Vertically integrating as far as possible

Paul David, sales director of Sapmer

The Sapmer Group comprises a holding company based in Singapore and subsidiaries Sapmer is a French company on Reunion Island and Mauritius. The group is focused primarily on catching and processing fish before marketing and distributing the products around the world.

 Among the French overseas territories is Reunion Island located off the eastern coast of Madagascar in the Indian Ocean and about 200 km from Mauritius. As an EU outermost region Reunion Island is an integral part of the European Union and subject to EU law. Exports from Reunion have the same access to the EU market as do exports from any other EU Member State.

Rock lobster and Patagonian toothfish were the start

The Sapmer Group was started in 1947 with fishing for St Paul rock lobster (Jasus paulensis) in the waters of the French Southern and Antarctic Territories in the southern Indian Ocean roughly midway between South Africa, Australia, and Antarctica. The company has a quota of approximately 400 tonnes a year. It has been catching lobster for many years using lobster pots and today its vessel, which is French-flagged makes two trips to the fishing grounds between December and April. The vessel used for the lobster fishing is a factory ship on which the lobsters are processed either raw or cooked and then frozen and packed. In the 90s the company expanded into fishing for Patagonian toothfish (Dissostichus eleginoides) in the Antarctic using longlines. The company has 55% of the French quota for this species, according to Paul David, the sales director of Sapmer, or 3,200 tonnes per year. The fish is caught with a fleet of four longliners that does three trips per year landing all the fish on Reunion where it is stored in a purpose built coldstore that is maintained at -20 degrees prior to being re-exported to the company’s market in Asia and the US. It is one of the obligations associated with the quotas, explains Mr David, that we land the fish on French territory.

The fishing grounds for Patagonian toothfish are around the Kerguelen and Crozet Islands in the Southern Ocean. The species is fished between a minimum of 500 m and 2,500 m. It is a long-lived species with some individuals living for up to 50 years and reaching 2 m in length and up to 50 kg in weight. Aware of the importance of preserving the resource Sapmer together with six other French vessel owners has had the fishery in the Kerguelen zone certified by the Marine Stewardship Council.

Expansion into Indian Ocean tuna fishing

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While the fishery for the St Paul rock lobster and the Patagonian toothfish sustained the company for many years, the quotas on these species were a constraint to its expansion. In the mid-2000s the company therefore decided that it needed to start working with other species if it was to develop its business. This was the start of the tuna catching and processing activities which were inspired by the Japanese model of tuna fishing. Purse seiners catch the tuna and then freeze the fish at -40 degrees directly on board the vessel leading to the production of a sashimi type tuna. This product was exported first to Japan, but later also to the EU, the US, and South Africa. The initial years the company spent obtaining the fishing licenses, and understanding the business of tuna production, marketing and distribution. Assisting them was a Japanese customer who worked closely with Sapmer explaining the finer points of the tuna business, how to cut the fish, how to grade it, how to test the product to see whether it was grade A or B etc. This initial exchange developed into a long and mutually beneficial commercial relationship between the two firms. The first two tuna seiners started their activity in 2006 and were initially intended for the production of canned tuna. Later however these were replaced with five brand new -40 degree, 90 m long purse seiners ordered in two stages. These five vessels fly under the French flag, while another two that have since entered the fleet are Mauritian flagged. On board these vessels the fish is frozen in two steps to rapidly bring down the temperature to -40 degrees.

In 2009 the company constructed its first coldstore, which had a capacity of 900 tonnes and a temperature of -40 degrees, in Port Louis, Mauritius. All our tuna activities, storage, sales, administration, and logistics are managed out of Mauritius, says Mr David, and all the tuna from the vessels is landed and stored there. As the tuna catches were growing the company expanded its cold storage capacity first by 2,700 tonnes bringing the total capacity to 3,600 tonnes, and subsequently by a further 2,500 tonnes to reach the 6,100 tonnes that it has today. It is also important to be able to supply the fish all the year around and therefore it is necessary to have a cold store that is large enough and cold enough to be able to store the fish for periods without impacting the quality. The tuna fishing is seasonal, yellowfin for instance is caught between December and March, and is then frozen so that it can be supplied all the year round. While yellowfin is the dominant species in Sapmer’s assortment amounting to 40-45% of the total tuna catch, the company also targets skipjack (50%) and bigeye (5%). About 35% of the yellowfin catch is fish above 10 kg, the most desirable size.

Tuna fleet of nine vessels

The company’s fleet of seven purse seiners will expand with a further two vessels, one this year and one in 2015. The facilities on Mauritius include grading, sizing, and sorting capabilities in addition to the coldstores at -40 degrees. The fish is frozen on board and when it is landed on Mauritius it is graded, sized, and sorted, and placed in the cold store. Sapmer also owns two factories in Mauritius, where the fish is processed. In one the fish is made into loins, while at the other the fish is cut into steaks, made into saku blocks, retail boxes, vacuum packages etc. The second processing factory is a joint venture with one of the main companies on Mauritius. From the time the fish is frozen it is never defrosted until it reaches the consumer, says Mr David, all the processing operations are carried out on frozen fish. During the processing the fish can go from -40 degrees to -35 degrees, but once it has been processed the products are returned to the coldstore at -40 degrees. The products are shipped in containers at -35 degrees or in superfreeze containers at -55 degrees depending on the quality of the product.

Sapmer sells its value-added tuna products to France and Italy in the EU and is focusing on developing oth
er markets in the EU including Northern and Eastern Europe. In addition it is selling in South Africa, where it is hoping to expand its market share. Because the tuna is Mauritian, it is possible to export the fish duty free to South Africa with a SADC (Southern African Development Community) certificate which should assist in penetrating this market. Sapmer has also signed an agreement with an American company to sell tuna into the US. Part of the production is whole round fish too small to be further processed or not the requisite quality, which is sold to canning plants either on Mauritius or the Seychelles, to Thailand, or to Japan to be made into a dried skipjack.

A supplier of final products rather than raw material

Sapmer is however not resting on its laurels. A newly created R & D division is busy developing ideas for more value-added items, so that Sapmer can supply the final product rather than just the raw material. Additionally, Mr David is interested in increasing the yield from the tuna which is currently only 40-45% by fine-tuning the processing technique. But the main target is finding ways to add value to the by-products from the cutting process, the head, guts, skin, bones, and tails. The company is already experimenting with extracting the meat from these by-products, making it into blocks and then using the blocks to make low end tuna burgers for hospitals, catering, or other bulk buyers. High end burgers with quality ingredients for retail markets are also being developed by the new division.

Sapmer’s strategy – to become a vertically integrated company catching the raw material, processing it into highly value-added products, and supplying them to markets around the world – is clearly well on its way to being implemented.