Stolt Sea Farm Holdings PLC History

Company Perspectives:

By maximizing on the potential of the aquaculture industry world-wide and through targeted long term investments in developing new species, implementing intensive fish farming technologies, establishing a global sales network and in making branded aquaculture products available for the retail consumer market, Stolt Sea Farm aims at positioning itself as a world leading seafood company.

Key Dates:

1973:

The company is established as a smolt producer in Norway.

1991:

Sea Farm becomes a subsidiary of Stolt-Nielsen S.A.

1992:

Sea Farm becomes Stolt Sea Farm; Stolt Sea Farm buys Ibec Aquaculture.

1994:

Stolt Sea Farm purchases a 12.5 percent stake in Eicosal.

1995:

The company opens a sales office in Singapore.

1996:

Niels Stolt-Nielsen becomes chief executive officer.

1998:

The company purchases Gaelic Seafoods Scotland Ltd., renamed Stolt Sea Farm UK.

1999:

The company acquires International Aquafoods.

2000:

The company acquires Ocean Horizon S.A., La Couronne, and Australian Bluefin Pty. Ltd.

2001:

James S. Lorentzen becomes chief executive officer; Stolt Sea Farm acquires Eicosal, Ferme Marine de l'Adour, and F & B Sales Ltd.

Company History:

Stolt Sea Farm Holdings PLC is an international aquaculture company with production and sales locations throughout the world. The group markets its products--from whole fish to prepared items--under the Sterling trademark in the three major seafood markets of Asia, the United States, and Europe. Stolt Sea Farm is the world's leading producer of farmed turbot, halibut, sturgeon, and sturgeon caviar, and also produces tilapia--an increasingly popular food source--in North America.

1973-90: From Fjon to Sea Farm

In 1973, Jacob Stolt-Nielsen and Bjorn Myrseth of Stolt-Nielsen S.A. acquired Fjon, a salmon smolt farm 30 kilometers north of Haugesund in Norway. Smolt are juvenile fish; in captivity, they are raised from fertilized eggs in freshwater tanks, then transferred to saltwater pens suspended in the ocean. Fjon, ideally situated on the coast with an outlet to the sea, is located near Lake Vigdarvatn, which covers an area of seven square kilometers and is one of the best freshwater sources in Norway. In addition to containing water of exceptionally good quality, Lake Vigdarvatn features a temperature that is ideal for year-round smolt production.

Fjon quickly became one of Norway's largest facilities for salmon smolts. Initial production was only 25,000 smolts in 1975; however, that number increased the following year to 300,000. By 1980, production at Fjon had reached 900,000 salmon smolts per year. As production increased, the farm's managers met its need for more space by incorporating two nearby lakes, Lier and Tvelt, placing cages in both lakes to hold the salmon smolt.

Throughout the 1980s, smolt production was a profitable industry worldwide. With wild stocks down and too many fishermen chasing too few fish, fish farming, or aquaculture, became a radical idea whose time had come, more so in Norway than in North America. Aquaculture enabled companies to provide customers with a steady supply of seafood. Farmers bought young fish from hatcheries each spring and raised them until they were 18 months to two years of age. Most fish farms were mom-and-pop operations. Fjon, or Sea Farm as it was now called, was thus unusual in that it belonged to the owners of a much larger company. Sea Farm remained separately owned by the Stolt-Nielsen family, however, rather than being folded into the larger Stolt-Nielsen group of businesses.

Sea Farm was not content to concentrate just on salmon smolt. As production grew and the company increased in size, it began research and breeding programs designed to develop other farmable species of fish. In 1982, Sea Farm acquired a number of turbot, sea bass, and sea bream farming operations located in Spain and France. Two years later, the company acquired salmon farming businesses in the United States and Canada. Fjon also began producing rainbow trout, and in 1985, Harald Mundal, Fjon's manager, started selecting the most silvery trout for breeding new broodstock fish for egg production. In 1986, the company began to explore halibut breeding, which resulted in the launch of the company's Sterling halibut farm stock and the introduction of Sterling halibut seven years later. In 1987, Sea Farm initiated sturgeon production in California.

Geographic and Product Expansion in the 1990s

During the 1990s, Sea Farm continued to grow rapidly, although by Stolt-Nielsen standards, it was still a small company. In 1991, it established its marketing and sales department in Norway in an attempt to develop new markets for its farm-raised fish products. Sea Farm became Stolt Sea Farm in 1992, having joined the larger family of Stolt-Nielsen companies when the parent company purchased it in 1991. Stolt Sea Farm also bought Ibec Aquaculture, a Connecticut-based company with sea cage operations in the northern Vancouver Island area of British Columbia in 1992 and acquired turbot farming operations in Spain and Portugal. In 1993, it initiated halibut production. In 1994, it purchased a 12.5 percent stake in Eicosal, a Chilean salmon farming company, and in 1995, it opened a sales office in Singapore. Niels Stolt-Nielsen became chief executive officer of Stolt Sea Farm in 1996 and took the company into another major seafood market with the purchase of Gaelic Seafoods Scotland Ltd., later renamed Stolt Sea Farm UK, in 1998.

The 1990s saw a growing number of fish farmers preparing to enter the caviar business, the more lucrative end of sturgeon fish farming. (Roe fetched $75 to $100 per pound if sold to a wholesaler in the late 1990s--up to $400 per pound if distributed directly--while sturgeon meat yielded only about $2 per pound from distributors.) Up until then, Russia, producer of about 70 percent of the world's caviar, had dominated the caviar market. Stolt Sea Farm entered the sturgeon caviar market in the 1990s, and the distinctive tasting roe became one of the company's key products.

