Alfesca hf

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Alfesca hf

P.O. Box 20
Fornubudir 5
Hafnarfjoerdur, 222
Iceland
Telephone: (354) 5508000
Fax: (354) 5508001
Web site: http://sifgroup-e.ecweb.is/

Public Company
Incorporated: 1932 as Sölusamband íslenzkra fiskframlei∂enda (SIF) (Union of Icelandic Fish Producers)
Employees: 3,500
Sales: EUR 554.7 million ($695 million) (2005)
Stock Exchanges: IcelandTicker Symbol: SIFI
NAIC: 311712 Fresh and Frozen Seafood Processing; 311711 Seafood Canning

Alfesca hf is one of Europe's leading producers of high-end and "festive" foods. Formerly known as fresh and frozen seafood SIF, the Iceland-based company's transformation into a processed foods leader was largely completed through its acquisition of European festive foods leader Labeyrie Group. That purchase, made in December 2004, added the highly respected Labeyrie brand of foie gras and smoked salmon. Labeyrie also includes the Blini brand, a producer of blinis (a sort of pancake) and seafood spreads; Scotland's Farne smoked trout and salmon brand, the number two in the United Kingdom; and Vensy, the leading smoked salmon brand in Spain. Alfesca also controls the U.K. seafood group, Lyons, a leading processor of shrimp and other specialty seafood products; Delpierre, a producer of smoked herring, salmon, and other fish, in France; and Christiansen Partner, based in Norway, active in the sourcing and trading of fresh salmon and salted seafood. In keeping with its new focus on the processed foods market, Alfesca spun off its fresh and frozen fish trading operations, creating Iceland Seafood International for its Iceland-based business, which, together with its U.S. operations, were sold off in 2005. The company has continued seeking buyers for its other non-core units, such as its Delpierre frozen seafood operation, which was sold to Icelandic Group in July 2006. Alfesca is listed on the Iceland Stock Exchange and is led by chairman Ólafur Ólafsson and managing director Jakob Oskar Sigurdsson.

BUILDING ICELAND'S SEAFOOD INDUSTRY IN 1927

Iceland's emergence from Danish domination following World War I prompted the newly independent country to seek a strong economic base through the development of homegrown industry. With few natural resources on the island itself, the country turned to the ocean, and its fishing and shipping industries, for economic growth. Indeed, the country's fishing industry quickly emerged as the veritable motor for Iceland's economy, and by the end of the 1930s Iceland already enjoyed the status as one of Europe's most important fish exporters. In the absence of refrigeration and freezing technology, the majority of the country's fish exports at the time remained in the form of salted fish.

Nonetheless, the difficult economic period at the beginning of the 1930s placed the country's many small, largely independent fishing companies under intense pressure. In response, the country established Sölusamband Islenzkra Fiskframleidenda (SÍF, for Union of Icelandic Fish Producers) in 1932. The company became the exclusive exporter for the country's salt fish production. As such, SIF served not only as an exporter, but also provided the country's fish industry with marketing and sales support. SIF's monopoly on the saltfish export market remained in place until the market's deregulation in 1992. By then, however, the company had already begun its expansion into the larger continental European market.

That market, however, was made difficult by significant import fees and other trade barriers. In order to skirt heavy import tariffs, SIF made its first international acquisition in 1990, buying up France's Nord Morue. This foothold into continental Europe gave the company the base from which to establish a strong European presence, and by the end of the decade, the company had also added sales operations in Spain, Greece, Italy, and Norway. The company further supported its international sales network with a series of new acquisitions, including Canada's Sans-Souci Seafood Ltd., a seafood trader, and Norway's SIFTOR, which operated both in the fishing and processing markets. The company also expanded its presence in Spain, forming Copesco-SIF as a sales and distribution business.

