BuiltOregon

Category - Coastal

Adding value to Oregon seafood

Something about Oregon’s fishing industry smelled off to Duncan Berry. The one-time salmon fisherman had made a livelihood at the helm of Apparel Source, disrupting the global textile industry by shepherding in large-scale adoption of organic cotton by retail giants like Walmart and Target.

“The one thing that’s missing in America is people who are applying their intelligence to raw materials,” Berry says. “We do great films, and great software companies, but what are we doing with the marine resource off our coast right now—one of the last great savannas of seafood? Well, we cut their heads off and we gut them, and we ship them out.”

Sea change ahead

After selling his apparel business in the mid-2000s, Berry semi-retired to his home at Cascade Head on the Oregon central coast to start an environmental consulting service.

To the south lies the Salmon River where it empties into the Pacific Ocean, and beyond that the 529-acre Camp Westwind. Berry and others have helped restore the camp through a stewardship group that he co-founded. Down the cliffs to the west: the Cascade Head Marine Reserve, established in 2014 to protect marine habitat across 18 square-miles of Pacific Ocean. Berry worked on the task force to make that happen as well.

He knew that through time and dedication, positive environmental change could happen, and that business could help drive that change. Which is why he was so perplexed at seafood industry practices that had evolved so little since his own experiences in the business decades earlier.

With ocean habitat in disrepair and species in steep decline, with coastal communities desperate for economic innovation, and with some of most valuable natural resources right at our fingertips here in Oregon—why didn’t someone do things differently?

That, in a clamshell, is the story of Fishpeople, a fast-growing seafood product company based in Portland, with a processing plant on Oregon’s central coast. Founded in 2012, the company’s goal is nothing short of changing our relationship with the sea through business.

Supply chain of values

Berry and his co-founder, Kipp Baratoff, share a commitment to values-based business. Baratoff, the CFO and COO, comes from a background of blending finance and sustainability that includes stints with Meyer Memorial Trust, real estate developer Gerding Edlen, and Equilibrium Capital.

FishpeopleBoth buy into the credo that a healthy economic system relies on a healthy natural system. But they were also aware that “there’s a graveyard of companies out there” that began with good intentions, Berry says: “No margin, no mission.”

To find that margin, the two began probing every link in the supply chain between the fisherman and the consumer.

“We asked two questions: What’s right about seafood in your life, and what’s not so good?” says Berry.

Over the course of nine months, what they heard from “distributors, grocers, mothers, children, fisherman, processors” began to illustrate the nature of the problems and the shape that a solution might take.

“There’s always a consumer that is moving at a faster speed than the entrenched business interests,” Berry says. “And there are those companies that are very nimble—mid-sized and below—that are able to move more swiftly to reorganize supply chains and connect all the dots to serve that customer.”

“If you could create and aggregate demand at the consumer level you could then drive change through the entire supply chain—if you really understood what the consumer wanted today,” Baratoff says.

A better packaged good

Through those efforts, they recognized the emergence a new customer—one that had not existed previously. It was a consumer who wanted quality and easily prepared meals, but was also concerned about source, safety, and traceability of ingredients. Healthy and gourmet grab-and-go was booming.

Berry and Baratoff saw their opening.

“What narrowed the focus was around providing solutions: A super-healthy form of protein, a social and environmental mission, and delivering a food that was being underutilized only because of the delivery mechanism,” Berry says.

They knew that Fishpeople wasn’t going to make change working at the commodity end of the equation—dominated by a couple of “monopolistic titans” not keen on new competition, as Baratoff describes it. No margin. Retail, at the other end of the spectrum, wasn’t financially feasible either.

But a branded product allowed for a relationship with the customer, while still maintaining leverage back up the supply chain. That’s where the change would need to be made.

“We did an analysis of what it would be like if we just cut off heads and gutted fish and shipped them out of state versus value-added them, and it was a swing between $700 million and $1.1 billion,” Berry says. “So we would maintain $400 million more, in Oregon, if we were able to apply value-add like we do with our pouches,” increasing the value of the fish inside by four or five times.

The “pouches” are vacuum-sealed retort packages that contain a shelf-stable product that can be prepared just by tossing the pouch in boiling water for three minutes. It eliminates spoilage and smell, and makes fish a quick and easy meal option.

However, before they could start packaging and selling, Fishpeople had to address some weaknesses in the regional processing infrastructure, finding partners willing to meet their product standards and specifications.

Processing on the coast

ProcessingOn a Monday in November, workers diced up smoked and frozen fillets of Chinook salmon two at a time, using a high-powered water jet that sliced the slabs into a grid of uniform chunks.

Once the fish is prepared, it’s sent to a manufacturing facility in Salem for packaging.

“It hasn’t come easily, but every day is a little better,” says Adam Hoogewind, a food science Ph.D. who heads up quality assurance for Fishpeople. “If it was easy, everybody would be doing it.”

