Seafood processors seeking alternative markets after losing share in Europe

December 7, 2010 12:15

 Leading local seafood processing companies are looking for alternative markets to penetrate with new products, after losing their market share in Europe during an almost one-year ban on Malaysian seafood by the European Union, reports with reference to The Star Online.

Golden Fresh Sdn Bhd, for example, is now targeting new markets in the Middle-East, North Africa, Brazil and Russia, while Texchem Resources Bhd (TRB) subsidiary Texchem Food Sdn Bhd is eyeing China and Japan.

Golden Fresh senior commercial manager Rosy Ng told StarBiz that the company was currently developing business alliances with seafood companies in the Middle-East to tap the markets in the United Arab Emirates (UAE), Lebanon and Kuwait.

We are also following potential leads in North African countries such as Algeria, Tunisia and Morocco as well as exploring opportunities with Brazil and Russia.

Last year, Brazil imported seafood products with an estimated value of US$285mil, while an estimated US$1.63bil of seafood entered Russia.

Malaysia soon, she said.

In line with its strategy to enter new markets and recapture market share in Europe, Ng said Golden Fresh had recently engaged Scottish chef, John Redding, to develop new products.

We have recently rolled out new products such as skewered prawns, kapitan prawns, chilli-flavoured squid chips and squid chunk. These are premium range of products, which are able to yield better margins to offset the high cost of raw materials.

The company has also recently established marketing offices in the UK and France to increase its market share in Europe.

Before Europe banned seafood exports from Malaysia in 2008, Europe contributed about 30% to the company's revenue.

When the ban was lifted in 2009, the European market's contribution shrank to about 8%, as the majority of our customers sourced frozen seafood products from our competitors in Thailand, Vietnam, and Indonesia, Ng said.

From July 2009 to July 2010, Golden Fresh's exports to Europe was about 300 tonnes, compared with about 2,000 tonnes during an identical period before the ban in 2008.

After losing its market share in Europe, Golden Fresh has since focused on increasing exports to Australia, which now generates about 50% of the company's revenue, compared with about 40% before the ban.

Golden Fresh is investing about RM10mil to raise its production of frozen seafood products to 12,000 tonnes in 2011 from 9,000 this year.

TRB chairman Tan Sri Fumihiko Konishi said that Texchem Food planned to further tap the markets in China and Japan with high-quality fishmeal products to be produced in the east coast of Malaysia and in Indonesia.

We are planning to establish in 2011 a high-quality fishmeal processing plant in the east coast of the peninsula and two similar plants in Indonesia in 2012.

The markets for high-quality fishmeal products are in China and Japan, Konishi said.

He said Texchem Food had also recently signed a memorandum of understanding with China National Chemical Fibre Corp (Sinofibre), a wholly owned subsidiary of China Hi-Tech Group Corp (China Hi-Tech), appointing Sinofibre the sole importer of Texchem Food's seafood products in China.

Konishi said the company planned to export 3,900 tonnes of seafood products, with an estimated value of RM30mil, to China next year.

Konishi said the figure was expected to increase to about RM50mil in 2012.

In 2012, contribution from China to Texchem Food's revenue would reach about 35%, up from 25% in 2011.

China ranks as one of the world's largest importers of seafood products, buying over US$3bil worth of seafood products from overseas annually, he said.

Konishi said the European market was huge, as Texchem Food used to export some 4,000 tonnes of squid and cuttle fish products just to Italy alone before the ban on Malaysian seafood.

Last year, TRB outsourced its seafood-processing activities to Thailand and Vietnam following the EU ban on Malaysian seafood in June 2008, so that it could continue its seafood business with Europe.

Malaysian Frozen Food Processors' Association (MFFPA) secretary Saw Hai Earn said that shortage of raw materials was still major problem for seafood companies exporting to Europe.

At present, there are only 16 aquaculture farms, out of over 1,000 in the country, certified to supply the 18 local seafood companies exporting to Europe.

The alternative is to source the raw material from Indonesia, Thailand or Vietnam, which is also a costly solution, as there are logistics and packaging costs, he said.

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