Portland, Maine, U.S.A.-based North Atlantic Inc. is selling its stake in its Indonesian-based PT Bali Seafood International processing operation.
Jerry Knecht, the founder and president of both companies, will be staying on after the sale as a consultant to ensure the operation continues to follow sustainable principles, he told SeafoodSource. PT Bali Seafood had as one of its primary goals the aiding of fishermens' livelihoods in Sumbawa, Indonesia, by connecting their certified sustainable products with Knecht’s U.S. buyers.
“I cannot name the new operational partner at this moment as the transaction is very much in progress,” Knecht said.
A deal was established based on a commitment from Knecht’s side to buy some of the fish from the new owner.
“The other part of this is that they do things our way,” Knecht said.
Knecht said the plant’s sustainable credentials will allow it to continue to be available as a launching pad for community development.
The company's processing plant, opened after much delay in 2018, has remained closed for nearly a year due to the COVID-19 pandemic, but has been kept in turnkey condition, according to Knecht. Once the plant reopens, Knecht said he expects there to be a lag in attracting local fishermen back to sourcing high-quality tuna for the plant using sustainable fishing methods.
“They all had markets before we came, but these markets are not as lucrative. Fifty to 60 percent of the fishermen will come back, [but] we will have to lure [back] the other 40 percent,” Knecht said.
Original investors in the venture include Aavishkaar, the Indian impact investor, as well as Dutch multinational banking and financial services company Rabobank. Others have expressed an interest in coming on board, Knecht said, including the Impact Investment Exchange (IIX) in Singapore.
“There is mild interest by IIX as they are trying to invest impact bonds in the Indonesian sustainable seafood and [to] promote women and social impact,” Knecht said.
North Atlantic had a good year in 2020 due to increased demand for frozen product at the U.S. retail level – the firm’s sales rose 28 percent year-on-year. The company assisted seafood firms in Indonesia who preferred to deal with U.S. foodservice clients, as the barriers to entry are lower than for U.S. retail, Knecht said. When the U.S. restaurant business took a dive last year – a 70 percent decline, according to figures published by the Food Marketing Institute – Knecht saw there was “a lot of raw materials” available.
“We bought up stocks from suppliers looking for markets,” he said.
In the long-term, Knecht said those suppliers will need to adapt to American buyers’ habits, which have changed due to the pandemic. Knecht pointed to more demand for frozen product.
“They [consumers] don’t want to go out more than once a week now or every 10 days for shopping. Therefore frozen food demand has gone up in all of the big five so-called warm-water species [which are] tuna, swordfish, mahi, snapper, and grouper,” Knecht said.
Knecht is committed to Indonesia for the long-term, he said, and intends to develop supply chains and communications programs for local fisheries and processing plants seeking to export, “helping to change behavior in the water."
"We get them certified, into FIPs [fishery improvement projects], and we will handle management," he said.
As for the year ahead, Knecht sees market research pointing to a continued change at the U.S. consumer level, with a greater degree of acceptance of frozen seafood as consumers have learned to cook during lockdowns.
“People aren’t going to go to restaurants as much. Frozen product suits home-delivery, and the quality is built in. It’s very different from fresh salmon sitting in the supermarket display case all day,” Knecht said.
