The Company
Wild Alaska Salmon Direct
Wild Alaska Salmon Direct, Inc is a direct retailer of commercially fished salmon. Formed in April 2010 by Michael Clemens and Victor Gesmundo, the company was founded to deliver high quality salmon products to the US market. While the company offers several different products, its flagship offering is its salmon jerky, which has a superior taste to other salmon jerky thanks to its exclusive use of Alaskan salmon, and a proprietary recipe.
In addition to having a robust product offering, the company also has a strong vertical supply chain. Salmon is directly sourced from Kodiak, Alaska, and is processed in Henderson, Nevada into jerky. This tightly controlled supply chain ensures that the company has direct control over every step of the value added process. The net result is high quality, healthy, and delicious salmon products.
Company location details
Fishery:Kodiak Island
Alaska / Jerky processing plant:
10895 S. Eastern
Unit 100
Henderson, Nevada
89052
Telephone: 702-430-7742
The Market
Salmon market at the macro level
The Alaskan salmon market is growing due to several factors, including increasing awareness of the health benefits of salmon and recent reports which indicate that wild salmon may contain less contaminant than farmed salmon.
TheUS salmon market grew steadily during the period between 1989 and 2004. While the majority of Salmon consumed was imported farmed salmon, domestic wild salmon has been proportionally very consistent vis-à-vis imported wild salmon and farmed salmon over the last 15 years.
Source: The Great Salmon Run: Competition Between Wild and Farmed Salmon,
January 2007, TRAFFIC North America World Wildlife Fund.
Household salmon consumption habits are also very favorably inclined for Wild Alaska Salmon Direct. A recent report by TRD Frameworks Market Research and Planning has some persuasive findings as regards US household’s salmon consumption habits (see next graph).
Salmon is by far the most popular seafood purchased by Americans:
Source: Consumer Brand Perception Study Report, by Alaska Seafood Marketing Institute, August 2009.
Alaskan salmon is preferred over other types of salmon—including Atlantic salmon:
Source: Consumer Brand Perception Study Report, by Alaska Seafood Marketing Institute, August 2009.
The salmon jerky market as a subcategory
A variety of jerky products are offered in the South Western United States, the most common of which is beef jerky, which can be found in almost all convenience stores and sports stores. Most jerkies are sold near the cash register as a point-of-sale purchase display as an “impulse” buy. Because salmon jerky is less well known, and therefore, less readily available than beef jerky, it has the potential to grow rapidly and become a potentially popular “healthy snack” in point-of-sale displays in convenience stores and sports stores.
Convenience stores as a channel
Since beef jerky is already sold in convenience stores, it’s logical that salmon jerky would also be sold in convenience stores, using the existing, proven point-of-sale model. There are approximately 147,000 convenience stores in the United States. The total sales of these stores was $511 billion (NACS’ 2009 sales data)—or $1 for every 28 dollars spent in the country in 2009.
The Business Model
Overview
The company’s business model is simple: fish is caught in Kodiac, Alaska, and then processed into IQF (individually quick frozen) product. The salmon can then be sold in the United States or internationally, or sent to Nevada for further value-added processing into jerky.
Wild Alaska Salmon Direct’s has three key competitive advantages over other salmon product producers. These competitive advantages are essentially built into the company’s business model:
1. Top down control of the supply chain. Wild Alaska Salmon Direct controls the flow of its product from the catching of salmon, to the delivery of the finished product. This vertical business model ensures that the company has complete control over the quality of the product at ever step of the production process.
2. A superior tasting product. Wild Alaska Salmon Direct’s proprietary recipe went through hundreds of iterations before it became what is considered to be a superior tasking jerky, according to taste tests.
3. Direct access to fished salmon and a fishing license holder. Michael Clemens—one of Wild Alaska Salmon Direct principals—is a salmon fisherman with an Alaskan salmon fishing license. Possession of a fishing license is a critical advantage for the company, because it guarantees the company direct access to fish. The requirement for a license also effectively acts as a barrier to entry for new players, since no new fishing licenses are being issued by the state of Alaska.
