With new products and funding, Nueva Pescanova looks for fresh start

Nueva Pescanova has been in the news often in the past few years, but Ignacio Gonzalez, the CEO of the Spanish seafood giant, is much happier with the headlines his company is making since he took over as its leader in February 2016.

After a messy bankruptcy procedure, allegations of financial mismanagement, the firing of the former CEO and board of directors, and a drawn-out fight with the major shareholders of its previous corporate entity (dubbed Old Pescanova), Gonzalez has charted a new course for the Redondela, Spain-based company. Following at strategic plan put into place in 2016, Gonzalez has based his efforts around two main objectives: new funding and new products.

“If you don’t have funds, you can’t execute a strategy,” Gonzalez told SeafoodSource at Seafood Expo Global in Brussels, Belgium in April. “It’s like two sides of a coin.”

Gonzalez scored a big victory prior to the expo when the company’s board of directors approved a EUR 135.4 million (USD 156 million) capital increase in April, a move that helped clear the company of a significant portion of its debt.

“It’s a big vote of confidence in us as management, because the banks were supposed to leave the company but instead, they are betting on the company,” Gonzelez said. “The reduction in debt means the company is now free to execute the strategic plan.  It would have been very difficult to imagine [executing] our plan without this new capital injection.”

At Seafood Expo Global, the company launched a new seafood snack range it called “Dippeos,” which the company dubbed, the “coolest, easiest and most fun way to enjoy prawns.” The pre-peeled, pre-cooked product range all comes in 155-gram packages and includes a variety of sauces, including tartar, cocktail, and mayonnaise.

“With this launch, Pescanova innovates by introducing itself in the refrigerated seafood segment, betting on more spontaneous consumption moments. The products are in line with current trends that are seeing snacking become more popular at home,” the company said in its product announcement. 

Gonzalez told SeafoodSource the Dippeo range represented the type of innovation he was looking for out of his company.

“The product is chilled, not frozen, which makes it more convenient, and it’s targeting a much younger demographic,” he said. “We think seafood is entering a different era of consumption, where it doesn’t need to be the birthday of your husband, or Christmas, to be an occasion for seafood. With the Dippeos, you just have it in the fridge, and if friends surprise you with a visit, you can reach for them like you would olives or whatever else is in the fridge.”

Gonzalez said the product could be easily internationalized by simply switching up the flavors of the sauces. That internationalization is important, because Pescanova sells its products in more than 80 countries around the world.

“The Dippeos summarize a lot of the strategy of the company,” he said.

That strategy is grand in scope and ambitious in its goals, Gonzalez acknowledged, admitting that the company is committed to “making every effort to be the number one food company in the market.” With more than 12,000 employees and operations in 27 countries on four continents, including fishing, aquaculture, processing, wholesale, product development, marketing, and distribution, it’s not easy to pivot. However, in making the plan, the company’s leaders went back to square one, asking themselves many tough questions, Gonzalez said. 

“We asked ourselves, ‘Is it worth it to fish or not, to have farms or not? Is our product development process adequate? Is the brand up to proper standards?’ and we learned a lot about ourselves in the process,” he said.

One of the biggest revelations, according to Gonzalez, was that the company  has historically been to focused on the frozen sector, and that it would like to focus more on fresh seafood moving forward. Another strategic decision made through the process was a plan to move beyond hake and shrimp.

“We don’t need to be dependent on bringing in certain things to sell them. We’re big enough that can sell whatever the sea brings us,” Gonzalez said. “We have proven that the Pescanova brand is strong enough to enter new categories and to succeed. The credibility the brand has in the retail arena is huge.” 

Geographically, Nueva Pescanova’s strategic plan calls for an aggressive push deeper into what it calls its “Big Five” markets, which include Spain, Portugal, France, Italy and the United States. For Spain and Portugal, the company has market share of around 18 to 20 percent, and so it must focus on innovation and entering new channels, such as foodservice, Gonzalez said. In Italy and France, “it’s much more about putting the brand where the brand needs to be.”

