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Despite Loss, Alliance Goes For Singapore Listing Philippines, December 5, 12

Alliance Select Foods exports 150 brands of canned tuna worldwide.
Philippine-listed Alliance Select Foods International, exports more than 150 brands of canned tuna, which can be found in major supermarket chains in 60 countries worldwide.

Jonathan Dee, president and CEO of Alliance Select Foods International has come a long way in the seafood trade. Starting out in 1991 packing sardines in the Philippines, he eventually founded his own company in 2003 producing canned tuna.

According to the UN’s Food and Agriculture Organization, by 2025, the world’s population of eight billion people will consume 225 million toes of seafood annually, up 46% from last year’s 154 million tons.

Dee was in Singapore recently for a meeting with his board of directors. He also took the opportunity when he was here to meet the Singapore media to share his growth plans, which include listing Alliance on Catalist by second quarter 2013, reports eFeedlink.

“We are able to raise funds in the Philippines, but we think there will be more visibility if we also list here. We want the company to become more international. The only way we can do that is to have a more international platform for investors to see us,” says Dee.

Besides tuna, Alliance also produces salmon. It acquired New Zealand’s second-largest smoked salmon processing firm, Prime Foods New Zealand, in 2009. Its products are available in Singapore at Cold Storage outlets under the Prime New Zealand brand. Last year, Alliance bought Massachusetts-based Spence & Co, which produces smoked salmon.

Salmon accounts for about 25% of Alliance’s revenue. The company expects salmon to make up one third of its total sales in the near future. Gross profit margins for salmon are twice those of tuna’s, at between 22% and 24%, according to Dee. Alliance’s biggest export markets for tuna are Europe and the US. For salmon, Japan and the US are its largest markets.

Still, tuna is “a recession-resistant product”, he says. “There’s a flight to cheaper protein. Fish is a cheaper protein.” China will therefore be an important market for Alliance. “China is a future market for us. We think that China is going to need more and more protein in the future. I think tuna is very healthy. Salmon is very healthy. They are a perfect match for a growing Asian market.”

Headquartered in Pasig City in Metro Manila, Alliance employs about 2,000 workers at its main tuna production plant in General Santos City in the Asian sector of the Western Central Pacific Ocean, where 56% of the world’s tuna is harvested. It has another canned tuna factory in Indonesia. Together, both facilities can produce up to 230 tons of canned tuna a day.

Alliance will be putting more resources into Indonesia. Earlier this year, the company received approval from the Indonesian government to fish in the country’s exclusive economic zone. It is the first foreign company to get a fishing license in the country. In a sign of its commitment to the country, Alliance is considering listing its Indonesian operation in Jakarta when business there is more settled.

Alliance has no plans at the moment to expand its two-product portfolio. “We are trying to gain more size in salmon before we move on. In tuna, we want to be a total company. That means we want to support our own brands in the market. We’ve always just been the manufacturer. We are not doing retail yet for tuna,” Dee says.

While he relishes the growth opportunities, Dee also concedes that the operating environment has become more challenging. “There has been a very strong environmental move in the tuna industry, not just in the Philippines, but also globally. The biggest risk in this business is always raw material-related.”

Alliance incurred a net loss of USD 226,000 (USD 275,845) in 2011, despite a 6% increase in revenue to USD 51.3 million, because of a spike in costs related to its acquisition of Spence & Co. It fared better in previous years, earning USD 1.7 million in 2010 and USD 2.1 million in 2009. Its current market value in the Philippines is about USD 50 million.