THE INVESTOR'S GUIDE TO THE NEW ZEALAND SEAFOOD INDUSTRY 2017
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THE INVESTOR’S GUIDE TO THE NEW ZEALAND SEAFOOD INDUSTRY 2017 Part of the New Zealand Food & Beverage Information Project FINAL REPORT; v1.05; June 2017
STEERING & GUIDANCE Projected market information, analyses and conclusions contained herein are Unless otherwise noted, all photos used in this discussion document were based (unless sourced otherwise) on the information described above and on provided by the New Zealand Story resource (www.nzstory.govt.nz), This project would not have been possible without the strong guidance of our Coriolis’ judgment, and should not be construed as definitive forecasts or purchased by Coriolis from a range of stock photography providers as Steering Committee. In particular, we would like to thank Andrew McCallum guarantees of future performance or results. Neither Coriolis nor its officers, documented, or are low resolution, complete product/brand for illustrative of MBIE for his tireless energy in keeping this project on track, while at the directors, shareholders, employees or agents accept any responsibility or purposes used under fair dealing/fair use for both “research and study” and same time pushing us forward. liability with respect to this document. “review and criticism”. Our usage of them complies with New Zealand law or their various license agreements. Draft versions of parts of this document were distributed to key firms for Coriolis wishes to draw your attention to the following limitations of the comment, addition or correction. This was done in the form of emails and Coriolis report “New Zealand Seafood Industry 2017“ (the Coriolis Report) Cover image: New Zealand Story phone calls. We thank those who helped us in this process for their time and including any accompanying presentation, appendices and commentary (the effort. We also thank those who provided their photos. Coriolis Commentary): Where appropriate, this document is Copyright © 2017 Coriolis and MBIE. However, please feel welcome to use, refer to and cite this research. We are grateful for all of the input we have received, but the report is ours a. Coriolis has not been asked to independently verify or audit the and any errors are our own. information or material provided to it by, or on behalf of the Client, or any of the parties involved in the project; Finally, we acknowledge the support of the Ministry of Business, Innovation and Employment (MBIE), New Zealand Trade and Enterprise (NZTE) and the b. the information contained in the Coriolis Report and any Coriolis Ministry of Primary Industries (MPI). It is their funding that has made this Commentary has been compiled from information and material supplied by report possible. third party sources and publicly available information which may (in part) be inaccurate or incomplete; CONSTRAINTS & INHERENT LIMITATIONS c. Coriolis makes no representation, warranty or guarantee, whether express This work was commissioned by the Ministry of Business, Innovation and or implied, as to the quality, accuracy, reliability, currency or completeness of Employment (MBIE) and prepared by Coriolis. This work is based on the information provided in the Coriolis Report and any Coriolis Commentary, secondary market research, analysis of information available or provided to or that reasonable care has been taken in compiling or preparing them; Coriolis by our client, and a range of interviews with industry participants and industry experts. Coriolis have not independently verified this information d. the analysis contained in the Coriolis Report and any Coriolis Commentary and make no representation or warranty, express or implied, that such are subject to the key assumptions, further qualifications and limitations information is accurate or complete. included in the Coriolis Report and Coriolis Commentary, and are subject to significant uncertainties and contingencies, some of which, if not all, are The report is dated June 2017 and Coriolis accepts no liability for, and has not outside the control of Coriolis; and undertaken work in respect of, any event subsequent to that date, which may affect the report. e. any Coriolis Commentary accompanying the Coriolis Report is an integral part of interpreting the Coriolis Report. Consideration of the Coriolis Report Key global trade data analysed in all sections of the F&B Information project will be incomplete if it is reviewed in the absence of the Coriolis Commentary are calculated and displayed in US$. This is done for a range of reasons: and Coriolis conclusions may be misinterpreted if the Coriolis Report is reviewed in absence of the Coriolis Commentary. - It is the currency most used in international trade - It allows for cross country comparisons (e.g. vs. Denmark) Coriolis is not responsible or liable in any way for any loss or damage - It removes the impact of NZD exchange rate variability incurred by any person or entity relying on the information in, and the - It is more comprehensible to non-NZ audiences (e.g. foreign investors) Recipient unconditionally and irrevocably releases Coriolis from liability for - It is the currency in which the United Nations collects and tabulates loss or damage of any kind whatsoever arising from, the Coriolis Report or global trade data Coriolis Commentary including without limitation judgments, opinions, hypothesis, views, forecasts or any other outputs therein and any Anyone should feel free to call the authors if any of the material cannot be interpretation, opinion or conclusion that the Recipient may form as a result understood or accessed. We always welcome opportunities to discuss our of examining the Coriolis Report or Coriolis Commentary. research with our readers and users. The Coriolis Report and any Coriolis Commentary may not be relied upon by the Recipient, and any use of, or reliance on that material is entirely at their own risk. Coriolis shall have no liability for any loss or damage arising out of any such use.
