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The Value-Driven Economics of Fishpeople Seafood

Kate Gaertner, the founder and managing director of TripleWin Advisory, interviewed Kipp Baratoff, co-founder and VP of Supply Chain of fishpeople seafood (headquartered in Portland, OR), in the Fall of 2018.  Fishpeople seafood is both in the business of fish and sustainability, arguably equally.  Read Kipp’s approach to building value through quality, transparency and community. 

Creating Respect in a Commoditized World

Kipp at Fishpeople Seafood (a.k.a. fishpeople) doesn’t feel fish gets the respect it deserves.  Fish is a globally-supplied, commoditized product mostly sold in the U.S. market without much distinction to how it is sourced, its level of freshness or differentiation in the type of species caught and sold.  And therein lies the challenge and opportunity fishpeople is pursuing with its fledgling consumer product goods company that embeds a sustainability mind-set into every part of its supply chain. 

Transparency Builds Inherent Value

The seven-year old, $6 million in revenue company wants to assign the same level of value and discernment to fish as end-consumers apply to their choice of chocolate, wine and coffee. But what does that mean exactly?  Kipp gives the example of how coffee went from a highly commoditized, low-cost, little differentiated product (think:  Folgers) to one deeply diversified by price and quality.  What was the catalyst for coffee and its derivative, coffee beans, to acquire value where there was none before?  The answer:  Starbucks.  The company shown a bright light into the formerly opaque and unknown processes of where coffee beans were sourced, picked, ripened, milled and roasted.  It was in this deliberate act of disseminating knowledge of the origins of coffee beans and the farmers that planted and tended the crops that we as consumers began to care about the people, the places and the processes that drove our value in the product.  Valuable products are perceived to have higher quality.  And with quality differentiation, product prices can be assigned accordingly.

Learned Lessons in Coffee, Chocolate and Wine

Humans have consumed chocolate for 2,000 years and wine for more than double that time.  And we know a lot about both.  Artisanal chocolate commands a hefty premium to that of say, a Hersey’s bar.  It does so because consumers have been actively educated in the importance of where cacao beans are sourced, which countries around the globe have better growing seasons and soils, what type of tasting notes are imbued in the chocolate from specific regions, how the chocolate batches are blended, conched and tempered.  The process by which cacao beans become a tasty chocolate bar are articulated with loving prose to consumers in a persuasive campaign to convince customers that high quality chocolate deserves a higher price tag.  A once commodity product becomes a decidedly artisanal one.  Knowledge dissemination is the mechanism. 

Premium wine follows a similar arc to that of coffee and chocolate.  The educated consumer knows more than just a thing or two about which regions of the world produce quality wines.  Quality is dependent on the types of grapes grown, the age of the vines, a region’s terrior, the historical expertise of the family growers, and the like.  You get the point.  With knowledge comes a commitment to upholding value.  And bingo, a once commoditized product is differentiated by perceived value and quality and price segmented accordingly.

Traceability Opens the Supply Chain Kimono

At fishpeople, the mechanism to build consumer knowledge of the fish industry – how fish is sourced, where the fish come from, what species are harvested, and whether those species are protected or sustainably raised – is through the use of traceability tags.  These “tags” are seven-digit codes on the packaging of all fishpeople products, that allow a consumer to learn details about how that product was made.  Details about the fishermen, the species of fish, where the fish was caught and the attributes of a particular species (e.g., river or ocean-dweller, fatty or lean, wild or fresh, anti-biotic free or not).  Fishpeople provides its customers with an education and not solely to justify higher prices for its products. Knowledge drives value.  Particularly, people’s value for the worth of fish.   For fishpeople, that knowledge supports its broader sustainability ideals:  to deliver fresh, quality fish from sustainable fisheries that support marine coastal communities and living wage incomes. 

Sustainability at Every Point in the Supply Chain

Fish protein is a necessary form of nutrition and health for billions across the globe.  Unfortunately, most ocean fisheries are woefully over-fished.   Sustainable management of both ocean and freshwater fisheries are critically important today.  How fish is sourced is important, which means:  who is sourcing it, from which oceans and freshwater systems, how quickly does the fish get to market to be sold and consumed, and is the fish you see in your local grocer a species that is endangered or in abundance?  We often possess little knowledge of the above questions.  And trying to find out some of the more basic questions (e.g. species, freshness, sustainably-caught) that can inform our decision-making can be both confusing and inconsistent.  With all this unnecessary obfuscation, how can we accurately value the prices assigned to fish sold in markets?  Kipp believes we can’t without the fore-knowledge of how fish is raised and handled, and we won’t without broader adoption of supply-chain traceability in the fishing industry.   

The Path to ‘Value-Added Quality Economics’

Most of us don’t really know how many species there are in a fish category and even more crucial, which are of higher quality (i.e., tastier and more nutritious).  Kip believes this last point is important.  He calls it “lazy” to reference a piece of fish, salmon or tuna.  Lazy in that there are seven species of Pacific and one Atlantic salmon. For tuna, there are more than a dozen species worldwide.  For fishpeople, this is the challenge it seeks to confront and defeat with its twin strategy of holding steadfast to its principles of providing transparency (i.e., everything it does is in service of sustainability) and traceability (i.e., shining a clear light on the company’s supply chain) to how its fish is sourced, raised, handled, packaged, and brought to market.  In Kipp’s words, he wants “to move the industry from commodity to premium value-added quality economics”.  And by de-commoditizing its fish products and that of the broader fish food market, fishpeople’s end goals are to a) responsibly source sustainable fish species, b) produce fish meals that are simply-made, nutritious and delicious, and c) provide fishermen living wages and marine communities with stable economies.  Kipp trusts that people will see the value in this strategy and they will speak with their wallets.  For fishpeople, knowledge is the key that bridges its mission to a fully-realized vision.    

TripleWin Advisory develops sustainable business cases and supports strategic decision-making for companies. In so doing, it provides businesses with continued profitability, relevancy, and longevity in the market. Learn more.        

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