ACQUIRING SCALE AT THE END OF THE NINETIES

The movement toward the modern Alfesca began in earnest toward the end of the 1990s, with the acquisition of France's Jean Baptiste Delpierre. That company was a leading producer of processed, fresh fish products, including smoked salmon and haring, marinated her ring, mackerel and haddock, and salted codfish. The addition of Delpierre formed the core of a new subsidiary, SIF France. Soon after the Delpierre acquisition, the company expanded its target to include the South American region, opening a subsidiary in Brazil. SIF also took steps to increase its sourcing operations, taking over Norway's Christiansen Partner A/S that year.

SIF leapt at a new opportunity in 1999, when it acquired the newly privatized Iceland Herring hf. That company had been founded in 1935 as the government-owned Iceland Herring Board. Herring had long been a staple food in Iceland, as well as the country's core export product. Through the 1960s, salted herring remained the country's largest single export product and the Iceland Herring Board grew into the world's leading herring exporter. A growing part of the organization's business was also supplied by the development of domestic fish farms. With the disappearance of herring from Iceland's territorial waters in the late 1960s, the Herring Board's fisheries became its main source of salted herring exports. After the Herring Board was restructured into a limited liability company in 1998, the company agreed to be acquired by SIF. That merger was completed in March 1999.

By the end of the year, SIF's drive to acquire greater scale in the European seafood industry reached a new milestone. In December 1999, SIF announced that it had agreed to merge with another major Icelandic seafood group, Iceland Seafood hf. That company stemmed from the Samband íslenskra samvinnufélaga, or the Federation of Cooperative Societies, which was founded in 1902 to group the interests of Iceland's cooperative movement. Samband grew into Iceland's largest commercial concern, operating in a wide variety of sectors. In 1952, Samband created a dedicated seafood arm, Samband Seafood.

By 1965, Samband had begun its own overseas expansion, starting up a subsidiary in the United States, called Iceland Seafood. Originally based near Harrisburg, Pennsylvania, that company moved its operations to larger facilities in Newport News, Virginia, in 1997. Later, Samband expanded into a number of continental European markets, starting with the United Kingdom and the creation of Iceland Seafood Ltd in Hull in 1980. By 1986, the company had launched operations in Germany, and then in France, establishing its presence in the three largest European markets. The new offices were placed under the oversight of Iceland Seafood Ltd.

COMPANY PERSPECTIVES

The role of Alfesca is to create value for its stakeholders by operating a market driven European food, marketing and manufacturing company of ready-to-eat products, that bring convenience and festivity to its consumers. The vision of Alfesca is to be a leading food-processing and marketing company, as measured by return on equity and marketshare in the markets and categories it competes in.

By the early 1990s, Samband Seafood was the largest and most profitable part of the larger Samband federation, with sales of more than $160 million per year. This led the federation to spin off Samband Seafood as an independently operating limited liability company, called Iceland Seafood hf. The company continued building its international presence, adding a sales office in Japan in 1996, then entering Spain in 1997. The company also boosted its fresh fish division with the purchase of export group Tros that year, then moved into France, buying up that country's Gelmer S.A., a producer and distributor of processed seafood.

The merger between SIF and Iceland Seafood created one of the world's leading seafood sales and marketing groups, boasting total sales of nearly $700 million. The new group, which also became Iceland's largest company, retained the SIF name, and renamed its overseas subsidiaries accordingly. Nonetheless, the Iceland brand remained one of the company's key brands.

REFOCUSED ON LUXURY FOODS FOR THE NEW CENTURY

SIF continued to build up its international seafood interests into the early 2000s. In 2002, the company bought the fisheries operations of failed French company Fecamp, based near Le Havre. SIF next attempted to consolidate its position in Iceland, entering merger talks with Icelandic Freezing Plants Corporation in March 2003. Those talks eventually broke down, however.

Instead, SIF found a new international target. In October 2003, the company further consolidated its position among the European leaders with the purchase of Lyons Seafood, based in the United Kingdom. Founded in 1958, Lyons had become part of the Allied Domecq group, before being spun off in a management buyout in 1994. The addition of Lyons positioned SIF as one of Europe's top producers of processed shrimp and other shellfish, and further boosted the company's turnover by some $75 million.