TABLE OF CONTENTS INTRO 01 02 03 04 05 Context & Market Production Categories Growth & Firms Conclusions Overview Innovation Performance Pages 3-10 Pages 11-26 Pages 27-31 Pages 32-40 Pages 41-54 Pages 55+ + Purpose + Global situation + Number of firms + Segmentation + Horizons for growth + Enterprises + Situation summary + Consumption + Employment + Key products + Emerging export + Employment stars + Drivers of success + Production + Yield/productivity + Exports by product + Turnover + New viable options + Investment + Import demand + Production + Ownership opportunities + Mega-trends driving + Key markets + Regional activity change + Foreign investors + SWOT + Market growth + Growth upside + Innovation & new + Acquisitions + Supply chain products + Investments + Firm Profiles
PURPOSE Why did the New Zealand government undertake this project? What is the purpose of the project? What benefit will this bring to businesses? How will government use the reports? The project presents a comprehensive, – As support for raising capital While the government collects large amounts of business-focused overview of the total New – As a base of market intelligence to enable industry data, little of this has an investor or Zealand food & beverage industry. business to be much more targeted in their industry-driven perspective. own market research The project pulls together the available – Reviewing and informing offshore market This information will provide much greater information on the food and beverage industry development (including export and insight into the industry, which is useful for a into one place, in a form which is familiar and investment) strategies range of policy developments, from regulatory useful to business. The reports contain analysis – Assisting in identifying areas of innovation frameworks to investment in science and skills and interpretation of trends and opportunities and R&D for the future and facilitating access to international markets. to materially assist with business strategy and – Identifying strategic partners and government policy. collaborators In particular, a single source of factual – Enabling a company to benchmark information will enable government agencies to The information will be of vital use to performance with that of its competitors better coordinate their efforts across the system businesses, investors, government, and and be more responsive to addressing industry – Monitoring industry activity research institutions as the industry expands issues. and diversifies. This industry view will be very – Gaining a better understanding of their own useful to government, enabling better dialogue industry sector – Identifying internal capability needs or All project resources are available online at: and the opportunity to address issues collectively. external inputs www.foodandbeverage.govt.nz 4
SITUATION SUMMARY: WILD CAPTURE While New Zealand has a large and sustainably managed wild catch fishery, there is little likelihood of significant volume or throughput increases going forward ALL SEAFOOD: CONSUMERS/MARKETS half of value and the growing Asian market the other main catch by volume is hoki, followed by mackerel half. and squid. Rock Lobster are a major export that have Per capita consumption of wild capture seafood has shown strong growth on rapidly growing demand been flat-to-declining globally, due to overfishing and Fresh seafood is a highly perishable product and the from China. population growing faster than capture quantity. This highest value products are often those sold fresh “deficiency” is being made up for by a massive (unlike some other foods). Bulk fish for further Wild capture fishing is reasonably consolidated, with expansion in aquaculture. processing is also a key channel for NZ. a handful of major firms and a range of secondary firms. Consolidation is more pronounced in deep Increased consumer demand for seafood across most WILD CAPTURE: NEW ZEALAND water fishing, less so in closer waters. developed countries is being driven by (1) scientific research showing health benefits and (2) changing New Zealand has access to a strong set of natural The industry has mixed ownership, with New Zealand diets. At the same time, key seafood consuming resources for wild capture fishing. The country is an Maori tribal interests predominating, but with one countries (e.g. South East Asia (SEA), China) are isolated island nation in the middle of the South listed firm (Sanford) and strong private ownership experiencing growing incomes leading to increased Pacific, 2,100 kilometres from Australia. It has the and foreign investment (primarily Japanese). ability to pay for (or demand) more seafood. This ninth largest exclusive fishing zone (EEZ1) and the situation has supported prices. tenth longest coastline of any country in the world. WILD CAPTURE: COMPETITORS The majority of fish consumption globally occurs in Multiple sources suggest New Zealand’s fisheries are NZ achieves a 7% share of the temperate Southern restaurants and other foodservice outlets. among the most sustainable fisheries in the world (on Hemisphere (S.H.) wild catch.2 New Zealand Supermarkets underperform in seafood (relative to a par with Alaska and Iceland). New Zealand uses competes in the first instance with other colder water other proteins); significant sales occur in more effectively the same catch management system as Southern Hemisphere countries, primarily Australia, traditional channels (e.g. fishmongers and wet Iceland. However sustainable management has led to Chile, Argentina, and South Africa. Secondarily, this markets) a decline in total wild capture over the past 15 years group compete with Northern Hemisphere colder and there is low potential for substantial future water fisheries, including Norway, Canada, Iceland, Demand for sustainable product varies by market. growth. Precision Harvesting research over recent USA/Alaska, UK/Scotland. There is increasing demand in Western markets years is driving towards increasing the quality and (Europe/North America), for sustainable products therefore value of the catch. Globally the wild capture seafood industry is often driven by retailers (and vocal activists). fragmented with a huge number of medium to small However, there is currently low/no demand in Asian New Zealand has an efficient, modern seafood sized firms competing. Around the world in-shore and developing markets for sustainability. industry with large modern boats, in particular the fishing is highly fragmented and primarily local deep sea freezer trawlers. More than 130 species are around the world. Deepwater fishing is more NZ exports seafood to over a hundred countries. commercially fished in New Zealand’s EEZ, a similar consolidated due to capital requirements for large Broadly speaking Western markets account for about species mix to Australia, Chile, Argentina, etc. The boats, but still fragmented globally. 1. EEZ = Exclusive Economic Zone; 2. defined as Chile, Argentina, Brazil, South Africa, NZ & AU; Source: Coriolis 5
