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China’s onlyChina’s only
Integrated Aquatic ProductsIntegrated Aquatic Products
CompanyCompany
HQHQ Sustainable Maritime Sustainable Maritime Industries, inc.Industries, inc.
2
HQHQ’s processing facilities and aquaculture operations are located on the pristine tropical island province of Hainan.
HQHQ’s Unique Location’s Unique Location
HainanHainan offers: offers:
• Only in Hainan can sashimi-grade tilapia be raised year round. 20% per year increase in Tilapia farms over the last 2 years in Hainan which will continue at the same pace for the next 5 years.
•
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0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
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2001
2002
2003
2004
2005
(es
t.)
2006
(es
t.)
Year
Met
ric
ton
s
Aquaculture Fishery
Global production of tilapia
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Sources of Imported Tilapia to the US
0
50000
100000
150000
200000
250000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
(LW
E in
metr
ic t
on
s)
others
Thailand
Indonesia
Colombia
China
Mexico
Jamaica
Ecuador
Costa Rica
Taiw an
US. Tilapia Imports 1993-2004:US. Tilapia Imports 1993-2004:China Now Dominates Market ShareChina Now Dominates Market Share
Source: American Tilapia Association
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50,000
100,000
150,000
200,000
250,000
300,000
350,000
Met
ric
tons
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
US Tilapia consumption229,000 mt of live weight-2004
306,410 mt of live weight-2005
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Value of US Tilapia Forms Imported into the US
297,413,000 (2004) $392,978,298 (2005)
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2000 2001 2002 2003 2004Tuna 3.5 Shrimp 3.4 Shrimp 3.7Shrimp 4.0 Shrimp 4.2Shrimp 3.2 Tuna 2.9 Tuna 3.1Tuna 3.4 Tuna 3.4Pollock 1.6 Salmon 2.0 Salmon 2.0 Salmon 2.2 Salmon 2.2Salmon 1.5 Pollock 1.2 Pollock 1.1 Pollock 1.7 Pollock 1.7Catfish 1.1 Catfish 1.1 Catfish 1.1Catfish 1.1 Catfish 1.1Cod 0.8 Cod 0.6 Cod 0.7 Cod 0.6 Tilapia 0.7Clams 0.5 Clams 0.5 Crabs 0.6 Crabs 0.6 Cod 0.6Crabs 0.4 Crabs 0.4 Clams 0.5 Tilapia 0.54 Crabs 0.6Flatfish 0.4 Flatfish 0.4 Tilapia 0.4Clams 0.5 Clams 0.5Scallops 0.3 Tilapia 0.35 Flatfish 0.3 Scallops 0.3 Scallops 0.3Tilapia 0.28
Top Ten Seafoods (U.S.)per capita (lbs)
Tilapia is the 4th most popular seafood import in 2006 according to USDA
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0
20
40
60
80
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120
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1950's 1970's 1990's 2010
Mil
lion
Met
ric
Ton
s
All seafood & aquaculture productionAll meat production
Ocean Catch
All meat includes: beef, poultry, swine & sheep.All seafood includes: ocean and farm catch.Ocean Catch: ocean catch only.
Aquaculture Market
Projected
Total World Protein Production
Fish consumption is currently 70 percent the size of all other meat products combined.
World Fish Consumption will Surpass all World Fish Consumption will Surpass all other Protein Consumption Combinedother Protein Consumption Combined
The future is fishThe future is fish
Current
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• World tilapia production expected to reach 1,500,000 mt in 2004 and 2,000,000 mt by 2010
• 2004 world sales over $2 billion • 2010 sales projected
to be over $5 billion
Projected World Tilapia Projected World Tilapia Production and SalesProduction and Sales
Source: American Tilapia
Association
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HQHQ’s Cost Advantage’s Cost AdvantageTilapia ProductionTilapia Production
• China - $0.70/kg• Philippines, Indonesia - $0.80/kg• Brazil, Ecuador, Thailand - $0.85/kg• Honduras, Costa Rica - $0.90/kg• Mexico - $1.00/kg• Taiwan Province - $1.05/kg• US - $2.00/kg• Canada - $2.10/kg
Sou
rce:
Am
eri
can
Tila
pia
A
ssoci
ati
on
• China - $3.50/kg• Philippines, Indonesia - $4.00/kg• Brazil, Ecuador, Thailand - $4.25/kg• Honduras, Costa Rica - $4.50/kg• Mexico - $5.00/kg• Taiwan Province - $5.25/kg• US - $10.00/kg• Canada - $10.50/kg
At PondAt Pond At Plant At Plant (Frozen tilapia fillet)(Frozen tilapia fillet)
HQHQ competes at Chinese price levels while competes at Chinese price levels while producing sashimi-grade frozen fillet.producing sashimi-grade frozen fillet.
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Quality Labor, Quality Quality Labor, Quality Conditions, Cost AdvantageConditions, Cost Advantage
• Low labor costs in China let HQHQ operate at a cost advantage over international competitors, while providing workers with quality working conditions and good pay.