The business model flowchart
Kodiak, Alaska.
Fish is processed in Alaska within 48 hours of
being caught.
Salmon sent to distributors
as IQF to be sold as wholesale. / Value-added processes / Salmon sent to Henderson, Nevada, for processing into jerky.
Jerky is distributed in convenience stores, and
sold through the website
or other channels.
The business model details
1. Fish is caught under the personal supervision of Michael Clemens, Wild Alaska Salmon Direct Fishing and Processing Operations Manager. The fishing volume is carefully managed in order to ensure an optimal yield. In the event that demand outstrips supply, the option to purchase directly from other ships exists.
2. Salmon is processed by local processors within 24 to 48 hours of being caught (by regulation). These local processors are also overseen by Michael Clemens.
3. The processed salmon then follows one of three possible paths in the supply chain:
a. Sent directly do distributors as an IQF (individually quick frozen) product.
b. Sent to the Las Vegas facility for further processing into salmon jerky, and is then shipped to distributors and retailers.
c. Sent to the Las Vegas facility for further processing into salmon jerky and is then sold on the company’s website directly to customers.
While the company has control over all facets of its supply chain flow, it will initially subcontract the distribution and processing of its IQF product to carefully vetted suppliers pending the eventual purchase of its own facilities. In the interim period, Michael Clemens will be overseeing all subcontracting work done for Wild Alaska Salmon Direct’s products.
The Products
Overview
Wild Alaska Salmon Direct’s product portfolio consists of the following two offerings:
· Salmon jerky sold in 1 oz packages
· IQF (individually quick frozen) salmon
Value added process chain
The company intends on focusing on salmon jerky due to that product’s higher-value added component, and hence, higher margin and selling price.
VA
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N / Unprocessed Salmon
IQF (individually quick frozen) product.
Salmon jerky
Unprocessed salmon
The fish used in all the company’s products will be King, Sockeye, Pink, Keta, and Coho wild Alaskan salmon. The clear, icy waters of Alaska are the world’s best supply for wild salmon. All Alaska Wild salmon are born in the state’s pristine streams, rivers and lakes. They migrate to salt water, where they mature before returning to the waters of their birth to lay their eggs and continue the life cycle. Alaskan salmon is known for its bright red color, firmness and wonderful richness of flavor.
Wild Alaska Salmon Direct fishes and processes only the highest-quality, sustainable, wild Alaskan salmon. This salmon is healthier than farmed salmon, as it contains less contaminants, and many health benefits, including:
· High in protein
· Contains essential amino acids
· High in vitamins A, B6, B12 , D, E, Niacin, Riboflavin, Calcium, Iron Zinc, Magnesium, and Phosphorous
· High in Omega 3’s Fatty Acids
· Low In Saturated Fats
· Significant cardiovascular benefits
Alaska Wild salmon are harvested around the waters of the island of Kodiak, Alaska during seasonal “runs” between the months of June and September. Salmon fishing in Alaska is very tightly controlled by the state. A license is required to catch the fish, and at this time, no news licenses are being granted.
Value-added product: salmon jerky
Wild Alaska Salmon Direct’s focus is the selling of salmon jerky, which is its highest-margin product.
· The company’s jerky has been tested by an independent food laboratory to ensure that anaerobicbacterial plate count, water activity, etc. are all within acceptable limits
· The Health Department tested the product and granted a permit for its sale
· The company’s jerky has been beta tested in several retail outlets to very positive feedback
· Salmon jerky is less readily available than beef jerky, and consequently has strong growth-potential
· The product does not require freezing, and is thus less expensive to transport since it does not require refrigeration during the shipping process
Value-added product: IQF
IQF (individually quick frozen) product offers a more modest but still attractive margin than jerky.
· These products have the benefit of being relatively common in most grocery stores so demand is stable and predictable
· They are a good option for any fish that is not processed into jerky, allowing the company to easily balance the supply of their three products
Product price and cost structure
IQF is sold by the pound. Salmon jerky is sold in 1 oz. packages at $3.00 per package, retail price.
