Interview: Scottish Salmon Company chief Craig Anderson

It's about four years since Craig Anderson started captaining the Scottish Salmon Company (SSC), but he has discovered that there had been a sweepstake on how long he'd last in the chief executive post.
Anderson says he is ready to face the challenges presented by withdrawal from the EUAnderson says he is ready to face the challenges presented by withdrawal from the EU
Anderson says he is ready to face the challenges presented by withdrawal from the EU

“From what I understand, one person thought about three weeks,” he laughs.

The lack of faith was apparently because he had no background in aquaculture, although he stresses that he never claimed to. “But I know how to run a business,” he stresses.

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Perhaps surprisingly, signing up to the firm headquartered in Edinburgh marked his first working role in Scotland, which he had left aged 19.

Initially venturing to London and North Africa, he spent more than 20 years in Russia, where he worked in telecoms and then property development, staying with one firm for seven years after being brought in to take a look at its activities.

As for what brought about his leap into the world of salmon, he attributes it to “one of these chance meetings” when he was introduced to a member of the company’s board.

“They said they’d like me to look at the company and see what I thought of it,” he says, so he analysed its structure and management, wrote up his assessment, and was asked to stay on.

The first six months – at the largest company of its kind only producing in Scotland – were an “absolute rollercoaster”, seeing him thrown in at the deep end not just in terms of the technicalities of the salmon industry but also entering the Scottish business world and its political background effectively as an outsider.

“My job was to fix the problems, build up a new team, secure the company, refinance it and then take it to the next stage.

“Like any company you go into, there were some small issues to get fixed,” he says. For example, he introduced a “no shouting” rule. “There’s no need to scare people.”

SSC, a limited company and subsidiary of Jersey-based The Scottish Salmon Company PLC, which is listed on the Oslo Børs stock exchange, has been reeling in plenty of new staff. The head count is about 500 and set to grow by 10 per cent this year, and Anderson says he tells the workforce that they are in the food business rather than in a fish processing company.

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As for his strategy at the helm, he says: “You’ve got the front end and the back end of a company and you pull it together, and then the aquaculture sides, and you’re gradually learning more and more and more. But from a business point of view, we have to look at getting this product to market on time every day. Every day we want to pull out 25,000 fish and get them to market, so by default we’re almost a logistics company at the same time.”

SSC has been investing “heavily” in infrastructure, growing its number of ships and focusing on keeping its water and seabeds clean with a view to maximising revenue.

On Friday, the business posted net operating revenues up to £35.1 million in the first quarter from £29.1m a year before. Harvested volumes fell to 5,685 tonnes from 6,741 but core earnings per kilo reached £1.67, up from 30p, which SSC said was the best result in its history and driven by operational improvements.

It also attributed higher revenues partly to growth in exports. Its products now reach 26 countries.

Anderson said the UK is the company’s largest market followed by France, and it plans to broaden its horizons.

Having moved into the likes of Ukraine and Canada, SSC is looking to increase its volumes “quite dramatically” in the US, and eyeing growth potential in China, Brazil and the Middle East. “India’s looking very interesting for us at the moment as well so there are a lot of new countries that we can export to”.

Scottish salmon is the top food export north of the Border, reaching more than 60 countries and with annual exports worth £500m.

Looking ahead, SSC said in its Q1 results that the outlook is “for a continued strong demand and with limited global supply growth”, but it also cited the impact of industry-wide biological issues, which it said hit costs in 2016 and the first quarter of 2017.

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Anderson readily admits that challenges overall have been vast, with an “unprecedented” 1,300 tonnes of mortalities in the third quarter of last year, for example.

“It’s always very sad when a problem hits,” he says. “It can be a gale, it can be biological, it can be an algae bloom that comes in from nowhere and literally suffocates the fish.”

There is also the issue of sea lice affecting the industry worldwide. As for what SSC is doing to tackle this, he highlights using cleaner fish, which eat the lice, plus “non-harmful mechanical treatments” and working with industry, government, scientists and feed companies.