Then, in 1997, just as the farmed sturgeon industry was poised to take off and Stolt Sea Farm was gearing up its caviar operation in California, the Convention on International Trade in Endangered Species placed sturgeon on its potentially endangered species list. The origin of this action was the overfishing of Caspian Sea sturgeon that began to occur after the breakup of the former Soviet Union. By the end of the century, according to U.N. estimates, over-fishing, poaching, and pollution had led to a 90 percent depletion of sturgeon stocks in the Caspian Sea from their late 1970s to early 1980s levels. As a result, in the late 1990s, exporters of sturgeon began to be required to document that they had obtained their caviar legitimately. They also had to pay $80 per shipment of caviar overseas. These fees made small retail orders uneconomical, amounting as they did to almost three times the cost of an ounce of caviar.

By 1999, Stolt Sea Farm farmed Atlantic salmon, trout, turbot, halibut, sturgeon, and caviar. That year and the next, as part of its strategy of geographic and product expansion and increased market penetration, the company opened the world's largest land-based fish farm in Galicia, Spain, and made several acquisitions. In 1999, it purchased International Aqua Foods Ltd., an international aquaculture corporation involved in salmon and tilapia hatchery and farming in the United States and Canada, and salmon and trout fishing in Chile, and Hydro Seafood, another aquaculture business. The purchase of Hydro brought about the merger of two of the world's major fish farming companies. In 2000, Stolt Sea Farm acquired Ocean Horizon S.A. in Chile, a subsidiary of International Aqua Foods that produced 1,800 tons of Atlantic salmon and had licenses or applications pending on ten additional farming sites. Stolt Sea Farm also bought La Couronne, which produced and sold more than 600 tons of smoked salmon and other salmon and fish products at its facilities in Belgium in 2000 and acquired Australian Bluefin Pty. Ltd., adding tuna to its list of farmed species and launching its first farming activities in the Asia Pacific.

The Year 2000 and Beyond: Consolidation in the Aquaculture Industry

Environmentalists had long insisted that farmed fish posed a potential problem for wild species, saying that they could spread disease as well as compete with wild fish for habitat and food when, as sometimes happened, they escaped. In 2000, a private prosecution against Stolt Sea Farm's Carrie Bay, British Columbia operation, claimed that the build-up of digested and undigested feed beneath the farm represented a harmful alteration of fish habitat under the Fisheries Act. Although the Canadian Justice Department stayed the prosecution, in 2001, reports completed in Canada validated environmentalists' claims, documenting high levels of drug residues in wild fish and shellfish collected near marine fish farms and concluding that not enough research had been collected on fish farms' effects on wild fish. Fish farmers as a group insisted that farmed salmon posed no threat to wild salmon stocks, but Stolt Sea Farm had reason to consider reinforcing its cages when, that year, 4,500 of its salmon escaped from its farming operation near Campbell River in Canada and, shortly thereafter, up to 50,000 more salmon escaped from its farm in the Johnstone Strait. In 2002, Stolt Sea Farm was found guilty of Clean Water Act violations for discharging feed, pesticides, and other potential contaminants into the ocean without proper permits.

When James S. Lorentzen became chief executive officer of Stolt Sea Farm in 2001, replacing Niels Stolt-Nielsen, who became chief executive officer of Stolt-Nielsen S.A., the company was one of the world's leading producers of farmed fish. Under Lorentzen's direction in 2001, Stolt Sea Farm acquired Eicosal S.A. in Chile, the fastest-growing salmon-producing region; Ferme Marine de l'Adour, producer of farmed turbot in southwestern France; and, moving into seafood distribution, F & B Sales Limited. F & B was well established as a supplier of seafood to major supermarkets, hotels, air caterers, private clubs, and restaurant chains.

Amid the move toward consolidation in the aquaculture industry then occurring, Stolt Sea Farm began construction on a new land-based turbot farm in northwestern Spain near its existing facility. When finished in March 2004, the facility would be the largest land-based farm in existence for any species of fish and increase Stolt Sea Farm's capacity for farmed turbot 25 percent to 4,000 tons a year.

The move was a strategic one given the glut then occurring in world salmon markets and the pressure by supermarket and hypermarket chains not to deal with small producers and distributors. Stolt Sea Farm, already one of the largest producers of many species of fish, was in a powerful position to continue to move in the direction of vertical integration--controlling processing, sales, and distribution as well as hatchery, smolt, and farmed fish production.

Principal Subsidiaries: Stolt Sea Farm Inc.

Principal Competitors: Cermaq; Fjord Seafood; Pan Fish ASA; Nutreco Holding N.V.; Grieg Seafood; Marine Farms; Salmar.

Further Reading:

• "Canadian Aquaculture Science Under Scrutiny," Environment News Service, April 20, 2001.
• Cresswell, Jeremy, "Salmon Output Set to Leap 40 Percent," Scotsman, April 16, 2001, p. 21.
• DeMont, John, "Fish Futures," Maclean's, July 29, 2002, p. 32.
• Durr, Barbara, "That's Why Caviar Is My Dish," Financial Times, July 26, 2002, p. 3.
• Howe, Kenneth, "California Caviar Clash: Roe Farmers Feel Rules to Protect Species Is Burden," San Francisco Chronicle, August 29, 1997, p. B1.
• Jung, Carolyn, "California Leads Country in Production of Farm-Raised White Sturgeon," San Jose Mercury News, June 12, 2002, p. 1A.
• Nalley, Richard, "Roe Rage," Forbes FYI, Winter 2002, p. 124.

Source: International Directory of Company Histories, Vol. 54. St. James Press, 2003.

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