However, the Lyons acquisition, which gave SIF a significant position in the market for high-end value-added products, soon appeared to be the inspiration behind a dramatic change in the company's direction. The company's new interest in processed foods over its traditional fresh and frozen fish sales, led it to bid for Financière de Kiel, the holding company for France's Labeyrie Group. Then controlled by Industri Kapital, Labeyrie, a specialist in high-end foie gras, smoked salmon, and other "festive foods"—so-called because their largest sales came during holiday periods—was the European leader in that segment.

The Labeyrie acquisition was completed in 2004, costing SIF more than EUR 330 million. The addition of Labeyrie, which also included Blini, a French producer of blinis and seafood spreads, among other products, and Farnes, the major Scottish salmon and trout producers, boosted SIF sales significantly by the end of that year.

KEY DATES

1902:: Samband íslenskra samvinnufélaga (Federation of Cooperative Societies) is founded in Iceland, with both fresh and salted fish operations.
1932:: Sölusamband Islenzkra Fiskframleidenda (SÍF, for Union of Icelandic Fish Producers) is created and becomes the exclusive international sales and export arm for saltfish.
1935:: The Icelandic government creates the Iceland Herring Board as the exclusive exporter for the country's herring exports.
1952:: Samband establishes the dedicated seafood wing, Samband Seafood.
1965:: Samband Seafood launches its first international operation, establishing a subsidiary in Harrisburg, Pennsylvania, called Iceland Seafood Corporation.
1980:: Samband Seafood opens a sales subsidiary in Hull, England.
1986:: Samband Seafood creates sales offices in Germany and France.
1990:: SIF acquires Nord Morue, in France, beginning the company's expansion into continental Europe.
1991:: Samband spins off Samband Seafood as an independent company called Iceland Seafood.
1998:: The Iceland Herring Board is privatized as Iceland Herring Hf.
1999:: SIF and Iceland Herring merge, followed by a merger with Iceland Seafood.
2003:: SIF acquires Lyons Seafood in the United Kingdom.
2004:: SIF acquires the Labeyrie Group and becomes a European leader in the luxury foods sector.
2005:: SIF sells off its frozen and fresh fish operations to refocus on the luxury food sector.
2006:: Company adopts the new name, Alfesca.

Following the integration of Labeyrie, SIF's management, led by chairman Ólafur Ólafsson and managing director Jakob Oskar Sigurdsson, decided to organize the group around a new core focused on the luxury foods sector. In keeping with its new strategy, the company restructured its operations, placing its Iceland-based fresh and frozen fish operations, including Tros, into a separate company, Iceland Seafood International, in 2004. That company was subsequently sold to a consortium led by Ker Ltd, B. Benediktsson Ltd, and Benedikt Sveinsson. SIF also sold its U.S. operations, which were acquired by Sjovik hf that same year. SIF continued its streamlining into 2006, selling off the frozen fish business of Delpierre to Icelandic Group.

In keeping with its transformation into a processed foods leader, SIF changed its name in February 2006, becoming Alfesca-the name was based on the Greek "alpha" and the Latin words "festiva" and "esca." With a new name and a new direction, Alfesca had successfully completed its transformation as a high-end festive food products leader.

PRINCIPAL SUBSIDIARIES

Nord Ocean ehf; Christiansen Partner AS (Norway); Zilia Holding NV (Netherlands); SIF Prime Foods Ltd (U.K.); SIF France sas; Lyons Seafoods Ltd (U.K.); Financiére de Kiel SAS (France); Labeyrie SAS (France); Pierre Guéracague SAS (France); Gueradis sarl (France); Blini SAS (France); Farne Salmon and Trout Ltd (Scotland); Vensy Espana S.A. (Spain); Vensy Portugal LTDA (Portugal); Labeyrie Norge AS (Norway); Palmitou sas (France).

PRINCIPAL COMPETITORS

Alpesca S.A.; Primlaks Nigeria Ltd.; Antarktika Fishing Company; Hanwa Company Ltd.; Orkla ASA; Mukorob Fishing Proprietary Ltd.; Aker ASA; Maruha Corporation.