Fishpeople’s processing facility opened in the summer of 2014 in the tiny central coast community of Toledo. A $30,000 economic development grant from the USDA to the Port of Toledo helped get the space up and running.

Change here has been a constant.

Since opening, plant employees have had to learn on the fly, rearranging the building layout, swapping out machinery, and experimenting with different processing approaches.

This particular step in the food processing supply chain, which would render fresh-caught fish into mouth-size morsels, just didn’t exist here in Oregon. Then again, neither did the dozen or so jobs that came with solving this problem.

“There’s no reason why a marine resource that comes from the coast shouldn’t create economic development at the coast,” Baratoff says.

Growth and shelf-stability

Today, Fishpeople has nine different products that retail at $5.99 in most major grocery chains on the West Coast, and is working its way back east. The varieties, prepared with input from a “flavor council” of cooks and chefs, include soups and sides such as Alder Smoked Wild Salmon Chowder, Albacore Tuna in a Yellow Coconut Curry, and Dungeness Crab & Pink Shrimp Bisque.

“We were at Kroger the other day,” Berry says, “and we cooked up nine different SKUs in the kitchen in their offices and we brought the buyers in and asked, ‘Do you smell anything?’
‘No,’ they said, ‘why?’

“Seafood.”

And that’s the beauty of the product. No strong fishy odors, great flavors, easily prepared, and good for you. Duncan Berry himself has tweaked the package graphics to better illustrate ease of preparation and to educate customers who hesitate at the unfamiliar retort pouch.

FishpeopleThe company’s story—it’s also a certified B Corporation—is an important part of connecting with consumers, but ultimately the product has to stand on its own.

Berry imagines Fishpeople’s customers saying, “You know what? I love seafood, but it is a real hassle to prepare. So, if you could make it convenient for me, and really healthy, and I could trust you because you are transparent? Then I’ll help you change our relationship with the sea. But do something for me first in my life with my kids and my family.”

With plans for expansion, hiring, and new products later this year, Fishpeople is on a rise buoyed by an Oregon-made product that tastes and smells as good as it is—and only in part because of the good it does.

“The most humbling thing is that are other people who want to walk on this journey with us, because we just can’t do it alone,” Baratoff says. “Our consumers have to walk with us, our supply chain has to walk with us, every employee in this place has to walk with us—if they don’t understand that intention, then Duncan and I aren’t doing our jobs. But if we can set that intention, there’s a pretty strong current going in the right direction.”

Fishpeople has an ongoing relationship with the suppliers for every ingredient in its packages, the majority of which come from the Pacific Northwest. They’ve even included batch numbers on every package that consumers can input online to see the source and producer for everything in that specific serving, from the fish and vegetables to herbs and spices.

That regional supply chain provides transparency, and also solves the issues and expense of refrigeration and spoilage that plague the seafood business.

“There’s value-based reasons for why we try to create things in Oregon or the Pacific Northwest that are deeply important to us,” says Baratoff, “But those are also just byproducts of building a good business.”

For more information, visit http://fishpeopleseafood.com/, follow Fishpeople on Twitter, like Fishpeople on Facebook, or follow Fishpeople on Instagram.

Swimming in business, sustainably

As the daughter of an Oregon fisherman, Laura Anderson spent enough time on boats to learn and respect those who make their living at sea. She also learned such a life wasn’t for her. But a few years traveling the globe—first in the Peace Corps and then working as bookkeeper in Vietnam—conspired to reconnect her future ambitions with her salty past. She eventually returned to Newport, Oregon to earn her living from the riches of the Pacific Ocean, much like her father did.

“Dungeness crab, king salmon, fish prized around the globe and it’s all right here in Newport,” Anderson, 44, says. “Some of the most valuable natural capital of the world – in both quality and quantity – is right here outside our doors.”

Good catch, bad pay

Anderson never shirked from a challenge of succeeding in two industries—restaurants and fishing—that are like the aftermath of great battles, littered with carcasses of those seeking success.

BoatsFormer business partner Al Pazar says when Anderson approached him about a fish market/restaurant across from the marina that would pay for the catch directly, she caught him on the right day. He had just come in with a pristine load of salmon only to find the price paid to him less than half of what a catch like that should warrant.

“I was pissed,” he says. “I just worked really hard and took care of them and got nothing for them.”

He said yes on the spot. Anderson originally was going to work for Pazar. But her dad convinced her to ask to be a 50/50 partner in respect to her unique experience, education and role in operations. Local Ocean Seafoods was born.

“That was definitely the best advice I’ve ever been given in my life ever,” Anderson says. “That was game changing. I would never had the gumption to ask to be a partner.”

An effective supply chain

Pazar helped recruit other fishermen to provide the stock. For fishermen like Lincoln County Commissioner Terry Thompson, the match was ideal. As he grew older he no longer wanted to spend weeks at sea, he says.

“I was looking for something I could fish for a few hours,” he says. “I thought they’d never take all the fish I could catch. Well, I ate my words.”