SITUATION SUMMARY: AQUACULTURE Aquaculture has huge theoretical growth potential for New Zealand, however this is unlikely to be realised in practice AQUACULTURE: NEW ZEALAND companies, holiday home owners and environmental AQUACULTURE: COMPETITORS – SALMON advocates oppose its growth. New Zealand has huge theoretical potential in Where New Zealand farms King/Chinook Salmon aquaculture production. New Zealand has the 10th New Zealand farms three species in any quantity (Oncorhynchus tshawytscha), effectively all other longest coastline of any country in the world, more (mussels, salmon and oysters); these make up ~99% salmon aquaculture in the world farm Atlantic salmon than China and 180 other countries on the world. of the total exports. (Salmo salar), due to its faster growth rates and Currently only a tiny fraction of this is farmed; the disease resistance. total area in New Zealand in aquaculture is similar to Aquaculture is more consolidated than wild capture; the area in onions or a single high country sheep farm. the top five companies account for approximately Salmon aquaculture is highly consolidated globally. three quarters of the industry The top 3 firms account for ~40% of global Aquaculture is a global growth story, supplying production (the top 10, ~65%). None of the top 25 growing seafood consumption in the place of flat wild AQUACULTURE: COMPETITORS – SHELLFISH global salmon producers currently operate in NZ. capture. Globally aquaculture has increased its share On a global basis, most shellfish are produced and Consolidation is driven by clear economies of scale in to about half of total seafood volume. In New Zealand consumed locally and very little crosses borders. New production systems, marketing, processing, skills, it is about a fifth. Zealand produces mussels and oysters in quantity, genetics and capital. However, New Zealand’s strong theoretical potential and smaller amounts of abalone/paua. New Zealand biosecurity effectively prevents imports for aquaculture is unlikely to be fully realised. There is MUSSELS Globally only about one in eight mussels of almost all fresh salmon. often a conflict with the proposed location of produced crosses a national borders. New Zealand aquaculture operations and other non-commercial competes with a wide range of regional players by uses. market; Chile is an emerging multi-regional threat. The fundamental issue is that NZ, as a society, has yet OYSTERS 1% of global oyster production crosses to come to a consensus on aquaculture, particularly borders; global production is flat except for China salmon, with the proponents arguing for it to become which is increasing production massively. a billion dollar industry, while a wide ranging opposition of recreational fisherman, inshore fishing 6
DRIVERS OF SUCCESS New Zealand’s success in seafood has three key drivers IDEAL WATER & CLIMATE EFFICIENT PEOPLE & SYSTEMS LOCATION & MARKETS Trusted by High share in key Available resource consumers products - Strong natural resources for wild capture fishing - Long history of seafood production - Excellent proximity to East & South-East Asian markets - Resources available for aquaculture - Industry focused on export for over 100 years - CER agreement with Australia - Substantial exclusive fishing zone (EEZ) available - Large pool of skilled people for fishing - Excellent market access across Asia - Strong Quota Management System and support - Isolated location protected by natural barriers networks - NZ was the first developed country to sign a free trade deal with China (2008) - Well-organised, cohesive industry Source: photo credit (purchased or creative commons (freenzphotos.com)) 7
INVESTMENT OPPORTUNITIES There are limited opportunities for new external investment in wild capture; regulatory change and fundamental drivers create more opportunities in aquaculture OVERALL There are limited entry vehicles for new is on-going, but progress is slow due to the ownership incremental gains in the future. However these are investors into seafood, as industry ownership of larger issues discussed above. There are also opportunities more likely to maintain New Zealand’s relative firms is locked up by: in value creation through delivering a greater percent competitiveness (e.g. vs. Chile) rather than translate of the catch to the market in a more fresh/less into dramatically increased profitability. - Maori interests (unlikely to sell), damaged form (see the Precision Seafood Harvesting Primary Growth Partnership programme, which is a SALMON Theoretically New Zealand has huge - Family businesses (Talleys, United, potential in salmon aquaculture; in practice Independent, Solander, Vela) unlikely to sell partnership between industry and the Crown.’). regulations and competing interests will likely without generational change. There are opportunities for growth and certainly constrain success. Industry is showing on-going - Cornerstone shareholdings of large global opportunities to find new markets for by-products and consolidation. The largest salmon producer – New seafood companies (e.g. Nissui in Sealord) fish species that are not currently processed or Zealand King Salmon – listed on the NZX/ASX retained. sharemarket in late 2016. - Long-term cornerstone shareholders in both publicly-listed firms: Sanford (Amalgamated) NEW SPECIES New Zealand scientists are working on and New Zealand King Salmon (Oregon a wide range of new species, however these are all AQUACULTURE The attractiveness of New Zealand Group) highly speculative and unproven commercially to aquaculture varies by species: date. Only investors with transferable capabilities or Investors seeking smaller opportunities will find a OYSTERS Pacific oysters have low growth potential, strong appetite for risk should participate. Recent wide range of opportunities among the second tier of due to risks with potential new viral breakouts and preliminary success in scampi aquaculture stands out. interesting and innovative firms, many of which are global market structure/situation. seeking capital. MUSSELS The industry is mature and consolidating FURTHER PROCESSING There are opportunities for rapidly. Mussels are relatively low value use of space. investment in further processing of New Zealand bulk WILD CAPTURE The industry has a strong and Returns over the past twenty years have been mixed ingredients (e.g. “white fish”) into consumer ready effective sustainability management system. This and cyclical, particularly for smaller operators (driving products, however this is primarily a greenfields system implies that New Zealand will have relatively industry consolidation). opportunity for firms with transferrable skills. more fish in the future compared with overfished The SpatNZ Primary Growth Partnership programme countries and regions. There are clear opportunities for investment in is a partnership between industry and the Crown seafood derived products (e.g. nutraceuticals, Main source of value creation in wild capture is in which is supporting selective breeding. The supplements, petfood) cost reductions via consolidation. This consolidation programme is on target to deliver hatchery grown mussel spat and will likely deliver constant 8
