The increase in sales in the USA boosts Discefa’s revenues, although the current price of octopus poses a challenge.Monica Sabugueiro
The increase in demand for frozen octopus products in the USA and Canada has been the main driver of Discefa’s sales during 2017. The firm expects this upward trend to continue this year and forecasts an increase in turnover of 8-10% and 30% in the US market. In the specific case of the commercial line of frozen cooked octopus, it can be seen that growth of 55.7% is maintained compared to 2016.
In order to maintain this trend in spite of the current market situation, our priority in coming years will be to support our major distributors and to continue working with them as much as possible. For this reason, changes and improvements were made within the company during 2017. In this context, Discefa has strengthened investment in four main business areas: sales, quality, production and purchasing.
For this reason, the company obtained various quality certifications in 2017: the MSC (Marine Stewardship Council) ecolabel for its Chain of Custody, FSS/ISO 22000, IFS, SAE and food export safety certifications.
In addition, Discefa invested 2.8 million euros (3.44 million dollars) to increase the production capacity of its A Coruña plant in northern Spain and improve the ultra-freezing process. This expansion has also allowed new frozen octopus lines to be added to the current portfolio of products.
Total sales in 2017 reached 83.89 million euros (103.05 million dollars), 28% more than in the previous year, according to the article in Undercurrent. Taking these results into account, the firm expects to reach a turnover of 100 million euros by the end of this year, with estimated profits of between 11 and 15 million euros.
Discefa exceeded its growth expectations in 2017, which has allowed it to maintain its leadership position in the distribution of high-quality octopus, both in Europe and in the USA and Canada. Based on this, it is worth noting that 2017 was the first full financial year since the private equity firm, GED Capital Development, acquired a 73% stake in Discefa in June, 2016.
As GED partner Enrique Centelles explains to Undercurrent, “In the coming years the company plans to increase its revenue by taking advantage of the growing demand for octopus in the US.”
Situation in the Market in the United States
The North American market has become one of the main objectives of the company, which markets its products here via its subsidiary, Ditusa. This reached a turnover of 20 million euros (24.57 million dollars) last year which means, according to information given to Undercurrent news by Discefa, an increase of 36% over the previous year.
Discefa is currently the largest seller of frozen octopus in the United States in the high-quality octopus segment. Its supply is mainly focused on distributors serving the Horeca channel.
As has been the case in all markets, there are products on the American market that are more popular than any other: in this case, the ones that sell the most are the frozen octopus in trays weighing between 4 and 8 pounds, and the precooked frozen ‘ready to eat’ octopus, which has been very successful among customers according to information from Discefa. For years, the company has also been distributing sushi-style octopus: a whole frozen octopus is, according to their statements, a format that is growing in popularity.
In line with the above, changes were also introduced in the US market to improve service and increase sales. One of the measures implemented by Ditusa was to improve the delivery time of its products on both coasts of the United States, with the aim of being able to deliver to its customers in less than 48 hours.
The increase in octopus prices puts the squeeze on margins
Discefa increased its turnover in the international market in 2017, especially in the North American area. As reported by Undercurrent News, this growth was mainly due to the increase in sales of octopus in the United States and Canada. Furthermore, this is a trend that promises to gain traction in coming years.
In this context, according to the data provided by the British newspaper, it is important to account for the increase in the price of octopus during 2017: 28% higher than in 2016, which was also aggravated by the shift from the euro to the dollar. To minimise the impact of this situation on our customers, Discefa and Ditusa have chosen to reduce the profit margin without compromising the quality of the final product that customers value so highly.
In particular, prices of Moroccan octopus rose even more steeply in 2017. This is shown by the latest set of prices Undernews has had access to for Moroccan octopus frozen on board: this reached €17/kg for size T1, €16.5/kg for T2, €16/kg for T3, €15/kg for T4 and €14.5/kg for T5.
Source: Undercurrent News. You can read the original article here.