“We’re involved in so many areas to try to clear the problem — and it is a big problem. We have to protect our stock as much as we can.”

He would also like to see better facilities for air freight in Scotland. Having to fly a great deal via London eats into the product’s limited travel window.

As for future growth drivers of the business, he cites SSC’s Native Hebridean Salmon, its own “native strain” of salmon broodstock, with an ancestral bloodline stretching back millennia.

It has been a difficult and expensive journey developing this strain, according to Anderson, but he hopes that by 2020 it will comprise about 15 per cent of production.

He also believes consumers are becoming more sophisticated, not just in terms of taste, but also “in their reading of the back of a packet”.

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The accreditation sector is big business, with the company’s larger clients imposing their own schemes, says Anderson. In October last year, SSC could boast that it was the first salmon producer in the UK to secure full GGN licensing, an international consumer labelling scheme guaranteeing the quality of production and origin of fish and seafood.

At the time, Anderson said: “Provenance and traceability are of increasing importance to consumers and are paramount to our business.”

Anderson also highlights filleting as a real priority, comprising about 12 per cent of turnover with its second filleting line set to open this year.

“That’s the first stage of the value-added process for us,” he says. “The fresh side will remain the top seller for at least another year or two, but we need to look into processing plants, we need to look into where our fish are coming from. Because we’re a young maturing company we’ve got limited funds to invest.”

Funds have, however, been boosted by securing a £55m refinancing deal with Bank of Scotland last year, which SSC hailed as “a major milestone” in its strategy to increase exports.

Anderson adds that the firm is always on the lookout for opportunities, which “could be in any country. We’ve got potential to grow – we’ve got linear growth and we’re already applying for new sites. We’re looking for growth and each site requires about £11m investment… For growth we need more sites.” SSC is set to open a 2,000-tonne location in Portree this year, bringing operations there to capacity of more than 4,000 tonnes.

Anderson also advocates the benefits of sector collaboration, noting that SSC is a member of the Scottish Salmon Producers Organisation (SSPO). “We want to grow and develop as an industry,” he adds.

The SSPO said earlier this year in a briefing paper on Brexit that the Scottish salmon sector employs, through both farming and processing, about 8,800 people, and estimated that up to 65 per cent of these are non-UK citizens from the EU. It also said the UK leaving the Single Market could lead to the loss of 400 jobs in Scotland if tariff trade barriers were introduced.

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Anderson says SSC has many staff from the EU, but insists he is not concerned about the UK leaving Europe. “We don’t see any mass exodus of the people we have. When the Brexit vote happened, the next day I was on a plane to New York setting up clients for the future, because I know how important the Commonwealth and the North American countries are going to be for the exports of salmon, because no-one knows what punitive tariffs will hit salmon.”

And he says that when problems arise in any of the firm’s geographies, “it’s my job to look at that, see it and put things in place to get our products to different countries to keep the company going… We’re an apolitical company but we’ve absolutely to got have our finger on the buzzer… as to possibilities.”

As for the prospect of a second Scottish independence referendum, the SSPO has called for no barriers to be placed on trading with the rest of the UK, Scottish salmon’s largest market, worth £395m a year.

Anderson says the forthcoming UK general election will give a greater indication on any indyref2 timings. “More importantly, I’m a big believer that it’s nice to say that the eyes of the world are on Scotland, but our eyes should be on the rest of the world.”

In the Scottish salmon sector, nothing is “straightforward or easy”, he believes, describing his time to date at SSC as intense. “Salmon farming is ‘complicatedly simple’. But it’s a business at the end of the day, so you have to run it as such.”

None the less, claims he fell in love with the industry when he started, and remains enamoured with it. “It’s been a great four years,” he says, evidently proud to have last year secured the Edinburgh, Lothians & the Borders Regional Director Award at the Institute of Directors Scotland Director of the Year Awards.

“We’re going in the right direction,” he says.

Evidently Anderson is a much better bet than he was initially given credit for.