Blue Star Foods Corp. is an international seafood company that imports, packages and sells refrigerated pasteurized crab meat, and other premium seafood products.
The company’s source of revenue is from purchasing blue and red swimming crab meat primarily from the company’s largest supplier in Miami and distributing it in the United States and Canada under several brand names such as Blue Star, Oceanica, Pacifika, Crab & Go, First Choice, Good Stuff and Coastal Pride Fresh, and steelhead salmon...
Blue Star Foods Corp. is an international seafood company that imports, packages and sells refrigerated pasteurized crab meat, and other premium seafood products.
The company’s source of revenue is from purchasing blue and red swimming crab meat primarily from the company’s largest supplier in Miami and distributing it in the United States and Canada under several brand names such as Blue Star, Oceanica, Pacifika, Crab & Go, First Choice, Good Stuff and Coastal Pride Fresh, and steelhead salmon and rainbow trout fingerlings produced under the brand name Little Cedar Farms for distribution in Canada. The crab meat which the company imports is processed in 13 plants throughout Southeast Asia. The company’s suppliers are primarily via co-packing relationships, including two affiliated suppliers. The company sells primarily to food service distributors. The company also sells its products to wholesalers, retail establishments and seafood distributors.
The company seeks to create a vertically integrated seafood company that offers customers high quality products while maintaining a focus on the company’s core values of delivering food safety, traceability and certified resource sustainability. The company’s companies include:
John Keeler & Co., Inc. (‘Keeler & Co.’) doing business as Blue Star Foods, which imports, packages and sells refrigerated pasteurized crab meat sourced primarily from Southeast Asia and other premium seafood products;
Coastal Pride Seafood, LLC (‘Coastal Pride’) which imports pasteurized and fresh crab meat sourced primarily from Mexico and Latin America and sells premium branded label crab meat throughout North America;
Taste of BC Aquafarms, Inc. (‘TOBC’), a land-based recirculating aquaculture systems (‘RAS’) salmon farming operation, which sells its steelhead salmon to distributors in Canada; and
Afritex Ventures Inc., (‘AVI’), a commercial manufacturer of food products.
Strategy
The company’s long-term strategy is to create a vertically integrated seafood company that offers customers high quality products while maintaining a focus on the company’s core values of delivering food safety, traceability and certified resource sustainability.
The company plans to grow the company organically by continuing to increase the company’s customer base and by introducing new high-value product lines and categories, as well as strategically acquiring companies that focus on additional species and proprietary technologies that the company can integrate into a larger, diversified company.
Operating Companies
The company operates through the following subsidiary companies:
Keeler & Co., doing business as Blue Star Foods, is an international seafood company that imports, packages and sells refrigerated pasteurized crab meat sourced primarily from Southeast Asia and other premium seafood products.
Keeler & Co. purchases the majority of the company’s crab product (Portunus Pelagicus and Portunus Haanii) from processors which source the crab meat from local fishermen in Indonesia, the Philippines, Thailand, Vietnam, Sri Lanka and India, to whom the company pay a premium in order to outfit their boats with a proprietary GPS-based system. This system allows the company to trace where the crab product originates and ensure that only mature crabs are being harvested by the use of collapsible traps and not gill nets.
The crab meat is purchased directly from processors with whom the company has long-standing relationships, that have agreed to source their product in a sustainable manner. All crab meat is sourced under the company’s U.S. Food & Drug Administration (‘FDA’) approved Hazard Analysis Critical Control Point (‘HACCP’) Plan. Additionally, all suppliers are certified by the British Retail Consortium (the ‘BRC’) and are audited annually to ensure safety and quality of the company’s product.
The imported crab meat is processed in six out of the ten plants available throughout Southeast Asia. The company’s suppliers are primarily via co-packing relationships, including two affiliated suppliers. The company sells primarily to food service distributors. The company also sells its products to wholesalers, retail establishments and seafood distributors.
The company has created a technology platform that tracks the product through its entire chain of custody and collects and transmits various data to the company in real-time, from the loading site to the packing plant, through the sorting and pasteurization process and the exporting process to the end customer. The company’s technology allows its customers access to their ‘Scan on Demand’ QR code-enabled traceability application.
The company’s premium proprietary brands, Blue Star, Pacifika and Oceanica are differentiated in terms of quality and price point.
