Seafood Delights: Surging Forward in the High Seas Mr. Anthony Maingot worked in the tourism industry in the Caribbean f o ra number of years. His wealth of experience in this industry showed him that hotels in Jamaica and the wider Caribbean lacked a consistent, high quality supply of the healthiest protein available - seafood. After several years of experimenting with differing business models to satisfy this market niche, in 1995, Mr.Maingot was finally able to fulfil his long-awaited dream. He created the company, Seafood Delights to supply the domestic and foreign markets with all of their seafood needs. Company's Early History In the first five years of the operations of his company, Mr. Maingot sourced seafood (Butter Fish, shrimpa n dlobster) from fishermen in Suriname. He also developed dedicated supplier relationships with selected groups of fishermen inJamaica. In addition, during this timethe company established markets forits products in Jamaica and several Eastern Caribbean countries. Company's Performance Over the past twenty years, Seafood Delights las proven tob e a resounding success. From athirty- person operation, most of whom were involved in the processing and distribution operations located in an old warehouse in downtown Kingston; the company has evolved to become the Caribbean's largest supplier of premium quality seafood. Mr. Maingot significantly expanded the range of seafood that hiscompany offers. Seafood Delights currently offers 20 different types of fish, shellfish, shrimp and exotics (clams, conch, squid and mussels). In order to ensure the consistent supply of seafood, Mr. Maingot established dedicated relationships with fishermen beyond Suriname and Jamaica. In 2000, he established the company, Launa Seafoods, located in the island of Launa off the coast of Costa Rica.This company operates four fishing boats and works closely with 30 fishermen to catch, process and export a variety ofseafood products. Most importantly, Mr. Maingot ensures that this company and all fishermen he employs use sustainable fishing practices. Seafood Delights currentlyhas two large, state-of-the-art processing centres strategically located in Kingston and Montego Bay. These facilities are HACCP, EU and FDA-approved. Hence, Seafood Delights could export its products in any narket il chooses. The company also boasts a highly trained processing team of 175 persons who work assiduously to provide customers with the highest quality product. These products are packaged for distribution by a team of 60 persons. Seafood Delights specialises in a variety of packaging techniques to freeze and capture as much freshness in its products as possible. All of these packages are attractive and use the company's well-recognised logo. Seafood Delights also has a highly developed distribution network. It boasts two state-of-the-art cold storage facilities and a fleet of 35 refrigerated vessels that ensure the company is able to deliver its products to customers in Jamaica in a day's time. Its factories and warehouses are located besides the major ports in Kingston and Montego Bay. Thus, with the assistance of its shipping partners, Sea Freight and GGC, the company is able to deliver products to overseas markets, quickly and at competitive rates. Its main export markets are in the Eastern Caribbean and USA, which in 2015 accounted for 30 per cent and 15 per cent of its total sales, respectively. The majority of its sales are in the local market, Jamaica. Over the last twenty years, Seafood Delights has experienced a transformation of its organisation structure. It has moved from a simple structure to a functional one. The company currently has a managerial team consisting of 20 highly trained and experienced persons, who operate in areas such as finance, export marketing, production and logistics. This managerial team, located in the company's new headquarters at Ocean Front, Kingston is responsible for the company's phenomenal success. They have recently engaged in concentric expansion. In 2014, Seafood Delights opened a restaurant that specialises in Jamaican seafood cuisine in Montego Bay. A year later, the company engaged in line extension: it began to process and market products such robammy and frozen vegetables for sale to local restaurants. With the exception of the company's two latest initiatives, Seafood Delights has enjoyed unprecedented financial success with profits increasing from J$ 5 million in 1995 to an astonishing J$ 150 million in 2015. The Fishing Industry of Latin America and the Caribbean The Fishing Industry of Jamaica The Fisheries Division of the Ministry of Agriculture, established in 1949, is responsible for the supervision of the fishing industry of Jamaica. There are currently 20,000 traditional (artisan) fishermen operating about 9,000 boats from 184 fish landing sites and three offshore cays in Jamaica. There is a relatively smaller but economic significant industrialfishery for conch and the Caribbean spiny lobster. With the exception of the industrial conch and lobster, all other fisheries operate on an open access basis. Hence, not surprisingly, with the exception oft h e conch fisheries, all fisheries in Jamaica are considered to be in a state of over exploitation. The fish caught are sold to higglers and other entrepreneurs, whonormally come fromvillages close to the fishing beaches. Fishing is not a highly profitable industry. Many fishermen in Jamaica face problemswhich include privacy (stealing of their catch), overfishing, pollution (garbage, sewage and industrial waste), a lack of modern storage