SWOT ANALYSIS New Zealand has a stable and sustainable position in the global seafood industry STRENGTHS WEAKNESSES - Clean water and generally healthy aquatic environment - Most industry wild capture growth metrics negative (Quota system) - Unsubsidised industry - Wild catch volume has fallen since 1998 leading to reduced throughput - Early introduction of quota management system prevented collapse of stocks - Relatively small producer on a global scale through overfishing - Supply fluctuates year-to-year with availability of wild capture fish - Stocks generally at sustainable levels or rebuilding - Mussels and oysters have low value per hectare; salmon development limited by - Regularly ranked in top three sustainable regions regulatory challenges - Efficient, modern industry with large modern boats, in particular the deep sea - Most EEZ space low productivity deep water freezer trawlers - Industry is bulk supply driven, rather than specialised/consumer focused - Stable, long-term ownership in place across most major firms - Firms primarily small/sub-scale with limited access to capital - Only country farming green lipped mussels (Perna canaliculus); others farm a - Competing users of coastal space for aquaculture (e.g. holiday houses) different green shelled species (perna viridis, etc.) or blue mussels (mytilus sp.) - Highly regulated - Limited presence of disease in aquaculture species - No competitive advantage around aquaculture feed production due to low scale - Unique access to some bio-secure markets (particularly Australia & Japan) - Lack of market integration, not capturing in-market value - Parts of domestic industry protected from imports by biosecurity measures - Limited in-market knowledge - Government support of industry R&D OPPORTUNITIES ISSUES/THREATS/RISKS - Consumer perceptions of health benefits of seafood - New Zealand’s wild capture continues to decline - Large amounts of fish body currently going to meal and waste - Other countries “catching up” on sustainability (e.g. Argentina) - Use of by-products for nutraceuticals /cosmetics sector - Low cost competitors in low wage/low regulation/higher productivity warm - Growing interest by some more wealthy consumers in Western markets for eco- waters labelling and environmental certification (driven by retailers) - NIMBY (not in my back yard) attitudes limiting industry activity - Growing middle class in China and SE Asia - Single issue special interest groups driving domestic regulatory agenda - Gradual removal of global fishing subsidies - Rising costs of airfreight reducing feasibility of fresh exports - Ongoing removal of trade barriers and negotiation of new free trade agreements - Streamline regulations - New/improved supply chain technology 9
SUPPLY CHAIN New Zealand has a robust seafood supply chain that produces seafood products from wild capture and aquaculture SIMPLIFIED MODEL OF NEW ZEALAND SEAFOOD SUPPLY CHAIN Model; 2017 International Supermarkets/ markets Fishmongers Wild capture Secondary Non-NZ waters Industrial2 Processing (in-market) New Zealand Seafood processing Seafreight Seafood Foodservice waters (wild+aquaculture) Airfreight wholesale1 (in-market) Aquaculture Seafood Distributor Supermarkets wholesale wholesaler Fishmongers Foodservice Domestic market 1. There may be one or more layers of wholesaling, depending on product or market; some wholesale functions maybe captive inside retailers or foodservice operators; 2. Includes product for housebrands, canners, fish meal manufacturers; Source: Coriolis analysis 10
Global Market Overview + Global situation + Import demand + Consumption + Key markets 01 + Production + Market growth
Fundamental demographic and production shifts have led to the global seafood market experiencing ongoing changes in both supply and demand CONSUMPTION - Total global cross-border seafood trade is spread across a wide range of products - Global seafood consumption is concentrated in E/SE Asia - White fish (US$38b), processed seafood ($23.9b), salmon ($15.1b) (particularly China), Europe and the Americas and prawns ($14.7b) stand out for size - Global per capita seafood consumption (all forms) is showing - Squid, salmon, lobster and processed seafood stand out for their moderate growth (1.4% per year) growth in demand over the past five years; white fish has shown slight growth in overall value despite declining volumes PRODUCTION DEMAND: IMPORT MARKETS - Global production is 200m tons of seafood - Total global cross-border demand for seafood was US$122b in 2015; the key markets are Europe ($48.2b), the US ($17.8b), Japan - Wild capture stalled around 1990, while aquaculture continues to ($11.7b) and China/HK (~$10b) grow - Vietnam, Thailand, South Korea, China and a wide range of other - As a result of the stall in wild capture, particularly of marine fish, the smaller markets stand out for import market growth; Japan and global production mix is shifting dramatically to aquaculture Russia shrank over the period production of freshwater fish, aquatic plants and molluscs - Markets vary in average seafood import price, with Hong Kong, the - Global seafood production (capture and aquaculture) is USA, Canada and Japan, followed by the “Big 4” Europeans, standing concentrated in E/SE Asia; New Zealand is a smaller, second tier out as high value markets producer overall SUPPLY: EXPORTERS GLOBAL TRADE - China is the largest seafood exporter overall; New Zealand is a - Global cross-border seafood trade volumes are growing (10y CAGR second tier exporter, similar in size to Australia and Argentina 4%) with moderate price gains across the cycle leading to solid - New Zealand is achieving moderate export price gains but no export value growth (10y CAGR 6%) increase in volume - Exporters vary in their average seafood export price, driven largely by DEMAND: PRODUCT CATEGORIES product mix; New Zealand achieves a similar return to the US and Norway 12
