A great catch

Pieters Group (Pieters), one of the leading integrated fish processors and distributors in Europe, was founded in 1953 by Jerome Pieters in Zeebrugge, Belgium. At this time the company saw opportunities for growth by offering portioned frozen fish delivered directly by trucks, at a time when competitors continued to deliver unprocessed fish by train.In 1955, the first cold store facility was built and the company experienced significant growth.

In 1976 Pieters moved to its current facilities in Bruges and continued to expand in Belgium through both organic growth and acquisitions. In 1991, Pieters’ first Scottish salmon farm was bought. This was renamed Wisco, and was followed by the establishment of the processing unit, Wisco Processing, in 1994. In the 1990s, Pieters also invested in two Icelandic companies while, in 1997, it bought Les Mareyeurs Boulonnais of France, which specialises in processing fresh fish.

Industri Kapital first looked at Pieters in April 1997. It was one of the leading integrated fish processors and distributors in Europe, and was the market leader in Belgium. The company also had significant market shares in the Netherlands, France and Germany. Pieters was engaged in the purchase, aquaculture, processing, packaging, sales and distribution of fish products, with its major products being salmon, North Atlantic whitefish and South East Asian prawns.

At the head of the company was Gilbert Pieters. He had no obvious successor to take over the business, so had brought in a young and talented management team to drive the company forward. As part of this development, in summer 1997, he had handed over the day-to-day running of the company to CEO Frank Tierenteyn. Tierenteyn had been with Pieters since 1984. Earlier, the first impression of many, including no doubt some potential buyers, had been that the business was highly dependent on Gilbert Pieters as CEO. Industri Kapital decided to look past these issues and could see a large amount of potential in the business: it was a profitable, well-run company; which enjoyed a good local market position; and had in place a good strategy for the future.

The fish industry is a sector that is still undergoing a fair amount of consolidation offering clear opportunities for growth. Fish is the major foodstuff still hunted and, it is historically fragmented through the value chain.

The Industri Kapital 1994 Fund bought Pieters in January 1998 and it was Industri Kapital’s first investment in the fish industry. The first step was to begin to professionalise’ the ownership of the company, transforming it from the culture of a family-owned business, to that of an accountable public company with outside shareholders. In addition to putting into place a programme to coach and motivate the existing management team, Industri Kapital also brought in some new members to the board. These included Philip Haspeslagh, who proved helpful on several counts: he offered valuable experience from his role as the chairman of another Belgian food company; and provided help with strategy development, (he is a professor of strategy at INSEAD.) Also new to the board was Jan Henry Olsen, a former Minister of Fisheries in the Norwegian government, who provided expertise on the supply side of the business. Gilbert Pieters remained in a consultancy role for some 18 months and the transition to the new team went extremely well.

With management issues resolved, Industri Kapital looked at the mechanics of the business and agreed to make a major investment to expand the company’s salmon farming business in Scotland. Consumers were increasingly asking where the fish they bought from the shops was coming from. As Pieters sold more salmon than it produced within the company, it could not always be 100 per cent sure of its origins. It decided that if it had reared the fish itself these questions were easier to answer. This was resolved by acquiring the Black Isle site in Scotland and making significant investments in its existing farming facilities. These changes meant that Pieters’ own production of salmon now accounted for 40 per cent of the group’s needs. At the same time, the company also invested in a significant increase in whitefish filleting capacity in Iceland.

Pieters also concentrated on product development using specific technology to create more added value products, such as DreamSteam, a line of fish-based ready-meals which, thanks to its unique packaging, releases just enough moisture to give excellent results in a microwave oven.

Pieters had long been the market leader in Belgium, and now was the right time to expand in other markets such as France, as well as the Netherlands, Switzerland, Germany and the UK. Around a year into Industri Kapital’s ownership of Pieters, the first add-on acquisitions were initiated in the shape of two Swiss sales and distribution companies Alimer, based in Geneva, and later Lausanne-based Covedis. Both of these companies deliver fresh and frozen fish. The acquisitions were followed by those of Appeti’ Marine and Rolmer, both French companies which produce fish products with a high degree of value-added.

At the same time as following its expansion plans, the group also looked at areas that were not performing so well. As a result of this, it shut a retail outlet at Pieters’ factory site in Bruges, divested a processing unit in northern Norway, and shut a pre-packed fish processing operation in France.

By now, Pieters had a stable customer base of between 4,000 and 5,000 customers with the top ten customers accounting for around 40 per cent of turnover. These customers were spread across both the professional (catering) market, including Sodexho and Gate Gourmet and the consumer market via retailers such as Ahold and Colruyt.

When IK acquired Pieters in January 1998, it was looking at achieving an IPO within five years. However, as time went on, this became less of an option, as the climate for IPOs in Belgium began to deteriorate. A listing in Brussels, rather than anywhere else, had been favoured because of Pieters’ strong local name recognition.

Since the IPO route was effectively closed, either a trade sale or a sale to a financial buyer were considered. Several parties showed an initial interest in the company and, in the end, there were five potential buyers four trade buyers and one financial buyer. In November last year, Pieters was sold to two Norwegian companies Fjord Seafood and Domstein, which have come together in a 50:50 joint venture to capitalise on their complementary expertise. Fjord Seafood is an integrated producer of farmed salmon products, while Domstein is a fully integrated producer of pelagic fish (herring and mackerel) and whitefish.

During its three years in the Industri Kapital stable, Pieters’ sales and profits doubled in fact all Industri Kapital’s returns were derived from profit improvement. At the same time, Pieters’ debt actually increased during that period due to the substantial investment programme that was initiated.

Pieters has developed through organic growth and acquisitions upstream within salmon farming and whitefish processing, and downstream within secondary processing and distribution. Through vertical integration and geographical expansion, Pieters has taken an active role in the consolidation of the European seafood processing industry. Through its focus on a wide product range and with extensive product development of value-added products, Pieters has positioned itself to meet the stringent demands from large customers demanding one-stop shopping.

In its new home with Fjord/Domstein, Pieters can look forward to continued growth in the consolidating fish industry. The principal goal for Pieters will be to extend its strong position as a supplier to the retail and catering sectors in Europe, while its integration with Fjord/Domstein will strengthen the availability of raw materials. For Fjord/Domstein, the acquisition lays the foundation for a substantial European fisheries group, which controls the whole value chain from the fisheries to the consumer.