facilities and low catch. Not surprisingly, manyof them supplement their income through farming and other employment. The Fisheries Division has attempted to alleviate these challenges by selling and dispensing subsidised outdoor motor fuel to fishermen. Recognising the challenges facing the local fishing industry, Mr. Maingot sought to complement his sources ofsupply ofseafood. To thisend, he secured supplies from Latin America where the industry also faces several challenges. The Fishing Industry in Latin America and the Caribbean The fishing industry in the Latin America and Caribbean (LAC) region is employment intensive with rates of employment doubling over the last 3 decades. While the South American region has experienced declining trends in the number of fish caught since the mid-1990s, in the Caribbean this figure has been increasing. Indeed, it averaged 2 0million t o n e s in 2006. The increase in the number of fish caught is a result of technological development, increases in the size of the fleet used, expansion of fishery workforce, the exploration of new fishing grounds and the impact of government subsidies. Yet, during the last decade, in many of these countries the most importantfishing grounds are considered to b eattheirmaximum level o fexploitation. Indeed, the fisheries in the LAC region are subjected to overexploitation, habitat degradation and unintended catches and discards. However, little has been done to address this issue because of the technical inadequacy (human and logistic) of the Fisheries institutes in the region. The Firms in Jamaica's Seafood Industry Seafood is sold by various entities in Jamaica. There is a large number of small, informal entrepreneurs (higglers), who sell seafood purchased directly from fishermen, in strategic locations scattered throughout the country. The informal nature of their activities prevents an accurate assessment oftheir size and number. The products and prices offered by these entrepreneurs are often determined by the availability of fish caught by the local fishermen. Conversely,there are approximately 12 established firms which sell seafood to the local and export markets. Two of these firms, Seafood Delights and Caribbean Fisheries Ltd. are horizontally integrated entities. The latter firm owns and operates 3 fishing vessels in Guyana. Six firms have extended their product line to include meats and vegetables. In addition, four firms operate in both the local and export markets while the rest cater solely for the domestic market. gplinterestingly, these four companies (Seafood Delights, Caribbean Fisheries Ltd,. Nations Choice Ltd. and Sealand Foods International Company) compete on the basis of possessing a differentiated 5 product. They all use attractive packaging with well recognised labels. Their products are sold at a premium prices and are available solelyat upscale supermarkets and retailers. These firmsare also the largest in the industry in terms of size and scope of operations, and generally export their products to the same markets. It is also noteworthy that all of these four firms ensure that their fishermen maintain sustainable fishing practices. The other companies in this industry are smaller in size and offer a limited variety of seafood. These firms do not offera premium product. Rather, the products tend to be packaged singi hmet any recognised logos. The products tend to be cheaper in price than those offered yb t. our larger firms. Finally, these products are widely available in the lower-cost supermarkets an: dietailers. The International Seafood Industry Seafood is a significant contributor to the world's food supply and is animportant protein-providing food in terms of per capita consumption. Indeed, the last few decades have witnessedan increased consumption of seafood products. According to the Food and Agriculture Organisation (FAO), the per capita food consumption of seafood in the world increased from 9 kg in 1061 to 19.22 kg in 2012. The main factors driving this demand are diet diversification in industrialised countries as the population become more health conscious; increasing per capita consumption, rising incomes and changing diets in developing countries as well as the increase in the numberof tourists in the coastal areas of these countries; and the development of modern distribution channels and technological improvements in processing, packaging and storage of seafood. Asian countries (China, South Korea, Japan and Vietnam) dominate per capita consumption of seafood globally while Brazil, China and India are forecasted t odemonstrate the highest growth in per capita consumption of seafood during 2012-2022. China currently dominates seafood production followed by India, Indonesia and the European Union.Overall,seafood demand is likely to surpass production in the future, primarily due to the increase in human consumption. 6 Seafood Delights' Future Mr. Anthony Maingot sits in the conference room of his company's headquarters in Kingston, waiting for his top management team to arrive for a critical meeting. He is now trying to envisage the future of his company. What directional strategy should Seafood Delights employ? Should it engage in a concentration or diversification growth strategy? Or should it engage in a stability strategy? Questions 1. Discuss the value chain used by Seafood Delights to compete in the seafood industry. 15 marks 2. Undertake a strategic assessment ofSeafood Delights' current business strategy. 65 marks 3. Suggest alternative strategies that Seafood Delights could adopt to improve its competitiveness