Global seafood consumption is concentrated in E/SE Asia (particularly China), Europe and the Americas; global per capita seafood consumption (all forms) is showing moderate growth (1.4%) AVAILABLE SEAFOOD SUPPLY BY REGION* 50Y GLOBAL SEAFOOD CONSUMPTION PER CAPITA Kilograms; millions; food supply quantity; 2013 Kilograms/person; food supply quantity; 1963-2013 816 13,729 16,739 5,113 7,787 10,274 78,370 Total = 132,829 Other E/SE Asia France 5,798 2,152 20 Indonesia 7,039 Spain Philippines 1,989 3,108 50y Vietnam CAGR 2,995 USA Myanmar 1.4% 6,883 2,897 Italy S. Korea 1,529 India 2,600 15 6,310 Japan Australia 6,179 609 UK 1,316 10 NA/ME/CA SS Africa 7,787 5,113 Canada 792 10 Other Europe 6,023 Brazil 2,178 China 47,754 Mexico Bangladesh 5 1,280 3,008 New Zealand 112 Peru 672 Russia Other Americas 3,275 Other S Asia 1,924 Pac. Is. 95 956 Turkey 0 455 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Australasia Americas NA/ME/CA SS Africa Europe S Asia E/SE Asia * Final supply after processing & trade; * CAGR = Compound Annual Growth Rate; Note: 2013 is latest UN consumption data available as of April 2017; Source: UN FAOStat database; Coriolis analysis 13
Global production is 200m tons of seafood; wild capture stalled around 1990, while aquaculture continues to grow GLOBAL SEAFOOD PRODUCTION BY TYPE & METHOD 40 YEAR GLOBAL SEAFOOD PRODUCTION BY METHOD Tonnes; m; landed; greenweight; 2015 Total = 200 Tonnes; million; 1975-2015 94 106 200 3 193 189 181 176 167 163 40y 159 CAGR 156 153 3% 152 40y ABS 40y CAGR 149 44 Freshwater fishes Aquaculture 101 8% 140 140 136 136 132 129 129 Marine fishes 66 125 123 121 112 108 106 105 103 103 100 98 16 Molluscs 91 88 80 81 78 76 74 74 72 71 7 Crustaceans 68 5 Diadromous fishes* 10 Capture 31 1% 7 29 Aquatic plants 7 2 11 1 Other misc. 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Capture Aquaculture * Diadromous fishes (migrate between fresh and salt water (e.g. salmon, eels) Note: 2015 is latest data available for all countries globally in UN FISHStat as of April 2017; Source: UN database; Coriolis 14
As a result of the stall in wild capture (particularly of marine fish), the global production mix is shifting dramatically to aquaculture production of freshwater fish, aquatic plants and molluscs 40 YEAR GLOBAL SEAFOOD PRODUCTION BY TYPE & METHOD GLOBAL SEAFOOD PRODUCTION SHARE BY TYPE & METHOD Tonnes; million; 1975-2015 % of tonnes; 1975-2015 200 100% 100% 100% 100% 100% 2% 5% 2% Aquaculture 40y ABS 40y CAGR 2% 10% 40y ABS 3% 1% 16% Capture 6% 4% 44 Freshwater fishes +42 9% 1% 22% Freshwater fishes +20% 7% 5% 4% 4% 5% 5% 8% 152 3% 3% 4% 16 Molluscs +15 6% 8% Molluscs +6% 5% 9% 3% 24 6% 125 6% 29 Aquatic plants +28 8% 4% 15% Aquatic plants +12% 12 13 3% 5% 8 14 5% 7 16 Other aquaculture +16 9% 8% Other aquaculture +7% 4% 9 91 3 2% 6 8 4 10 Freshwater fishes +6 2% 5% Freshwater fishes -1% 2 7 3 7 1 7 Molluscs +4 2% 4% Molluscs -1% 5 5 6 75% 5 4 7 Crustaceans +4 3% 3% Crustaceans -0% 68 3 4 70% 21 4 Other capture +1 1% 2% Other capture -2% 2 3 0 4 3 58% 2 2 46% 72 70 64 66 Marine fishes +15 1% 33% Marine fishes -42% 51 1975 1985 1995 2005 2015 1975 1985 1995 2005 2015 Source: UN FAOStat database; Coriolis analysis 15
Global seafood production (capture and aquaculture) is concentrated in E/SE Asia; New Zealand is a smaller, second tier producer overall GLOBAL SEAFOOD PRODUCTION BY KEY COUNTRIES & REGION GLOBAL SEAFOOD PRODUCTION BY KEY REGION Tonnes; million; 2015 Tonnes; million; 1975-2015 1.6 21.3 18.0 6.3 7.7 15.0 129.7 Total = 200 200 Norway USA 3.8 New Zealand 5.5 0.5 40y ABS 40y CAGR 79 China +74 7% Iceland 152 1.3 Canada 1.1 China Spain 79.4 1.3 India 10.1 UK Australia 125 0.9 52 0.2 Peru Denmark 4.9 0.9 NA/ME/CA France SS Africa 0.7 33 22 Indonesia +21 7% 6.3 7.7 91 7 4 Chile 9 Other Europe Japan 28 Other E/SE Asia +10 1% 3.2 2 4.6 4.7 25 S Korea 22 3.3 68 24 Mexico 5 Pac. Is. 1 7 10 15 S. Asia +12 4% 0.8 1.7 Indonesia 4 Bangladesh 22.2 4 5 Brazil 18 5 6 NA/ME/CA +5 3% 2 3.7 6 1.3 3 8 SS Africa +4 2% Russia 3 20 Viet Nam 2 17 Other Americas 3.8 4 6.2 25 18 Europe -5 -1% Philippines 3.7 4.5 Other S Asia Myanmar 23 3.0 22 21 1.3 Turkey Other E/SE Asia 14 15 C/S America +8 2% 0.7 6.5 7 Australasia Americas Europe NA/ME/CA SS Africa S Asia E/SE Asia 7 7 7 North America +3 1% 4 7 0 1 1 2 2 Australasia +1 3% 1975 1985 1995 2005 2015 Note: 2015 is latest data available for all countries globally in UN FISHStat as of April 2017; Source: UN database; Coriolis analysis 16
Global cross-border seafood trade volumes are growing (10y CAGR 3%) with moderate price gains across the cycle leading to solid export value growth (10y CAGR 6%) GLOBAL EXPORT VOLUME GLOBAL AVERAGE EXPORT PRICE GLOBAL EXPORT VALUE KG; b; 2005-2015 US$/kg; actual; 2005-2015 US$; b; 2005-2015 35.0 $5.00 $160 10y 10y 10y CAGR CAGR CAGR 6% 3% $4.50 3% $140 30.0 $4.00 $120 25.0 $3.50 $100 $3.00 20.0 X = $2.50 $80 15.0 $2.00 $60 $1.50 10.0 $40 $1.00 5.0 $20 $0.50 - $0.00 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Note: data is as reported sender FOB; Source: UN FAO database; Coriolis classification and analysis 17
Global cross-border seafood trade is spread across a wide range of products, though white fish (US$38b), processed seafood ($23.9b), salmon ($15.1b) and prawns ($14.7b) stand out for size GLOBAL SEAFOOD EXPORT VALUE BY PRODUCT CLASS/TYPE US$; b; FOB; 2015 $1.8 $56.6 $11.7 $22.4 $29.4 Total = $121.8 Fish, dry/salt Lobster $3.7 $3.6 Fish oils & fats $1.7 White fish $38.0 Squid, etc. $9.4 Prawns Live fish $14.7 $1.8 Processed seafood $23.9 Tuna $3.5 Salmon Scallops $15.1 $1.4 Other Crustaceans $4.1 Oysters $0.3 Mussels $0.5 Live fish Fish Molluscs Crustaceans Processed Note: “Squid, etc.” uses trade codes under HS03047-03079; Note: 2015 is latest available globally; data is as reported sender FOB; Source: UN Comtrade database; Coriolis analysis 18
Squid, salmon, lobster and processed seafood stand out for their growth in demand over the past five years; white fish has shown slight growth in overall value despite declining volumes 5Y GROWTH MATRIX: 5Y VOLUME VS. 5Y CAGR VALUE VS. VALUE 2015 BY PRODUCT T; b; % of US$; US$b; FOB; 2010 vs. 2015 8% Lobster 5Y CAGR value Squid, etc. US$; 10- 15 7% Fish oils & fats 6% Other Crustaceans 5% Salmon Oysters 4% Scallops Processed seafood 3% Mussels 2% White fish Tuna 1% Bubble size is proportional to seafood export Live fish $3 value in 2015; a bubble this size is US$3b 0% Fish, dry/salt -600 -400 -200 0 200 400 600 800 5Y Change in volume (t) of exported; 10-15 Note: 2015 is latest available globally; data is as reported sender FOB; Source: UN Comtrade database; Coriolis analysis 19
