Polish processor Graal eyeing two acquisitions to double revenue

Acquisitive Polish processor Graal is close to two deals in its mission to double its revenue, founder and board president Boguslaw Kowalski told Undercurrent News, during the Seafood Expo Global trade show.

Between 2005 and 2008, canner and smoker Graal did eight acquisitions using the proceeds of a listing on the Warsaw stock exchange. In 2017 it then took investment, and was taken private, by investor Abris Capital Partners. Since then it has been looking for opportunities to expand through acquisitions.

Kowalski is looking to France, Germany, the UK, and Italy, he said. He told Undercurrent in 2017 the firm was looking to expand, but now, he said, deals are imminent.

“Since I had the private equity get involved, the aim has been to develop a lot. We want to double revenues, from €280 million now.” The entrepreneur feels organic growth is too slow, and is eager to develop through purchases of companies — “not huge ones, but not too small either”.

“Talks are getting close now. I’d hope to close one or two this year. This half-year, even.” Graal has four main pillars — canning, smoking, marinating, and fresh and frozen fish — with salmon making up around 50% of turnover, said Kowalski. He wants to develop both the salmon and pelagic operations.

He said of the likely targets, one was a processor, and one a distributor. For now, the firm owns four plants, all in Poland. “I’m looking to the private equity for its knowledge of investing in other countries, because that’s outside of my experience.”

Aquaculture remains an area he wants to buy into as well, using PE funds. “Salmon is around 50% of our business, and the prices are so volatile.”

“The best way to make that easier for us is to buy, or take shares in, an aquaculture operation. It would make things safer for us, on the prices front.”

He noted the high salmon prices in 2017 caused a significant drop in consumption, and said he hoped 2019 could ease into a more stable situation. “It sounds like there’s plenty of biomass in the water, in Norway, so I hope spot prices might come down a bit later in the year,” he said.

On the pelagics front, mackerel prices are at an all-time high, which can cause difficulties for processors, Kowalski said. There’s an upper ceiling of around €2.50 per kilogram which is acceptable for Polish consumers, above which they tend to swap out for different products, he said. “We’re just about at that level now, and I don’t see it easing anytime soon.”

According to pelagic sales body Norges Sildesalgslag, mackerel prices so far this year have averaged NOK 13.92/kg — up year-on-year from NOK 10.13/kg — which under current exchange rates is €1.42/kg, to the fisherman.

He also noted a number of Graal’s mackerel products carry Marine Stewardship Council ecolabels. With certification of this fishery suspended at present, he was very hopeful the certification might be reinstated by the time fishing begins again on this species in the fall. Graal had stocks of product to last it until that time, he added.

In terms of Graal’s new product development, Kowalski said the current focus was on producing healthy, convenient, quick-to-prepare foods for the Millenial generation. He pointed to the company’s “Salatino” tuna salad products as one example.

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