,” said Gibin George, Abad’s Project and Factory Manager.

In Sri Lanka, Taprobane Seafood Group set aside over USD 1.5 million two years ago for new machinery and factory upgrades that will increase capacity and automation, said Director Dilan Fernando.

Given that labor costs are comparatively low in Bangladesh, S Humayun Kabir, a former Director of the Bangladeshi Frozen Foods Exporters Association, said there have been no huge investments in automation there.

“Automation is not really effective across all divisions, but some producers have adopted it because demand for seafood with better labor standards has been rising. In turn, costs will automatically increase,” he said.

Further processing

Further processing

Nguyen Van Quang

During the VietFish seafood exhibition in Ho Chi Minh last year, Asian Meat Magazine observed that Vietnamese seafood producers and exporters were promoting more value-added lines.

Nguyen Van Quang, Chairman of Minh Phu, believes higher profit margins from value-added seafood have been tempting fellow seafood exporter to enter the market.

“That is why we will see more seafood producers invest in further processing facilities in the coming years,” Mr Quang said.

Half of Minh Phu’s overall production consists of value-added seafood. The company is now building two new new plants to keep up with growing demand.

Pushing for added value

Fisher Farms’ natural fish sausages.

The Indonesian Fishery Product Processing and Marketing Association has been encouraging its members to focus more on ready-to-cook and ready-to-eat seafood.

Budhi Wibowo

“Both the domestic and export markets for these are growing. In Indonesia, breaded shrimp, shrimp tempura, seafood nuggets, fish balls and shrimp dumplings sell the most. Overseas, cooked shrimp continues to record a double-digit growth,” said Budhi Wibowo, the association’s Chairman.

Akbar Febriansyah, Customer Support Manager for Indonesia at Multivac, notes that many producers are still exporting more raw frozen and basic processed seafood.

Akbar Febriansyah

“The sad thing is that some international buyers only repack these with better and more attractive packaging, and then sell them at higher prices,” Mr Febriansyah said.

“So now is the time to move on. Indonesia has been left behind by countries like Thailand in the value-added category. At Multivac we are ready to support new processing systems and product innovation, design and packaging.”

After inspecting a sample of supermarkets in Greater Jakarta, Asian Meat Magazine found that the ready-to-cook segment is now seeing more brands and varieties. At the same time, just a handful of brands are offering ready-to-eat seafood, including shrimp dumpling soup and fish and shrimp meatballs with packed seasoning.

Thai Union banks on r&d for innovative new lines.

Prominent growth

Value-added seafood has grown in prominence in India over the last five years as many producers invest in manufacturing shrimp and fish-based ready-to-cook and ready-to-eat packs.

Abad Fisheries is the only seafood company headquartered in Kochi to supply value-added seafood. Half of its production comes in value-added formats—a figure it intends to increase in the future.

Abad’s Project and Factory Manager, Gibin George, said its most popular lines are breaded fish, burgers, nuggets, pastries and dumplings. These are made from imported fish and spiral and tunnel-frozen for a shelf life of up to a year.

Golden Fresh’s new facilities in Penang will be completed this year.

Though it currently only supplies local customers, Abad has been given an export license and hopes to start sending shipments overseas in the next year. The company has HACCP and FSSAI certification, and all its 20 factories across India are EU-approved.

Mumbai-based Fazlani Foods is another Indian value-added seafood producer, selling GMO-free marinated local prawns in vacuum packs. These are marketed as being additive, preservative and gluten-free. They are also certified to BRC, ISO 22000:2005 and halal standards.

Added value dominating

Humayun Kabir

According to S Humayun Kabir, a former head of the Bangladeshi Frozen Foods Exporters Association, close to 80% of Bangladesh’s seafood factories have moved into value-added production. Almost two-thirds of Bangladesh seafood supplies now comes in this category.

“We see that demand for ready-to-cook products is greater than ready-to-eat products,” he said, adding that this could be seen as a reflection of consumers preferring to eat seafood cooked at home rather than on the move.

Though the demand for value-added seafood is high, there is still only limited supply of raw materials, Mr Kabir cautioned.

Under development

Dilan Fernando

Sri Lankan seafood producers are slowly stepping into the value-added market, with raw products still accounting for a 60% share overall. Moreover, there is little room for growth, even though seafood can be eaten by all religions.

“Sri Lankan consumers prefer unfrozen seafood, their perception being that frozen seafood comes from old and low-quality fish, though this is completely wrong,” said Dilan Fernando, Director of Taprobane Seafood Group.

At the same time, most Sri Lankan seafood is exported in raw form, and trades on its quality and freshness.

Mr Dilan said his company is moving toward more value addition, though it does not yet produce ready-to-eat meals.

“To stay ahead of competition and to be able to pay more for our labor, we need to move into value-added seafood,” he added.

Roshan Fernando

Taprobane, which specializes in blue swimmer crab, produces pasteurized crab meat in 226g plastic cups. Though Mr Dilan says this line is now “90% value-added”, the company intends to embark on completely value-added production in the near future, once it begins supplying ready-to-eat crab cakes to the American market.

Meanwhile, Tropic Sri Lanka is moving in this direction too. Executive Director Roshan Fernando said: “Our company’s strategy to improve the competitiveness in the market is by piggy-backing on more popular meats like chicken, beef and pork, and substituting them with value-added seafood to target the cultural and religious sectors of the community.”

Smoked Pure Milkfish received taste awards last year.

Of Minh Phu’s total production, half is value-added seafood.

Semi-automation in Indonesia, Vietnam

Value-added seafood requires a certain level of process automation to ensure quality and safety, according to Budhi Wibowo, Chairman of the Indonesian Fishery Product Processing and Marketing Association.

“Seafood producers have automated their processes because they want to reduce their production costs given the increasingly high cost of labor,” he said, adding that producers have been embracing increasing automation for skinning, sorting, sizing, weighing and packaging.

However, Akbar Febriansyah, Multivac’s Customer Support Manager for Indonesia, said its processes are actually semi-automated since some operators are still required.

“I haven’t seen a fully-automatic seafood processing plant with robotic systems in Indonesia,” said Mr Febriansyah.

“On the one hand, full automation offers higher productivity, better food safety and traceability. But it is costly, with returns typically taking 7-10 years to come through.”

In addition, it takes time for machine suppliers to design the necessary pick-and-place robotic systems to cater for seafood products with specific textures.

Not everything can be automated

However, it is not feasible for all processes to be automated, according to Nguyen Thi Thanh Binh, a seafood processing specialist at the Industrial University of Ho Chi Minh City. Though some factories have invested in automation, the equipment available is not completely reliable.

For instance, shrimp shell peeling is preferred when it is done manually, while breading and shrimp deveining cannot be carried out by machines. Moreover, some demanding markets still require the human touch.

“Whether to use automatic processing lines or not depends on the needs of the market. Japan, for instance, prefers to buy seafood that is carefully prepared manually. Most of these items are high-quality and value-added,” she said.

Malaysia’s Golden Fresh has automated its value-added seafood processing.