Total global cross-border demand for seafood was US$122b in 2015; the key markets are Europe ($48.2b), the US ($17.8b), Japan ($11.7b) and China/HK (~$10b) GLOBAL SEAFOOD IMPORT VALUE BY RECEIVING COUNTRY/REGION US$; b; FOB; 2015 $1.8 $24.3 $48.2 $3.6 $2.7$0.7 $40.5 Total = $121.8 France Vietnam $6.1 $4.4 Egypt $0.6 Thailand $2.6 Spain Malaysia $5.8 $1.0 Sri Lanka Singapore $0.3 $1.1 Other SE Asia UAE $1.2 $0.6 Italy South Korea $5.5 $4.8 Australia USA $1.4 $17.8 Saudi Germany $0.5 $5.2 SS Africa $2.7 United Kingdom Japan $4.1 $11.7 Other NA/ME/CA Other S Asia Hong Kong SAR $0.4 $4.3 $1.9 Other Europe New Zealand Canada $19.7 $0.2 $2.6 China Brazil $6.6 $1.1 Other Pacific Mexico $0.8 Chile $0.3 Colombia $0.3 Venezuela $0.3 Other$0.0 Americas Russia Other E Asia $1.3 $2.8 Turkey $1.4 $0.2 NA/ME/CA SS Africa Australiasia Americas Europe S Asia E/SE Asia Note: 2015 is latest available globally; data is as reported sender FOB; Source: UN Comtrade database; Coriolis analysis 20
Vietnam, Thailand, South Korea, China and a wide range of other smaller markets stand out for import market growth; Japan and Russia shrank over the period 5Y GROWTH MATRIX: 5Y VOLUME VS. 5Y CAGR VALUE VS. VALUE 2015 BY RECEIVING COUNTRY/REGION T; b; % of US$; US$b; FOB; 2010 vs. 2015 20% Vietnam Sri Lanka 5Y CAGR value US$; 10-15 Thailand 15% Chile Colombia Other E Asia 10% Turkey UAE Other SE Asia Other Americas Malaysia Mexico Singapore China USA S Korea 5% SS Africa Hong Kong SAR UK Other NA/ME/CA Saudi Egypt Other Europe Other S Asia Canada Germany Australia Brazil Italy New Zealand 0% Japan France Spain Bubble size is proportional to seafood import $3 value in 2015; a bubble this size is US$3b -5% Russia -200 -100 0 100 200 300 400 500 600 5Y Change in volume (t) of imported; 10-15 Note: 2015 is latest available globally; data is as reported sender FOB; Source: UN Comtrade database; Coriolis analysis 21
Markets vary in average seafood import price, with Hong Kong, the USA, Canada and Japan, followed by the “Big 4” Europeans, standing out as high value markets TOTAL GLOBAL SEAFOOD IMPORT VOLUME VS. AVERAGE IMPORT PRICE BY KEY MARKET KG; millions; US$/kg; actual; 2015 $9.99 Average import value per kilogram US$/kg 2015 $7.28 $6.25 $6.00 $5.67 $5.54 $5.45 $5.38 $5.33 $5.33 $4.86 $4.31 $4.15 $4.10 $3.97 Weighted average $4.13 $3.78 $3.75 $3.64 $3.37 $3.26 $3.21 $3.03 $2.99 $2.69 $2.62 $2.58 $2.50 $2.52 $2.49 $2.36 $2.08 $2.08 $1.79 $1.65 $1.63 Hong Kong SAR USA Canada Other E Asia Japan Australia Singapore Italy France UK Germany Vietnam Spain UAE Venezuela Mexico Brazil Saudi South Korea Malaysia Other NA/ME/CA Russia Sri Lanka Colombia Other SE Asia Other Americas Chile Thailand Other Pacific Other S Asia Turkey Egypt Other Europe China SS Africa Proportional to import volume in 2015 Note: therefore area under chart is proportional to import value (volume x $/kg); Source: UN Comtrade data; Coriolis analysis and classifications 22
China is the largest seafood exporter overall; New Zealand is a second tier exporter, similar in size to Australia and Argentina GLOBAL SEAFOOD EXPORT VALUE BY SENDING COUNTRY/REGION Total = $121,840 US$; b; FOB; 2015 $2,660 $2,346 $2,323 $23,893 $42,364 $5,336 $42,917 Thailand $5,424 Norway USA $9,078 $5,751 Vietnam New Zealand $6,573 $1,105 Spain $3,645 Indonesia Canada Denmark $3,609 $5,063 $3,221 Japan $1,902 Netherlands $3,377 India $4,818 NA/ME/CA SS Africa $2,660 $2,346 Sweden $3,668 Chile $4,456 China $19,758 Australia $1,066 Ecuador $3,533 Other Europe $15,590 Argentina $1,445 Peru Hong Kong SAR $1,193 $760 Mexico Belarus Other Pacific $986 $258 Other E/SE Asia $152 Russia Other S Asia Other Americas $519 $4,891 $2,824 $1,465 Turkey $704 NA/ME/CA SS Africa E/SE Asia Australasia Americas Europe S Asia Note: 2015 is latest available globally; data is as reported sender FOB; Source: UN Comtrade database; Coriolis analysis 23
New Zealand’s seafood trade share is drifting lower, similar to other Southern Hemisphere cool water peers other than Chile (which has a strong aquaculture sector) GLOBAL EXPORT MARKET SHARE: KEY SOUTHERN HEMISPHERE COOL WATER SEAFOOD EXPORTERS % of value; US$; 2005-2015 4.0% 3.9% 3.8% 3.8% 10Y Change 3.7% 3.7% Chile 0.0% 3.5% 3.5% 3.3% 3.2% 2.8% 1.6% 1.4% 1.4% 1.3% 1.3% 1.3% 1.3% 1.2% 1.2% 1.2% Argentina 0.0% 1.2% 1.1% 1.2% 1.1% 1.1% 1.1% 1.1% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.9% New Zealand -0.4% 0.8% 0.8% 0.9% 0.8% Australia -0.5% 0.6% 0.5% 0.5% 0.5% 0.5% 0.4% 0.3% 0.3% 0.3% 0.3% 0.3% South Africa -0.3% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Note: 2015 is latest available globally; data is as reported sender FOB; Source: UN Comtrade database; Coriolis analysis 24
New Zealand is achieving moderate export price gains but no increase in volume 5Y GROWTH MATRIX: 5Y VOLUME VS. 5Y CAGR VALUE VS. VALUE 2015 BY EXPORTING COUNTRY/REGION T; b; % of US$; US$b; FOB; 2010 vs. 2015 18% Belarus Ecuador 15% 5Y CAGR Turkey India value US$; 10-15 Hong Kong SAR 10% Chile China Mexico Indonesia Sweden Russia Peru Vietnam 5% USA Canada Denmark Netherlands Argentina Spain New Zealand Norway Other Europe 0% NA/ME/CA Other E/SE Asia Japan Other Americas -5% Thailand Bubble size is proportional to seafood import SS Africa $3 value in 2015; a bubble this size is US$3b Other S Asia -10% -450 -400 -200 0 200 400 600 750 5Y Change in volume (t) of exported; 10-15 Note: 2015 is latest available globally; data is as reported sender FOB; Source: UN Comtrade database; Coriolis analysis 25
Exporters vary in their average seafood export price, driven largely by product mix; New Zealand achieves a similar return to the US and Norway SEAFOOD EXPORT VOLUME VS. AVERAGE EXPORT PRICE ACHIEVED BY EXPORTING COUNTRY/REGION KG; millions; US$/kg; actual; 2015 $16.15 Rock Lobster Average export value per kilogram US$/kg 2015 $7.54 $7.55 $6.99 $5.51 $5.21 $5.09 $4.98 $5.01 $4.60 $4.61 $4.45 $4.39 $4.30 $4.05 $4.13 $4.13 $3.89 $3.87 Weighted average $4.13 $3.54 $3.48 $3.42 $3.26 $3.27 $3.66 $3.59 $2.94 $2.83 $2.78 $2.40 $2.04 Australia Hong Kong SAR Mexico Canada Turkey Vietnam Ecuador Sweden Other Americas Indonesia Belarus Denmark Thailand New Zealand Japan Spain Other S Asia Netherlands SS Africa Argentina Other Pacific NA/ME/CA Other E/SE Asia Peru India China Chile Other Europe USA Norway Russia Proportional to export volume in 2015 Note: therefore area under chart is proportional to import value (volume x $/kg); Source: UN Comtrade data; Coriolis analysis and classifications 26
New Zealand Seafood Production + Number of firms + Production + Employment + Regional activity 02 + Yield/productivity + Growth upside
New Zealand produces sustainable quantities of seafood through wild capture and aquaculture - New Zealand has the 10th largest coastline of any country and 6.7m km2 of controlled ocean space - the ninth largest claimed ocean space of any country – however most of this claim is deep water with low productivity - New Zealand produces significant amounts of seafood under both wild capture and aquaculture - Wild capture volumes have benefited from the increase in the allowed Hoki (Blue Grenadier) catch, while aquaculture production has achieved long-term growth 28