The company utilizes best-in-class technology, in both resource sustainability management and ecological packaging.
Coastal Pride is a seafood company, based in Beaufort, South Carolina, that imports pasteurized and fresh crab meat (Portunus Pelagicus, Portunus Haanii and Callinectes) sourced primarily from Mexico and Latin America and sells premium branded label crab meat throughout North America.
It has three premium branded label products, First Choice, Good Stuff and Coastal Pride Fresh.
TOBC is a land-based recirculating aquaculture system (‘RAS’) farming operation located in Nanaimo, British Columbia, Canada with an annual production capacity of approximately 100 tons. It produces steelhead salmon and rainbow trout fingerlings under the brand name Little Cedar Farms for distribution in Canada.
TOBC’s RAS facility has been operated as a model farm for the development of salmon RAS technology. The company intends to refine this model farm into a 150-ton standardized module that will be replicated in the development of future farms. The next facility the company intends to build, subject to sufficient resources, will have 10 such modules, for a total production capacity of 1,500 tons.
The RAS facility is in an insulated, bio-secure structure in which culture conditions are controlled. The primary RAS system is composed of thirteen culture tanks, a drum filter, a fluidized sand bed biofilter and a low head oxygenator and employs an efficient gravity fed low head arrangement which reduces energy use as compared to other RAS designs. Additionally, there are two independent partial reuse finishing tank systems.
Weekly harvests of approximately two tons of salmon are stunned and bled at the farm and then processed as fresh iced head on gutted (‘HOG’) fish at a Canadian Food Inspection Agency approved processing facility. TOBC sells its salmon mainly to two wholesale seafood distributors in Canada.
Eggs are purchased from two primary suppliers and are hatched approximately every eight weeks. TOBC’s hatchery is composed of a recirculating system that utilizes an upwelling ‘heath stack’ incubator and five tanks with moving bed biofiltration. The fish are then transferred to the main RAS system approximately 12 weeks post hatch. TOBC’s feed is largely terrestrial based from grains and other non-marine ingredients.
The faster life cycle from birth to harvesting of the company’s salmon, as compared to conventional salmon, allows it to be produced more economically in contained, land-based RAS farms.
On February 1, 2024, the company entered into a ninety-day Master Services Agreement (the ‘Services Agreement’) with Afritex Ventures, Inc. a Texas corporation (‘Afritex’), pursuant to which the company will be responsible for all of Afritex’s operations and finance functions. The company will provide Afritex with working capital in order to sustain operations and will purchase certain inventory listed in the Services Agreement. The company automatically extended the Services Agreement to August 31, 2024 after which it expired.
Branded Products
The company distributes its imported blue and red swimming crabmeat in the United States under the brand names Blue Star, Pacifika, Oceanica, Crab & Go Premium Seafood, First Choice, Good Stuff and Coastal Pride Fresh and steelhead salmon and rainbow trout fingerlings produced by TOBC under the brand name Little Cedar Falls.
Blue Star is packed with only high quality Portunus Pelagicus species crab and is produced under exacting specifications and quality control requirements.
Pacifika is a quality brand for the price conscious end user. The Portunus Haanii crab meat is packed in China and is ideal for upscale plate presentations.
Oceanica is made from the Portunus Haanii crab, which is caught and processed in Vietnam. It is an affordable choice to help reduce food cost without sacrificing the look/taste of dishes.
Crab + Go Premium Seafood is geared towards millennials as part of the trend toward pre-packaged, grab-and-go items. The product is packaged in flexible foil pouches.
Lubkin Brand is packed with quality Portunus Pelagicus species crab in the Philippines and Indonesia.
First Choice is a quality brand packed with Portunus Haanii crab meat from Malaysia.
Good Stuff is a premium brand packed with high quality Callinectes species crab from Mexico.
Coastal Pride Fresh is packed with Callinectes Sapidus from Venezuela and the United States.
Steelhead salmon and rainbow trout fingerlings are produced by TOBC under the Little Cedar Falls brand. The fish are sashimi grade and only sold as a fresh item, usually reaching end users within days of harvest.