“We are present in big retailers in Italy, but we need to have a larger presence, and we need to enter the chilled category there because we’re not there now,” Gonzalez said. “And it’s a similar situation in France. “

Nueva Pescanova’s ambitions for the United States focus on increasing sales from current levels at around USD 100 million (EUR 867,000) to eventually reach USD 1 billion (EUR 868 million), primarily through expanding into retail. To lead that endeavor, earlier this year the company hired Richard C.E. Grant as its new CEO for its United States operations.

The company’s overall financial goal, according to its strategic plan, is to see its earnings before taxes, depreciation, and amortization (EBITDA) hit EUR 139 million (USD 160 million) by 2020, up from its 2016 EBITDA of EUR 68 million (USD 78 million). As part of that overall goal, the company hopes to achieve EUR 1.4 billion (USD 1.6 billion) in sales by 2020, up from its current figure of a little more than EUR 1 billion (USD 1.15 billion) in sales in 2016.

Those goals are achievable, Gonzalez said, even with debt load still an issue for the company. Nueva Pescanova has spare production capacity near 50 percent, he said, “so nearly all the growth were looking for can come from inside the company, and can be achieved with no major investment.”

Currently, between 45 and 60 percent of the company’s revenues come from non-branded food sales, while just 40 to 45 percent comes from its branded foods. Gonzalez said he’s like to see those numbers flip in the next few years.

“The resurrection of our company is not going to come from selling bulk, two-kilo bags of frozen shrimp,” Gonzalez said.

Besides its “loved” brand name, Nueva Pescanova’s size and its vertical integration can become major advantages, allowing the company to implement traceability from boat or aquaculture pond to plate, Gonzalez said.

“That’s going to make a big difference, if we can tell our customers who the captain of the boat was who caught the fish they’re eating,” he said. “Lots of other companies can fish and farm like we do, but not many can do full traceability as easily as we can.”

The seafood sector still has numerous challenges, Gonzalez acknowledged. 

“It’s obviously always going to be tough. There’s always competition, we have to deal with crises in countries we operate in, and consumption is weak,” he said. “But we are in good categories, and we think that people want to be healthy, and the health benefits of seafood are there.”

Gonzalez is so convinced about the future of the seafood industry that he said one of the biggest challenges for the company’s – and the sector’s – future will be to provide enough food to keep up with demand. Global population trends favor seafood, he said, and Nueva Pescanova has committed to aquaculture as a sustainable solution to feed the world’s growing masses, he said.

“We want to send a strong message supporting aquaculture,” he said.

That message includes a EUR 4.5 million (USD 5.2 million) investment in the construction of the new Pescanova BioMarine Center in Pontevedra, Spain. The center will concentrate on improving farming practices for turbot, vannamei shrimp, and tilapia, and will study and research the development of new species.

Another major goal for the company, Gonzalez said, is its eventual public listing. He said the recent moves by the company’s investors – primarily Spanish banks and other financial institutions – to inject cash into the business shows their confidence in the company’s plan.

“Our idea to put the company in good shape to be ready for stock market in 2020,” Gonzalez said. “A lot of people are looking at us knowing the banks are not going to exit now. Everyone is looking at the future, thinking that we have an interesting model.”

Another recent sign that markets are receptive to a Nueva Pescanova stock listing is the performance of the stock of “Old Pescanova” – essentially a holding company whose main asset is a 1.6 percent share in Nueva Pescanova. Since being relisted on the Madrid Stock Exchange, the stock price has soared from a low of EUR 0.14 (USD 0.16) to a high of EUR 3.38 (USD 3.90), though the price has leveled off recently around EUR 1.50 and 2.00 (USD 1.73 to 2.31).

“We’re optimistic,” Gonzalez said of his company’s future. “I am fully convinced – every day, the number of opportunities the company has is amazing. Our growth potential is infinite.”