New Zealand has the 10th largest coastline of any country and 6.7m km 2 of controlled ocean space - the ninth largest claimed ocean space of any country – however most of this claim is deep water with low productivity LIMIT OF NEW ZEALAND EXCLUSIVE ECONOMIC ZONE (EEZ) AREA OF NEW ZEALAND EEZ BY WATER DEPTH Area; depth; 2017 km2; m; % of area; 2017 Defined as 200 nautical miles from Less than 200m coastline deep 22% 200-1,000m deep 6% More than 1km deep 72% TOTAL = 6.7m square kilometres of EEZ LENGTH OF COAST BY TOP 20 COUNTRIES TOP 20 EXCLUSIVE ZONES (EEZ) BY CLAIMED AREA* Km; 2017 km2; million; 2017 or most recent available Canada 202,080 France 11,691,000 Indonesia 54,716 United States 11,351,000 Greenland 44,087 Australia 8,505,348 Russia 37,653 Russia 7,566,673 Philippines 36,289 United Kingdom 6,805,586 Japan 29,751 Indonesia 6,159,032 Australia 25,760 Canada 5,599,077 Norway 25,148 Japan 4,479,388 United States 19,924 New Zealand 4,083,744 New Zealand 15,134 Chile 3,681,989 China 14,500 Brazil 3,660,955 Greece 13,676 Kiribati 3,441,810 United Kingdom 12,429 Mexico 3,269,386 Mexico 9,330 Micronesia 2,996,419 Italy 7,600 Denmark 2,551,238 Brazil 7,491 Papua New Guinea 2,402,288 Denmark 7,314 Norway 2,385,178 Turkey 7,200 India 2,305,143 India 7,000 Marshall Islands 1,990,530 Chile 6,435 Portugal 1,727,408 * Sovereign states including dependent territories; Note: a nautical mile is 1,852 metres; Source: CIA World Fact Book; FAO; Seaaroundus.org; Sealord; Coriolis analysis 29
New Zealand produces significant amounts of seafood under both wild capture and aquaculture TOTAL NZ WILD CAPTURE SEAFOOD PRODUCTION AQUACULTURE PRODUCTION PER KILOMETRE OF COAST Tonnes; 000; 1950-2015 Tonnes; actual; 1950-2015 97-08 700 CAGR 10 -3.2% 9 600 76-97 08-15 CAGR CAGR 8 11% -0.6% 500 7 6 400 5 300 50-76 CAGR 4 3% 200 3 2 100 UNCLOS 1982 EEZ 200nm 1 0 - 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 NZ WILD CAPTURE PER PERSON SHARE OF TOTAL SEAFOOD PRODUCTION BY TYPE KG/capita; actual; 1950-2015 % of tonnes; 1950-2015 200 100% 180 90% 160 80% Wild capture 140 70% 120 60% 100 50% 80 40% 60 30% 40 20% Aquaculture 20 10% - 0% 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Note: 2015 data latest available as of April 2017; Source: UN FAO FishStat database; MFish/MAF/MPI; Coriolis analysis 30
Wild capture volumes have benefited from the increase in the allowed Hoki (Blue Grenadier) catch, while aquaculture production has achieved long-term growth TOTAL WILD CAPTURE BY SPECIES GROUP TOTAL AQUACULTURE PRODUCTION BY KEY SPECIES Tonnes; 000; 1975-2015 Tonnes; 000; 1975-2015 117 649 648 112 112 111 110 108 105 105 600 589 100 570 557 97 553 551 546 545 94 92 92 91 Abalone Oyster 495 87 86 85 477 470 453 453 444 443 442 440 77 437 76 433 433 430 75 425 70 386 Other 352 316 Silver warehou 53 Orange roughy 52 51 Blue mackerel 277 49 Mussel Oreo dories nei Ling Arrow squid 241 Snoek 208 208 203 Southern blue whiting 196 169 167 Mackerels nei 29 28 154 27 117 19 98 17 78 69 Hoki 12 63 11 10 7 Pacific salmon 3 3 3 3 2 2 1 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Note: 2015 data latest available as of April 2017; Source: UN FAO FishStat database; MFish/MAF/MPI; Coriolis analysis 31
New Zealand Category Performance + Segmentation + Key products 03 + Exports by product
New Zealand has a solid position in select seafood products where it has real strengths OVERVIEW BY CATEGORY - New Zealand has a stable wild seafood catch, is a leader in rock lobster and is innovating in mussel and salmon products - WILD CAPTURE Thanks to pioneering quota management systems, New Zealand has a long-term, sustainable supply of ~450k tonnes of wild capture seafood available - Exports are spread across six categories - ROCK LOBSTER* New Zealand has a long-term, sustainable - however wild capture (54%), rock lobster (20%), and supply of rock lobster available; export value growing strongly, mussels (14%) are the largest with almost all volume now going to China/Hong Kong - Export value is growing across the cycle - MUSSELS New Zealand has a strong position in green shelled mussel aquaculture, producing a third of global green supply; - Average export price varies by category, with rock lobster export value growing strongly standing out for dramatically higher prices and wild capture accounting for the bulk of export volume - SALMON New Zealand is the global market leader in King/Chinook Salmon aquaculture, a small but premium - Mussels, salmon, oysters and lobster are shifting to value species; there is potential for further strong growth (higher prices at lower volumes), while wild capture is experiencing falling volumes and price pressure * Rock Lobster: While rock lobster is a “wild capture” seafood in New Zealand, this project considers it separately, due to its significance and growth 33
New Zealand has a stable wild seafood catch, is a leader in rock lobster and is innovating in mussel and salmon products KEY HIGH-LEVEL CATEGORIES WILD CAPTURE ROCK LOBSTER MUSSELS SALMON Stable Major Global Pioneering Farmer & Exporter #1 Global Farmed Supply Exporter Unique Species Chinook/King Salmon - Stable, predictable, secure long term - Well managed fishery - Modern and consolidated industry - Highly consolidated and at scale supply of fish - Stable supplies - Proven supply chain, track record in in- - Effectively only global supplier of - NZ pioneering of wild catch quota store merchandising systems farmed Chinook; others hampered by management has prevented collapse of - One of two major global suppliers of disease fish stocks (unlike competitors) spiny red rock lobster (rest of world - Recently implemented breeding primarily clawed lobster) program driving productivity gains - Lack of key salmon diseases (e.g. ISA) - Growing strongly into China and wider - Huge potential for growth (5x/10x) Asia Source: photo credit (purchased, courtesy of firms or fair use; low resolution; complete product/brand for illustrative purposes); Coriolis classifications and analysis 34
