In its latest quarterly report, Richmond, British Columbia, Canada-based Premium Brands Holdings Corporation announced several acquisitions that deepen its push into the North American lobster sector.
Premium Brands, which had CAD 98 million (USD 74.1 million, EUR 67.3 million) in earnings and more than CAD 3 billion (USD 2.3 billion, EUR 2.1 billion) in revenue in 2018, bought York, Maine-based Maine Coast Shellfish in September and Topsham, Maine-based Hancock Gourmet Lobster Co. in May. The new acquisitions will become part of Premium Brands’ North American seafood platform, which already includes Portland, Maine-based Ready Seafood, which it acquired in September 2018.
Premium, which has a range of holdings across the specialty food manufacturing and distribution industries, paid CAD 17.6 million (USD 13.3 million, EUR 12.1 million) for Maine Coast and around CAD 100,000 (USD 76,000, EUR 69,000) for Hancock Gourmet Lobster Co., with additional payments due if the company meets performance targets over the next two years. Premium Holdings also announced in its third-quarter earnings report the acquisition of Quebec City, Canada-based seafood distributor Viandex and the purchase of a 50 percent stake in North Delta Seafood.
“All of these businesses represent best-in-class operations and strengthen one or more of our existing businesses,” Premium Brands President and CEO George Paleologou said. “Looking forward, we continue to have an exceptionally robust pipeline of transactions we are working on and expect to close several more before the end of the year. We have become the acquirer or partner of choice for an increasing number of successful food entrepreneurs in Canada and the U.S.”
Paleologou said Premium Brands is in the midst of an acquisition strategy that will see it expand further into meat snacks, charcuterie, artisan sandwiches, cooked protein, and seafood, and will announce additional purchases as soon as the fourth quarter of 2019.
“We are in the early innings of executing our U.S. growth strategy and are very encouraged by our progress in opening new channels and markets,” Paleologou said. “Given the traction we are seeing in the U.S., I am more confident than ever in the ability of our meat snack, deli meats, sandwich, cooked protein, and seafood platforms to become billion-dollar platforms in the coming years and that we will substantially beat our targets of achieving CAD 6 billion [USD 4.5 billion, EUR 4.1 billion] in sales and a sustainable 10 percent EBITDA margin by 2023.”
Maine Coast President and CEO Tom Adams told SeafoodSource he will remain on as company president following the sale, and that the company’s operations will not be significantly changed following the transaction. He said he was approached by at least two private equity groups earlier this year, but chose to sell to Premium Brands because of the company’s vision for the lobster sector.
“Their strategy is to find leading brands within the sectors that they’re in – for us, that’s the lobster sector – and invest to take them to the next level,” Adams said.
Adams said he is already working with his counterparts at Ready Seafood to find synergies, and to optimize Maine Coast’s supply chain both for lobster sourcing and for exporting via Ready Seafood’s Canadian subsidiary, L Walker Seafoods, which is based in Nova Scotia.
“This was a way I thought the business could continue to grow and more easily access both supply and a customer base that would probably be more difficult to do alone versus as part of the larger organization,” Adams said. “I definitely see us expanding our footprint both in the U.S. and Canada with the help of Premium Brands and their affiliated companies. And we will continue to remain active in the export of lobster.”
Maine Coast’s business was shaken by the imposition of tariffs by the United States on both the European Union and China, which in both cases hit the lobster trade hard. Adams said the company was able to survive the trade wars by finding new customers, and that ability to survive had impressed Premium Brands. But the acquisition will allow Maine Coast to “go back into growth mode.” Adams said he’s ready and willing to work with his former competition at Ready Seafoods to enable that.
“I’ve always gotten along with and respected Ready. I considered them competitors but peers in the industry, and now there’s a great ability to collaborate with them when beneficial to both companies,” he said.
Adams said the continued consolidation of the lobster sector, which he said has always been “a very fragmented industry,” is a good thing.
“There’s healthy reasons for past fragmentation. It’s a fishery that mostly fished by independent operators, and it’s a hard business to consolidate,” he said. “But I think this is a new chapter, consolidation will continue to occur. Being a part of a large organization with strong buying power helps with supply concerns, and having resources to invest back into the organization is also good. That doesn’t mean just one or two companies will succeed. I think a few strong players will emerge as industry leaders, and I include us in that because I think our strategy is strong, but I think there will always be room for independants to operate successfully, and that having a combination of both will continue to strengthen the industry at the harvester level as well as the members of the supply chain.”
As far as supply goes, this year has been a down year for lobster catches in Maine, but Adams said he’s not concerned.
“So far, I’m viewing it as a one-off. Catches are good now but with the numbers of days left, it will be an off-year compared to the last few. But the overall health of the fishery is very strong,” he said.
Photo courtesy of Maine Coast Shellfish
