Karavela CEO: Canned seafood consumers want new but familiar products

Riga, Latvia-headquartered SIA Karavela is one of Europe’s leading fish-canning companies. Karavela CEO Andris Bite told SeafoodSource that while the firm has undergone many changes in its 140-year history, it remains fast-growing and innovative, with the overriding ambition “to become and to establish ourselves as the trendsetter of canned fish consumption in the Western world.”

In 2020, Karavela posted its best-ever turnover of EUR 66 million (USD 77.3 million) and exported products to 46 countries. The main factors behind this success, Bite explained, include the company’s ability to make quick decisions and a continuous investment in research and development. He also cited the company's flexible production infrastructure that supports the efficient mass-production of low-margin products and its rollout of more complex, high value-added items. Added to this, the company’s management has built a strong team of specialists at all levels, he said.

“Specialists provide the operational work of the company and the daily involvement of the owners allows us to make quick and efficient decisions in comparison to our Western colleagues and competitors, for whom it may take longer," he said. 

Bite discussed the company’s current status, and its future plans, with SeafoodSource. 

SeafoodSource: How much seafood is now being produced by Karavela? 

Bite: In 2020, the company processed more than 16,000 metric tons (MT) of fish, sourced from all of the world’s major fishing areas. Today, it would be easier to list what we do not produce. Our main raw materials are mackerel, herring, sardines, sprats, all types of tuna, mussels, and all types of salmon. We have also begun a cooperation with VIČI, from who we purchase surimi shrimp and crab claws, thus moving this production from the usual shelf of chilled products to ambient. The year 2021 – with more than 90 million cans sold –­ has been successful, and we think that in 2022, we will exceed the threshold of 100 million cans.

For the last five years, the company has been growing rapidly – at a rate of 20 to 30 percent per year. We are growing and developing. A key reason for this is our powerful R&D department. We are also constantly following the offers of our competitors and what’s demanded by the market. And currently, we are successfully managing it. Further growth can take place thanks to new geographic markets, as well as the addition of new products to our expanding ranges.

We now have more than 40 export markets, the largest of which are Scandinavia, Germany, United Kingdom, and the United States. In more recent years, we have achieved the largest growth in the German market. However, in the near future we will be working on new products to significantly increase our sales in the U.K., U.S., Australia, and Benelux markets. We are achieving growth thanks to our ability to be competitive among supermarkets’ standard private-label products, as well as by offering interesting products that supermarkets in these countries are willing to use in their “in-out” promotions. We understand the differing consumer tastes in different countries.

SeafoodSource: What are the main changes to have taken place in the canned seafood sector in recent years, and how competitive is it today?

Bite: The first thing to understand is that the market for canned fish is indeed very conservative; it’s influenced by things beyond the consumer’s control, such as whether or not the fish has MSC [Marine Stewardship Council] certification, what the vegan market is currently moving towards, and so on. Consumers always say that they are expecting some new products from the manufacturers, but when these products do appear, often they are not purchased. Therefore, we think it’s important to find new solutions among the products that the consumers already love, to combine new tastes and the visual appearance of the products, for example, our TL [transparent lid].

Over the last 10 years, a steady decline has been observed in the canned fish industry in terms of the number of companies. There has also been industry consolidation. At the same time, some large multinational companies have continued to expand in the industry by purchasing the strongest brands.

Most products are industrially produced, thus there’s a lot of competition. In addition, great influence comes from the price and assortment of supermarket’s private-label products and the strength of brands in each market, which practically no longer allow the emergence of new brands. Therefore, the possibility of new players entering the market is not entirely excluded, but this is quite unlikely. The most difficult situation is faced by the medium-sized companies that produce only industrial goods, as their costs mean they are unable to compete with the large companies and, thus do not have the higher value-added offerings that could generate profit.

SeafoodSource: How has Karavela been differentiating itself from other canned producers in and around the European market?

Bite: One thing that we are proud of is that Karavela is currently the largest exporter of canned fish in Northern Europe. We are not the largest producer of canned products, but we are definitely the largest exporter. In 2020, we exported more than 84 million cans.

At the same time our advantages and disadvantages are visible. Latvia is a small market, and in order to expand, we must always work on our competitiveness. In turn, the large European markets such as Poland, Germany, and France have large domestic markets, and so those manufacturers first try to compete to maintain and increase their own market size. From this point of view, we can say that in order to obtain “volumes” in this market, we must be able to offer such products and services that are interesting for the local buyers. And we do succeed in doing this. Therefore, we could say that Karavela’s R&D department is among the best in Europe.

We are also the only canned fish production company in Europe that has been able to combine the mass production of popular products with product groups that require a much more flexible technical base and greater labor involvement, and which are innovative and unique at the same time. Other producers are either unable to offer such products or they cost much more. Another thing that sets us apart from our colleagues is our constant investment in new product development and additional production lines to enter new market segments.

SeafoodSource: In what ways has Karavela been affected by the COVID-19 crisis?

Bite: Last year was excellent for us. This was not because of COVID, but because we had worked well in the previous years. This year, however, we are feeling the negative effects of COVID. This is related more to the fact that consumer habits have changed, and because all work with customers has been taking place remotely – there’s been no one in their offices, no one to present our new products to or to make decisions about their inclusion in the assortment or in-out promotions. But current sales are still at the 2019 level, which is OK.

SeafoodSource: Looking ahead, what are the main challenges and opportunities for the canned sector and for Karavela?

Bite: As I have mentioned, the sector is very conservative, and the problems it’s facing today are not related to the consumers, but to the sustainability of fish. And of course, everyone is interested in how the new market trend of vegan seafood will develop.

In some large markets, the challenge is to ensure a production volume that is balanced with the market capacity. There are some large national markets where producers, influenced by competition, have been operating without profitability for years, which results in slower development and inability to create new demand.

The second task is to acquire and maintain interest in the products from young consumers – so that there’s no gradual abandonment of the product group as the generations change. We place high hopes on our innovation product group – such as with transparent lids that visually attract the attention of such buyers, who may not have bought canned food before.

Karavela is constantly investing in both the production of new product groups and in R&D, which will allow us to retain the attention of customers and also allow us to maintain the company’s financial profitability in the long-run. For the next three years, the company has approved an investment plan of EUR 15 million (USD 17.6 million) for the installation of new production lines and the production of new product groups, including canned skinless and boneless wild salmon and vegan fish products. There will soon be some news for us to share in the vegan sector, with a major presentation scheduled at the end of September, before the ANUGA exhibition.

We strive and believe that we are able to be an innovative producer of canned fish that creates constant customer [B2B] interest in us and gradually allows us to become the trendsetters of canned fish. Within five years, our plan is to increase our production to about 120 million cans, using about 20,000 MT of raw materials.  

Photo courtesy of SIA Karavela