Another vital piece fell into place when local fish buyer Amber Morris came aboard as the designated “fish goddess.” Her local knowledge and exacting standards helped build the company’s reputation, says Anderson. Thompson agrees, crediting Morris as a vital tie between Local Ocean and the fishermen on the docks.

“She knows who to get and where the best fish are,” Thompson says. “They make sure that I can still sell my fish. It’s a give and take.”

Making sustainable and local profitable

Instead of braving rough sea, Anderson braved a battered economy to forge a thriving seafood restaurant and fish market that has become the state’s standard bearer for locally caught seafood and sustainable fishing practices. Local Ocean is built on Anderson’s own deep roots and the state’s longstanding fishing economy.

“I’m a believer in what she’s done and the model they have there,” says Thompson.

Laura Anderson of Local Ocean SeafoodsHe’s not alone. Pazar credits Anderson’s resolve for the company’s success.

“The reason why Laura was a perfect partner is that she has no fear,” Pazar says. “With that kind of confidence you can’t fail.”

The company combined Anderson’s various interests and experiences with Pazar’s connections to the fishing community. Pazar, a fisherman by trade, is also a successful entrepreneur. The partnership was one of shared philosophy and a strong sense of place.

“That’s kind of the allure of the place,” Pazar says. “It’s a nice blend. You look at the fish while you are waiting for the table. You can take fish home and you can look out and see the boats that caught it. You can roll down the windows on a nice day and feel like a part of the bay front.”

A seafood experience

Anderson agrees, saying the entire experience from sustainable catch, fair wages to fishermen, to sound business practices that benefit the local economy all add up to the unique success of Local Ocean.

Seafood“The vision really has not changed in the ten years we’ve been in business. We give them the best seafood experience they’ve ever had in their life. Not a day goes by that we don’t hear our exact mission statement come out of people’s mouths,” she says.

Though the original idea was a fish market with small deli attached, it quickly reversed into a restaurant with a fish market attached. Interest in sustainable catch helped the company thrive.

“I had no idea when we started this how successful it would be. We’ve exceeded those projections of 10 years ago 20 times over by now,” Anderson says. “They say in business things don’t work out how you plan, and in this case that’s a good thing.”

Pazar says the business still stands for his philosophy that ensures the highest quality. He calls it a “vertical integration” that in effect tells the story of a given fish that’s sold and eaten.

“If you have chain of custody from the minute it’s caught until it’s on a guy’s plate, you are solely responsible for that quality,” Pazar says.

The fisherman have bought into the story as well, he says.

“People are very proud to have their name on a tag on the fish in the case. It’s a big deal. People take pictures of it and it speaks to value, quality and sustainability.”

Ready to scale?

Anderson bought out Pazar a few years back, which Pazar says went reasonably well for a profitable business both felt so passionate about.

“We had an exit strategy built in. We’re both reasonable people. It went well. It was tough letting it go, but I’m still very attached to things I built and that promote my philosophy of seafood and marketing. I know it’s in good hands. It’s a pretty good gig,” he says.

So good that the question is often asked: is this lightning in a bottle or is it ready to scale? It’s a question Anderson herself can’t answer, at least not yet.

“There are no shortages of requests for us to replicate this,” she says. “My gut sense is we have this serendipitous thing here. Local Ocean Portland, for example, may not have the same feel, that kind of terroir that makes this work so well.”

Fishing economy done right

Anyone connected to Local Ocean is connected to the local economy and the greater issues of sustainability. As fishing is threatened around the globe, they say Oregon has set an example for fishing done right.

Boat“What Oregon does better than anybody else is to try to have sustainable fisheries,” Thompson says. “I think it’s up to 95 percent of the fish in the state of Oregon is certified sustainable. That’s a big accomplishment.”

Anderson is as much a part of the advocacy for sustainability as she is a business owner (“I like to think I’m a voice of reason, not an activist,” she says). Her platform adds to consumer knowledge. She is so integrated into the entire ecosystem she never considered cutting corners, she said.

“For me its inherent in who I am, and it comes no doubt from my legacy of fishing with my family. I feel this almost over-arching protectionism toward the industry,” Anderson says.

Part of improving that distribution chain, Thompson says, is changing laws, improving the supply chain and continuing education of fishing practices. All of it has to work together for both sustainability and profitability.

“There’s a big challenge in the state of Oregon,” Thompson says.

So much so that in coming years, Anderson would like to be involved in the ongoing issue of improving delivery of the riches of the Pacific Ocean to inland markets.

“My next step is making that link between valley and coast. Distribution hubs and microprocessing,” Anderson says. “There’s a big disconnect in distribution for the small guy. That’s where I see myself. Is it related to Local Ocean? Yes. But is it the heart of our business? No.”

It seems a safe bet that one way or another Local Ocean and Laura Anderson will be involved in the challenge.

For more information, visit http://www.localocean.net/, follow Local Ocean on Twitter, or like Local Ocean on Facebook.