Season 6, Post 38: Sightseeing with salmon

It was planes, trains and automobiles for your author as he travelled over 900km from London to remote Norway. This was followed by boats, boats and more boats. There was a purpose to this lengthy journey: a highly privileged opportunity to see how the life of the salmon evolves before it finds its way onto your plate. The host was MOWI, the world’s largest producer of Atlantic salmon. It serves an estimated 2.9bn meals annually, or the equivalent of 1 in 5 salmon consumed globally.

Our first stop was Nordheim, where Norway’s biggest post-smolt site is located. For the unfamiliar, a smolt is a young salmon, typically in the phase of its life before being ready to migrate to the sea. At MOWI, the young fish spend up to 50 weeks in temperature-controlled tanks in ultra-violet lit rooms. Each of the eight tanks we saw can hold up to 250,000 baby salmon. They are 5 metres deep and contain 5,800 cubic litres of water. Here, the salmon can attain a weight approaching 500g (harvested salmon may weigh as much as 5kg). The rationale for such an approach is lower mortality rates, fewer treatments and faster growth.

The 6,000 tonnes of fish produced annually at the Nordheim site may sound like an impressive figure, but for context, this volume can be equivalent to that found in just one seawater salmon farm. MOWI has around 100 of these in Norway. While there is a clear logic in further post-smolt investments across the industry, improving conventional salmon farming needs to be front of mind. It was therefore interesting to learn about the smart farming initiatives being undertaken at Bremnessvaet – which we visited – and across the broader group. MOWI (and its peers) are “trying to digitalise more and more of the value chain”, in the words of our host. This entails remote operations centres, automated monitoring and feeding systems, data analysis and more. At the Bremnessvaet site alone, over 20,000 data insights may be captured on any given day. The name of the game: efficiency and ultimately healthier salmon.

Our boat then took us to Jøsnøya, a journey similar to that which the harvested salmon might make. This major processing plant – where no photos were permitted – sees 150 fish processed a minute, equivalent to between 40 and 50 boxes, ready to be sent to wholesale. Each will contain up to 25kg of fish. The site handles over 530,000 tonnes of salmon annually, with a theoretical ceiling some 15% higher. It was hard not to be impressed by the level of automation evident throughout the process and the relatively few employees on site.

The salmon industry should be the beneficiary of multiple overlapping future trends that include population growth, health and resource efficiency, all of which we have discussed in the past. MOWI announced last week plans to accelerate its salmon production to account for growing demand, which we believe will continue to outstrip supply. In the words of MOWI, salmon has the potential to become “the food icon of the 21^st Century.” 

3 October 2024

The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in MOWI. The author of this piece has no personal direct investment in the business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.

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Alex Gunz, Fund Manager

Photos by the author