Australia’s largest producer of Pacific oysters Angel Seafood Holdings (ASX: AS1) is disrupting what has been a very traditional industry with innovation, commercialisation and cutting-edge aquaculture techniques.
The journey began 10 years ago, when Angel Seafood founder and chief executive officer Zac Halman snapped up oyster farms on South Australia’s Eyre Peninsula. Being new to the industry, Mr Halman recognised there was a significant opportunity to adopt an innovative approach to farming that focuses on sustainability, efficiency and profitability.
Angel Seafood became Australia’s first-ever listed oyster company (and remains the only one) when it floated on the ASX three years ago and this exposure to capital markets, combined with its unique techniques, has given it a competitive advantage and enabled it to grow significantly.
From being a small family owed business, Angel Seafood has now grown to be Australia’s largest producer of pacific oysters – supplying more than 10% of Australia’s pacific oysters while maintaining its sustainability and organic certifications.
Angel Seafood is one of only two sustainable and organic-certified oyster growers in the world, producing premium oysters that are known for their high-quality and delicate taste that cater for a broad collection of high-value markets.
Located on the remote Eyre Peninsula with a 36-hectare holding of developed fast-growing, nutrient-dense water in pristine Coffin Bay, Angel Seafood runs a multi-bay strategy with modern equipment to produce superior oysters at a commercial scale, mitigating production risks and maximising the sustainable operating environment.
The company’s facilities include nursery and oyster grow-out operations in the towns of Cowell and Haslam with a holding capacity of over 20 million oysters; and final conditioning in Coffin Bay with capacity to finish 10 million oysters annually.
Angel Seafood claims this multi-bay strategy makes it unique as it allows for an agile operation that can more quickly adjust to customer demand and needs than its competitors, optimise growth conditions and fast-track production and revenue.
“Our growth and results over the last couple of years have shown the effectiveness of our multi-bay strategy, and the scale at which we are now operating is opening up new opportunities” Mr Halman said.
The company sells to about 10 domestic and two international customers in one country direct from Coffin Bay and processes the oysters for export out of its purpose-built and fully accredited export site in Port Lincoln.
The company maintains a focus on data acquisition and interpretation to find ways to maximise efficiency, including understanding how the oyster lifecycle is affected by geographical and seasonal growing conditions within the different bays it operates in.
Angel Seafood claims its adjustable longline systems improve water flow and nutrient intake – with high quality water resulting in a more efficient production capability than most other Australian oyster producers – and it recycles its posts and baskets to minimise landfill.
According to Mr Halman, the company aims to capitalise on a growing customer preference for organic and sustainably sourced food.
“Our ‘innovation first’ approach to sustainability, efficiency and profitability aims to make oysters an accessible product and a household name,” he said.
Retail market is its ‘oyster’
The last financial year has been particularly successful as the company scaled its business to sell 6.6 million oysters during the 12 months to June 2020 (up 25% on the previous year) and reported a record revenue of $5 million – despite the challenges posed by COVID-19.
In fact, the global pandemic enabled Angel Seafood to reposition itself to take advantage of the relatively untapped retail market, which represents a substantial growth opportunity for the company.
“Before the COVID-19 pandemic we could have never imagined or planned for an extended period of restaurant closures, denying us access to our traditional markets,” Mr Halman explained.
“The pandemic resulted in us withdrawing our FY 2020 sales guidance at the end of March. However, our business and team has shown extraordinary resilience by quickly pivoting to the retail channel.”
“Approximately 60% of consumers most frequently buy their seafood from supermarkets and our research shows only around 20% of supermarkets currently regularly sell oysters, so there is a significant opportunity for us to increase [market] penetration,” Mr Halman added.
Retailers have reportedly been positive about the move amid growing recognition that the company could guarantee a continuous supply of good quality stock to their stores which has not been possible in a fragmented industry.
The COVID-19 inflicted slowdown also allowed Angel Seafood to invest in improving its stock profile towards higher-value and larger-sized oysters, increase its water holdings and improve its infrastructure.
Mr Halman said these developments place the company in a “really strong position” to deliver substantial future growth.
“Demand for our clean, green, premium oysters continues to be strong and pricing remains stable, which positions us well in the domestic market, and to grow in export markets,” he said.
“As restrictions ease further and consumers return to dining out, we hope to see demand increase across our channels.”
COVID-19 containment measures disrupted logistical supply lines earlier in the year, but Mr Halman said export sales have now restarted, with Angel Seafood successfully shipping oysters to existing clients in Hong Kong.
“While volumes have been small due to COVID-19, [we] continue to see this as a long-term venture and with an improved stock profile, we will be well placed to capture market opportunities,” he said.
Premium exports into Asia and the Middle East represent a “large long-term opportunity” in line with increasing global demand for clean and responsibly-sourced seafood.
“We have sufficient scale to guarantee continuous supply of meaningful quantities when global conditions return to normal,” Mr Halman added.