Exports are spread across six categories, however wild capture (54%), rock lobster (20%), and mussels (14%) are the largest; exports are growing across the cycle NEW ZEALAND SEAFOOD EXPORT VALUE BY SEGMENT NEW ZEALAND SEAFOOD EXPORT VALUE BY SEGMENT US$; m; 2015 US$; m; 2005-2015 Salmon $36 Oysters $1,242 $1,236 $1,218 3% $14 $1,187 1% $129 $96 $131 $115 $13 $1,105 Mussels $12 $30 $153 $37 $15 $1,033 $15 $44 $90 Processed seafood 14% Processed $42 $14 Oysters seafood, $90 , $949 $104 $150 $206 $36 Salmon 8% $144 $907 $167 $83 $12 $873 $875 $853 $52 $153 Mussels $95 $12 $77 $30 $83 $79 $181 $11 $12 $119 Lobster $19 $26 $10 $205 $223 $12 $142 $36 $174 $214 $27 20% $113 $126 $214 Lobster $114 $124 $163 $80 $89 $128 $82 $116 Wild capture $598 $733 54% $673 $678 $668 $574 $583 $598 Wild capture $539 $559 $554 $505 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 NOTE: “processed seafood is seafood relevant global trade codes under HS 1603-1605 (see page 80 for details); oysters includes wild catch and export (inseparable at source); Source: UN Comtrade database (from NZ Customs data); Coriolis classifications and analysis 35
Average export price varies by category, with rock lobster standing out for dramatically higher prices and wild capture accounting for the bulk of export volume; mussels, salmon, oysters and lobster shifting to value (higher prices at lower volumes), while wild capture is experiencing falling volumes and price pressure GROWTH MATRIX: 5Y # VS. 5Y CAGR $/KG VS. $/2015 NEW ZEALAND EXPORT VOLUME VS. AVG $/KG: BY SEGMENT Kg; US$/kg; US$; 2010-2015 KG; millions; US$/kg; actual; 2015 10% $68.67 5Y CAGR of Average average NZ NZ export export value value per per kilogram kilogram US$/kg 10- Mussels Bubble size is proportional to US$/kg 15 export value in 2015; a $100 2015 8% bubble this size is US$100m Oysters 6% Salmon 4% Lobster Weighted average $2.84 2% $10.30 $9.25 $7.94 0% $5.35 Wild capture $2.52 Processed seafood -2% Lobster Salmon Oysters Processed Mussels Wild capture -10 -5 0 5 10 15 20 5Y growth in export volume; kg; m; 2010-2015 Proportional to NZ export volume in 2015 NOTE: Oysters includes wild catch and export (inseparable at source); Source: UN Comtrade database (from NZ Customs data); Coriolis classifications and analysis 36
WILD CAPTURE Thanks to pioneering quota management systems, New Zealand has a long-term, sustainable supply of ~450k tonnes of wild capture seafood available WILD CAPTURE OF SEAFOOD IN NZ WATERS NZ WILD CAPTURE SEAFOOD EXPORTS T; 000; 1950-2015 US$m; 2005-2015 10Y CAGR 10Y ABS $598 Other Crustaceans 3% +$5 $574 $20 $1 Scallops -11% -$1 600 $15 $2 $39 Squid, etc. -11% -$87 $32 Tuna 6% +$14 $126 500 $18 400 Hoki 300 $505 White fish 2% +$93 $412 200 Other marine 100 Live fish Squid $1 $2 6% +$1 - Other 2005 2015 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 Source: US FishStat database; UN Comtrade database; photo credit (CC BY-SA 1.0); Coriolis classifications and analysis 37
ROCK LOBSTER New Zealand has a long-term, sustainable supply of rock lobster available; export value growing strongly, with almost all volume now going to China/Hong Kong NEW ZEALAND SPINY RED ROCK LOBSTER CATCH VOLUME GLOBAL CHILLED ROCK LOBSTER EXPORT VALUE BY REGION T; 000; 1950-2015 US$m; 2005 vs. 2015 10Y CAGR 10Y ABS $862 12 10 CAGR 9% $521 Australia 11% +$338 8 6 $351 4 Other $183 Europe $212 New Zealand 11% +$136 2 15% $76 $42 South Africa 5% +$16 0 $26 $66 $87 Other 3% +$21 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2005 2015 EXAMPLE PRODUCTS: KIWI LOBSTER NZ CHILLED/FROZEN LOBSTER EXPORT VALUE BY DESTINATION 2017 US$m; 2005-2015 CAGR $214 10% $1 Other $163 $8 $213 China/HK $80 $19 $155 $61 2005 2010 2015 Source: US FishStat database; UN Comtrade database; Coriolis classifications and analysis 38
MUSSELS New Zealand has a strong position in green shelled mussel aquaculture, producing a third of global green supply; export value growing strongly NEW ZEALAND MUSSEL EXPORT VALUE NZ MUSSEL AQUACULTURE PRODUCTION US$m; 2005-2015 Tonnes; 1950-2015 CAGR 10Y CAGR 10Y ABS 2% France 100 $182 6% $156 80 60 $112 $151 Mussels (not-live) 3% +$40 40 Other 20 Europe 15% $1 0 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 $1 Mussels, live 5% +$1 $43 $29 Mussels, prepared -4% -$14 2005 2015 EXAMPLE PRODUCTS: SEALORD NZ SHARE OF GLOBAL MUSSEL EXPORT VALUE BY TYPE 2017 % of US$; share of tonnage; 2015 48.1% NZ Share of world trade % of US$; 2015 0.9% 0.7% Mussels (not-live) Mussels, prepared Mussels, live Proportional to cross-border volume in tonnes in 2015 Source: US FishStat database; UN Comtrade database; photo credit (courtesy Sealord); Coriolis classifications and analysis 39
SALMON New Zealand is the global market leader in King/Chinook Salmon aquaculture, a premium species produced by aquaculture in New Zealand NEW ZEALAND SALMON EXPORT VALUE AGGREGATE GLOBAL SALMON EXPORT GROWTH US$m; 2005 vs. 2015 US$b; 2005 vs. 2015 $44 10Y CAGR 10Y ABS $9.5 CAGR CAGR 9% 12% $26 Salmon, chilled whole 9% +$15 CAGR $19 CAGR 5% $3.2 11% CAGR 5% $2.9 $11 $13 Salmon, frozen whole 10% +$8 $1.6 $1.8 $1.1 $0.6 $0.7 $5 2005 2015 $4 Salmon, smoked 5% +$2 $3 Other $0 $1 11% +$0 Salmon, chilled whole Salmon, smoked Salmon, frozen whole Other salmon 2005 2015 AVERAGE EXPORT PRICE: WHOLE CHILLED SALMON: NZ & PEERS EXAMPLE PRODUCTS: MT COOK ALPINE SALMON US$/kg; FOB; 2016 2017 New Zealand $11.10 United Kingdom $8.26 Australia $7.61 Canada $7.35 Norway $7.17 Chile $6.66 USA $5.84 Source: UN FishStat database; UN Comtrade database; photo credit (courtesy the great people at Mt Cook Salmon); Coriolis classifications and analysis 40
New Zealand Growth & Innovation + Horizons for growth + Mega-trends driving change + Emerging export stars + Innovation & new products 04 + New viable options
New Zealand firms continue to develop a range of innovative new seafood products THREE HORIZONS OF GROWTH HORIZON 3: NEW, VIABLE OPTIONS - Beyond its mature core export products (Horizon 1), New Zealand - In Horizon 3, New Zealand is creating and nurturing a wide range of has both a strong range of emerging export stars (Horizon 2) and viable options for future export success continues to innovate and produce new, viable export options (Horizon 3) - Four broad global consumer mega-trends are driving growth and new product development in the food & beverage industry HORIZON 2: EMERGING EXPORT STARS - New Zealand seafood products succeeding on-shelf in export - In Horizon 2, New Zealand is building a range of emerging export markets are aligned with these trends products - These trends drive new product development, through (1) packaging, - Two seafood products emerge as “growth stars” – fish extracts and (2) product, (3) category and (4) channel innovation; success, whole salmon – from an evaluation of ten years of product-level trade however, often comes down to implementation and execution growth - New Zealand seafood firms are delivering on… - Fish extract exports are growing and the product plays to New Zealand strengths in nutraceuticals - Packaging-driven innovation - New Zealand whole chilled salmon exports are growing, with the US - Product-driven innovation market as the key success, having grown from US$2m to US$15m in a decade - Category and channel innovation 42
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