CIG’s Way to the End Market

pp 48-49

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pp 48-49In a stunning development Christian í Grótinum acquires Germany’s Larsen Danish Seafood to enter the top level of the seafood market’s value chain — while continuing to demonstrate leadership in the Faroese fishing industry.

Through a groundbreaking move that effectively brings the Faroese fishing industry to the forefront of the European seafood market, Klaksvík’s family business mostly known under the name of Christian í Grótinum (CIG) has once again showed its ability to reinvent itself. From running a pelagic fishing vessel equipped with refrigeration tanks back in 1999, through operating an advanced processing-at-sea concept applied to its two modern pelagic factory vessels, to its recent acquisition of Larsen Danish Seafood — the fishing company’s development trajectory is remarkable.

With Larsen Seafood, a well-established brand with sales throughout Germany and exports to some 50 countries, CIG leapfrogs into a position that is perfectly in line with its plans for the future, except for the fact that the timeline has been shortened by many years and the projected costs reduced dramatically.

Arising from an unexpected opportunity, the Larsen deal, with an undisclosed price tag, happened very quickly.

“We got word back in December [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][2014] that they were in a situation of financial distress,” said Bogi Rasmussen, the new CEO of the food manufacturing company, which has processing facilities in Flensburg and Bremerhaven. Mr. Rasmussen is a former sea captain and a managing partner in CIG together with brothers Jón and Eyðun and father Kristian Martin. Apart from owning and operating pelagic factory vessels Norðborg and Christian í Grótinum, CIG is also one of the main shareholders in the new Fuglafjørður-based freezing plant Pelagos.

“The news caught our attention since we have long been on the lookout for opportunities to bring our business closer to the end market; we would consider various options, including starting a pilot project in a closed-down factory in Klaksvík. However, we decided to contact the insolvency administrator in Germany first and he invited us to come over and have a closer look. We were given access to all relevant records and facilities so that we could make a fairly accurate assessment and evaluation of the whole package, and by late January we submitted an indicative offer.

“We knew other parties were also interested but we had no idea of what their offers would be like. We only made sure ours was thoroughly considered and included a realistic budget. Perhaps we didn’t really expect it, but it turned out we had the winning bid and already by 4th February we had signed the deal.”

‘A new chapter’

The acquisition indeed seems to make a great deal of sense for all parties involved, not least considering CIG’s sourcing capacity — a key factor, since Larsen Seafood’s failure last fall to fill major orders for shortage of raw materials was seen as the foremost reason for the insolvency that followed. Now with the new owners coming from the catch and preprocessing side, sourcing is not likely to become a major problem.

“The good thing with Larsen is it remains a strong brand,” Mr. Rasmussen noted. “The financial troubles the company experienced had nothing to do with product quality or customer service; they simply had the misfortune of not being able to source the necessary volumes of fish, and this is without a doubt something that our fishing company can help resolve successfully. Luckily, Larsen never went out of business and was operating normally while under bankruptcy protection. After taking over we immediately started contacting clients to reassure them and to inform them of what had happened; we’re confident that come next fall we’ll see at least some of those who, unfortunately, were lost last year.”

With around 250 employees in Germany, Larsen Seafood manufactures seafood products ranging from fresh chilled to canned to smoked to salted — largely convenience foods, pâtés and spreads. Species include mackerel, herring, sprat, trout, salmon, saithe, mussels, and more. While most of the products are aimed at consumers through supermarkets and retail chains, there is also a food services market in demand of larger units for e.g. preparing lunch sandwiches.

Then there is the contracting market, i.e. producers ordering the manufacture of specific products in specific quantities, typically under their own labels.

While the Flensburg plant has a production capacity of 80 million cans per year, the Bremerhaven facility annually processes some 3,000 tonnes of saithe and Alaska pollock. During 2014 the Norðborg and the Christian í Grótinum in total caught almost 80,000 tonnes of mackerel, herring, blue whiting, and capelin.

“Larsen Seafood opens up a whole new chapter for our business,” Mr. Rasmus­sen added.