28 Sep Taking Iceland’s strongest sector onto the next level
Pétur Hafsteinn Pálsson, General Manager, VISIR, underlines the importance of sustainability and flexibility for any successful company in the fishing sector
Fishing is engrained in Iceland’s DNA, and has been around for as long as people started to live in Island. Today fishing remains one of Iceland’s main sources of income – and pride. How would you describe your country’s positioning in the global fishing industry?
The fishing industry is in a strong position. During the past decades we managed to build up fish stocks around Iceland through the implementation of the quota system. Simultaneously, we have been able to build up strong equity in the fishing companies.
We have managed to create a culture in this business that embraces new technology and techniques. We have adapted our business allowing us to react to a continuously changing environment. Another strength is the collaboration we have within the fishing industry here in Iceland. This has helped us establish long-term relationships with technology providers. In Iceland we have an element within our culture that drives us to work together to respond quickly to challenges.
Following the COVID-19 crisis, we are ready to show what the fishing industry in Iceland is made of, our strength and capacity to adapt. We are working to prepare ourselves for the challenging economic outlook for the years to come.
The Icelandic fisheries sector has seen significant consolidation over the last few decades, also with the introduction of the quota system. How has this consolidation reinforced the sector and more broadly what are some of the biggest changes that you have seen on the market during the last 10 years since the 2008 crisis?
There has been talk in our industry about companies getting bigger because of the mergers that have happened. But Iceland is a very small country with approximately 360.000 people. The story is not directly about consolidation and growing bigger. There is no industry or business in Iceland that is as widely distributed across the country as the seafood sector. In Iceland, the 10 largest companies own roughly 50 percent of the fishing rights and the 30 largest companies own approximately 80 percent. The remaining 20 percent of the market is owned by smaller companies, which number in the hundreds.
The implementation of the quota system provided companies with the operational security to make long-term investments. Mergers have enabled companies to find efficient operating units of various sizes and secure year-round operations. With this stability and efficiency companies are better positioned to make significant investments in their fleets and processing facilities.
In order to make investments in the latest technologies from the Icelandic companies, Marel and Valka for example, you need to have to achieve a critical mass in order that the investments make financial sense. For example, you need to scale up your annual raw material supply from 2,000 tons to 10,000 tons in order to invest in the latest fish processing equipment. This has driven the consolidation that has taken place in the factories.
Is there room for outside investors in the seafood industry of Iceland?
Yes, although there are limitations on foreign ownership of fishing companies in Iceland. In addition, any investor that comes into the fishing must be patient and have a long-term view. Today, many of the fishing companies in Iceland are family-owned and operated. Institutional investors have not demonstrated a strong appetite to enter the industry in Iceland to date.
VISIR is one of Iceland’s leading fishing and seafood companies, a family owned company with a long history of over 50 years and strong expertise in fishing and seafood processing. The company offers a rich variety of premium, high quality products and serves a broad group of demanding customers from all over the globe. Can you give us a brief overview of the company, with a couple of facts and figures to appraise its global role and importance? What is your production output? What kind of fleet does the company hold?
VISIR started with my father and two other owners in 1965. In its origins, VISIR was one salt-fish factory and two vessels. In 1990 we bought the shares of the other two owners. Following a number of mergers and acquisitions VISIR now operates seven vessels, catching approximately 20.000 metric tonnes per year. The vast majority of our catch is processed in one of our two land-based processing facilities. We produce a wide variety of groundfish products, though we are primarily focused on cod and haddock. We have great flexibility in production, which has proven invaluable in tackling the many challenges presented by COVID-19.
Iceland has created one of the most modern and competitive seafood industries in the world, based on sustainable harvest, responsible fishing and protection of the marine ecosystem. What kind of efforts is a company like VISIR putting to enforce responsible and sustainable fishing practices? What are some of the most valuable initiatives taken by your company in regard to protection of the environment and conservation of the marine ecosystem?
VISIR like the rest of the fishing industry in Iceland, views sustainability and protection of the environment as vital to securing the long-term viability of our company. In addition to having various certifications around sustainability, equality and food processing standards, we are continuously focused on increasing our utilization and improving our efficiency. We aim to minimize our carbon footprint while reaching 100 percent utilization of our catch.
The sector has seen a vast amount of consolidation as we mentioned earlier. What are some of the most attractive segments in the industry today for investors? As a family business, are you also considering further expansion through acquisitions? Are you open to work with outside partners one day?
We are always working to improve our operational efficiency. This can involve buying quotas, making investments in our fleet and facilities, or investing in our markets to secure a larger portion of the value chain. We are constantly evaluating these types of opportunities as well as the best way to finance them. Although we are not presently looking for outside investors, we would not rule out bringing in other partners in the future.
What would be your final message towards the millions of readers of Newsweek?
We are very proud of the VISIR’s long history and important position in the Icelandic seafood industry. By continuing our focus on quality, innovation, and sustainability, we look forward to feeding the generations to come.