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HQHQ Mission Statement Mission StatementVertically integrated qualityVertically integrated quality
• To bring quality and excellence to every aspect of HQHQ’s vertically integrated aquatic products business.
• To be the world’s leader in tilapia markets based on market driven products of the highest quality while generating strong profitability.
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Our BusinessOur BusinessQuality responding to demandQuality responding to demand
• HQ is the leading direct Chinese exporter of quality tilapia (frozen) products to the US.
• HQHQ has uniquely integrated operations:– R & D – Aquaculture (through cooperative supply
arrangement)– Processing of aquatic products in response to
evolving market demand – Nutraceutical manufacture and – Sales and Marketing
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The Market OpportunityThe Market Opportunity Global demand ….increasing and changingGlobal demand ….increasing and changing
• The global ocean catch has not increased for the last five years and cannot keep pace with demand.
• The shortfall is being met by aquaculture production, and China is the leading producer.
• Higher quality aquaculture products are demanded by consumers.
HQHQ’s on-hand orders are greater ’s on-hand orders are greater than current production capacity.than current production capacity.
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HQHQ Growth StrategyGrowth Strategy
• Distribution and branding initiativeDistribution and branding initiative..
• PPatented nutraceutically enriched organic atented nutraceutically enriched organic feed formulae with expanded plant feed formulae with expanded plant production.production.P
has
e 2
Ph
ase
1
The TiLoveYa brand is the symbol for HQ’s future growth...vertically integrated quality supporting a strong brand
17
HQHQ Growth StrategyGrowth Strategy ®
Distribution and Branding InitiativeDistribution and Branding Initiative• HQ has relocated its corporate and sales offices to the Pacific
North-West, and acquired Pacific Supreme Seafoods, headed by Trond Ringstad, who becomes HQ’s Executive VP, Sales and Distribution ;
• Trond has begun rolling out the new TiLoveYa® brand with appropriate support documents, web site, and marketing campaign.
• New corporate presentations are airing on CNBC through paid programming on PTG’s Business and Beyond & World Business Review with Alexander Haig
Ph
ase
1
18
HQHQ Growth StrategyGrowth Strategy
Distribution and Branding InitiativeDistribution and Branding Initiative• HQ will sell directly to major purchasers of Tilapia a
differentiated product at higher margins supported by the new branding and marketing initiative.– Such targetted buyers include;
• Wholefoods• Albertson’s• Stop “n Shop• Appleby’s• Denny’s• Red Lobster Restaurants
Ph
ase
1
®
19
HQHQ Growth StrategyGrowth Strategy
Distribution and Branding InitiativeDistribution and Branding Initiative
New Sales Team will;• Enhance sales margins through marketing
campaign;• Manage import of product and distribution;• Begin sales of fresh product including zero-
toxin shrimp products;• HQ’s processing plant and shrimp farms are
being certified to ACC standards making HQ the first such certified operations in China;
®
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• Profitability will be enhanced through the demands of traceability and applied technologies including;– Real time inventory of products and raw
materials– Business intelligence data analysis tools– Ongoing quality and environmental monitoring
HQHQ Growth StrategyGrowth Strategy
Distribution and Branding InitiativeDistribution and Branding Initiative
Ph
ase
1
®
21
All Tilapia are not created All Tilapia are not created equal,..TiLoveYa equal,..TiLoveYa ® Zero toxin Tilapia Zero toxin Tilapia
for Lovers of healthy Foodfor Lovers of healthy Food
Ph
ase
1®
22
HQHQ Growth StrategyGrowth Strategy
Feed Mill and patented FeedFeed Mill and patented Feed
• Construction of local Feed Mill ill provide newly formulated feed for HQ including “floating feed”
• Feed production to organic standards and nutraceutically enriched
• Partnership through licensing agreement with American organic feed formulation companies and others to benefit from their proven technology
• R & D input from Chinese nutraceutical and feed experts
Ph
ase
2
®
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HQHQ Growth StrategyGrowth Strategy
Nutraceutical Products ManufactureNutraceutical Products Manufacture
Health and nutraceutical product plant and Specific Gravity Molecular Separator owned by HQ
Ph
ase
2
®
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HQHQ Growth StrategyGrowth Strategy
Nutraceutical ProductsNutraceutical Products
Ph
ase
2
25
HQHQ Growth StrategyGrowth Strategy
Expanded ProductionExpanded Production • Construction of a new production plant
or acquisition and upgrade of an existing plant will more than double capacity and introduce some value added products such as breaded fillet.
Ph
ase
2
®
26
ConclusionConclusionResponding to demandResponding to demand
• World protein markets will be dominated by fish in the coming years
• Traceability and consumer awareness of health issues create opportunities for farmed organic products nutraceutically enriched by a vertically integrated company
• HQ is the leader in responding to these challenges
HQHQ
27
HHighest ighest QQualityuality