Growth Strategy
The company’s strategies include growing its existing businesses; continuing to seek opportunities to acquire companies that allow the company to expand into new territories, diversify the company’s species product categories, and where operational synergies with the company’s existing companies may exist; and scaling the RAS Business.
Sales, Marketing and Distribution
The company’s products are sold in the United States and Canada. Its primary current source of revenue is importing blue and red swimming crab meat primarily from Indonesia, the Philippines and China and distributing it in the United States and Canada under several brand names such as Blue Star, Oceanica, Pacifika, Crab & Go, Lubkin’s Coastal Pride, First Choice, Good Stuff, Coastal Pride Fresh and TOBC steelhead salmon and rainbow trout fingerlings produced under the brand name Little Cedar Falls.
The company stores its crab meat inventory at a third-party facility in Miami, Florida and distribution takes place from this facility.
The company has a sales team based throughout the United States who sell directly to customers, most of whom are in the food service and retail industry and also manage a network of regional and national brokers, that cover both the retail and wholesale segments. The sales team and brokers help to pull the products through the system by creating demand at the end user level and pulling the demand through the company’s distributor customers. The company sells to retail customers either directly or via distributors that specialize in the retail segment.
The company does not own its own fleet of trucks and utilizes less than truckload freight shipping (‘LTL’) national freight carriers to deliver its products to its customers. LTL is used for the transportation of small freight or when freight does not require the use of an entire trailer. When shipping LTL, the company pays for a portion of a standard truck trailer, and other shippers and their shipments fill the unoccupied space.
Customers
The company’s customer base is consisted of some of the largest companies in the food service and retail industry throughout the United States. The company sells its crab meat to its customers through purchase orders. For the year ended December 31, 2023, sales to food distributors and retail and wholesale clubs accounted for 52% of the company’s revenue. The balance of the company’s revenue is derived from smaller seafood distributors and value-added processors.
The company had nine customers which accounted for approximately 52% of revenue during the year ended December 31, 2023. Two customers accounted for 22% of revenue during the year ended December 31, 2023.
Competition
The company’s primary competitors in its traditional sustainable seafood businesses are Tri Union Frozen Products, Inc. (Chicken of the Sea Frozen Foods), Phillips Foods, Inc., Harbor Seafood, Inc., Newport International and Twin Tails Seafood Corp.
The company’s primary competitors in its RAS business are Aquabounty, Atlantic Sapphire, Aquaco, Nordic Aquafarms, Whole Oceans, West Coast Salmon and Pure Salmon.
Intellectual Property
The company’s patents expire 20 years from the date of issuance which range from year 2007 to 2015.
Government Regulation
The company’s third-party distribution facilities and its international suppliers are certified in accordance with the HACCP, standards for exporting aquatic products to the United States. The HACCP standards are developed by the FDA, pursuant to the FDA’s HACCP regulation, Title 21, Code of Federal Regulations, part 123, and are used by the FDA to help ensure food safety and control sanitary standards.
The company is subject to extensive regulation, including among other things, the Food, Drug and Cosmetic Act, as amended by the Food Safety Modernization Act (‘FSMA’), the Public Health Security and Bioterrorism Preparedness and Response Act of 2002, and the rules and regulations promulgated thereunder by the FDA.
The company’s activities, including working with customs brokers and freight forwarders, are subject to regulation by U.S. Customs and Border Protection, part of the Department of Homeland Security.
TOBC’s aquafarms facility in Nanaimo, British Columbia, Canada with an annual production capacity of approximately 100 tons are licensed under the Canadian Department of Fisheries and Oceans. Harvests of steelhead salmon and rainbow trout fingerlings are processed as iced HOG fish locally at a Canadian Food Inspection Agency approved processing facility.
The company is subject to certain regulations by the U.S. Federal Trade Commission. Advertising of the company’s products is subject to such regulation pursuant to the Federal Trade Commission Act and the regulations promulgated thereunder.
The company is subject to certain health and safety regulations, including regulations issued pursuant to the Occupational Safety and Health Act. These regulations require the company to comply with certain manufacturing, health, and safety standards to protect the company’s employees from accidents.
Because the company is organized under the laws of a state and the company’s principal place of business is in the United States, the company is considered a ‘domestic concern’ under the Foreign Corrupt Practices Act (‘FCPA’) and are covered by the anti-bribery provisions of the FCPA.
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