Product / Salmon jerky / IQF (individually quick frozen)Production cost
Wholesale price
Retail Price / $0.50 per pound
$32.00 per pound
$48.00 per pound / $0.50 per pound
$1.50 a pound
$12.00 per pound
Salmon jerky offers the highest retail price, as well as the largest opportunity for differentiation in the marketplace.
It should be noted that Wild Alaska Salmon Direct has a shore based processing license with the State of Alaska that allows the company to source fish directly from fishing boats and fishermen at what are called “dock prices”. This means that Wild Alaska Salmon Direct $0.50 per pound cost represents a minimum price, and no competitor can produce lower than this price.
Future opportunities
Wild Alaska Salmon Direct has the following potential opportunities for the future:
1. Cod jerky. Fished in the same Alaskan waters as salmon, but at a different time of the season, selling cod jerky would allow the company to extend its fishing season and would thus be a cost-effective extension to Wild Alaska Salmon Direct product line.
2. Geographic expansion. Wild Alaska Salmon Direct intends on initially focusing on the South Western United States. Once it has gained traction there, the company will bring its experience in that area to other markets. The first geographic expansion would be the Eastern United States, potentially followed by an international expansion.
The Competition
IQF product category
There are several large companies—such as Icicle, Trident and Pacific Seafood’s—that purchase unprocessed salmon, process it into IQF and canned product, and sell it wholesale to the domestic and international markets. Since these companies only sell wholesale, they are not considered to be in direct competition with Wild Alaska Salmon Direct.
Salmon jerky category
The salmon jerky market is a small, developing market, unlike beef jerky which is a large and mature market. Consequently, the salmon jerky market is highly fragmented. There is no clear market leader, and this vacuum represents an opportunity for Wild Alaska Salmon Direct to fill the void and become a prime mover in salmon jerky food category. For the most part, small, “Mom and Pop” type of companies dominate the salmon jerky market on the internet, and most—with the exception of “Trappers Creek”—have little or no retail presence.
Competition focus: Trapper’s creek
“Trappers Creek”, based in Alaska, is one of the few companies that has a developed presence in the salmon jerky retail market. This company has outlets in the American North West, specifically in Alaska, Washington, Oregon and Northern California. They also have their products in some regional Costco Stores and distributors in those areas. Trappers Creek constitutes the only real salmon jerky competition for Wild Alaska Salmon Direct.
Sales And Marketing
Strategy overview
Sales and marketing will work very closely together in order to drive revenue. The strategy will be for reps to ensure that Point of Purchase (POP) displays are placed in high-traffic locations, and for marketing to send potential customers to those locations in order to garner sales. Sales results will then be shared with reps and incorporated into the sales script in order to give added credibility to the brand. As this process repeats and sales increase, the sales script will become more and more persuasive. The flowchart of this process can be seen on the next page.
Sales and marketing process flowchart
Í / The sales script is enhanced with an even stronger message. / É
Note: all marketing and sales activities would be run out of Wild Alaska Salmon Direct’s packaging and shipping facility in Henderson, NV.
Message
In order to differentiate the company’s product from other salmon jerkies and substitute products, a single clear message will be conveyed by both sales and marketing:
We use only the highest-quality wild Alaskan salmon to produce
the most delicious and healthy salmon jerky you’ll ever taste.
The above statement entails the communication of three benefits:
1. The superior quality of wild Alaskan salmon
2. The superior health-benefits of wild Alaskan salmon
3. The superior taste of the company’s jerky which is imparted by a proprietary recipe
Marketing
Marketing’s primary objective will be to increase awareness of Wild Alaska Salmon Direct’s jerky, and to drive traffic to POP display locations and to the website. All campaigns will initially focus on the local market before being rolled out nation-wide.
Magazine ads
· Advertising will be purchased in “Commercial News USA”, a magazine that is distributed worldwide to key personnel in companies that are actively searching for products to distribute.
Coupons
· Coupons will be provided to retailers when POP displays are first installed. Each store will receive a limited number of coupons to attach to their POP displays in order to encourage “buy to try” purchases.