Cod Supply at Historic Low
“The supply of cod is at a historic low due to a large cut in quotas in the Barents Sea, so the supply has not covered the entire cod market and is simultaneously putting pressure on other species. There are cuts in mackerel quotas and there has been little capelin in recent years, so pelagic fish has also been in short supply.”
Today, Iceland Seafood is a respected and leading company in its industry, serving the world’s major seafood markets. The company is among the largest exporters of fish products from Iceland and a key player in processing of high-quality seafood products for the Spanish and Irish markets.
Rapid Change
Ægir Páll says that the nature of Iceland Seafood’s operations requires that it constantly meet the challenges posed by changes in international markets and external factors.
“The environment in which we operate is international and can change rapidly. To meet this, we have invested abroad in primary processing and value-added processing to strengthen our position in certain parts of the market, for example, our investments in shrimp processing in Argentina and in salmon processing. The company’s success in foreign markets is explained by its proximity to the market, strong employees and access to quality products from Icelandic producers.”
Ægir Páll says that sales are going very well today, and the reason is not least the lack of white fish, which is driving sales.
According to Ægir Páll, prices have risen significantly in the last fifteen months and, as previously mentioned, this is mostly due to shortages caused by large quota cuts, especially for cod in the Barents Sea.
“My feeling is that product prices are going to stay high for some time unless something changes significantly on the supply side with larger quotas. As things stand today, I don’t see any signs that this is changing.”
Strong Relationship with Icelandic Producers
Asked which markets have been strongest for Iceland Seafood recently and where he sees the greatest opportunities, Ægir Páll answers: “It is these traditional cod markets that have been the strongest, and not only in cod but also in other species that are then used to fill the gap left by the reduced supply of cod. For Iceland Seafood, this is the Southern European market along with the UK, the US and France, as well as markets in Eastern Europe for pelagic fish.
“The challenge today is to be able to supply our customers in these markets with fish so that the demand continues to be there. With such limited supply, it is difficult to build new markets and add customers. At Iceland Seafood, we see opportunities in salmon alongside an increased supply of it in Iceland and have been working to increase sales of it through our sales network and then differentiated as Icelandic salmon.”
According to Ægir Páll, long-term business relationships are very important. “The strength of the company lies in the strong relationship with Icelandic producers and the reputation that their products have in markets around the world. Customers want to secure those products.
“Icelanders have been known for quality, reliability and delivery security. That is our main competitive advantage and it is very important that we do not lose it by relaxing the factors that create this good image that “Icelandic fish” has. If this image is damaged and/or if Iceland increasingly becomes a raw material exporter of fish, it is my opinion that the export value of Icelandic seafood products will decrease in the long term and everyone will lose from this development.”
Asked what the main challenges are in operating an international fisheries company today, Ægir Páll replies: “The biggest challenges, looking at our company, are that there is enough supply to serve our markets and existing customers. Keeping prices competitive with other proteins and then there are world issues, what is happening in them and what impact they have on the economy and consumer behavior. Fluctuations in the price of salmon are also of considerable importance to us and can affect the company in the short term.
“Exchange rate fluctuations can greatly determine which market is most profitable to sell the products to, interest rates have a direct impact on all consumption as well as increasing inventory costs and then transportation costs have a direct impact on the final selling price.”
Key Growth Opportunities
When asked where the main growth opportunities lie for Iceland Seafood, Ægir Páll answers: “The main growth opportunities are continuing to build on the strong foundation the company has today and strengthening it, so that we can better serve our markets and suppliers. Working closely with both producers and customers to strengthen the value chain.
“The growth of salmon farming in Iceland is an opportunity for the company and we have started to market salmon separately as Icelandic, as I mentioned. There we can use the foundation the company is built on and the sales network we have built for almost a century. But this can only be done in cooperation with farming parties.”
Asked whether the increased emphasis on sustainability and traceability in food has affected Iceland Seafood’s operations, Ægir Páll replies: “The external regulatory environment has been gaining weight in this area and greater demands are being made on companies to provide information, we feel that, but regardless of these demands, great emphasis has always been placed on these aspects at Iceland Seafood.
“Sustainability and traceability have long been important in our relations with customers and have therefore been a constant element in our operations. Traceability is also very important for us to limit fraud on the origin and type of product, that fish from other countries is being sold as Icelandic and mixed with other fish species, as is known.”
Source: VB (in Icelandic)