SELLING SEAFOOD in CALIFORNIA Market Opportunities and Considerations for Peixes

SELLING SEAFOOD IN CALIFORNIA Market opportunities and considerations for Peixes

Global Social Enterprise Yale University School of Management and FGV Jasmeen Batra, Timila Dhakhwa, Sabrina Ling, Meaghan McGrath, Rosa Souza Lima & Jessica Webb May 6, 2015

Contents Executive Summary ...... 3 Introduction & Overview ...... 4 Methods ...... 4 Road Map ...... 5 Overview of US Market ...... 5 Market Sizing ...... 5 Key Species ...... 6 Seafood Imports ...... 6 Market Players ...... 7 Regulatory Landscape ...... 7 Sustainability Certifications and Guidelines ...... 8 Certifications ...... 8 Proprietary Sustainability Standards ...... 10 Benchmarks and Best Practices ...... 10 Detailed Analysis: California ...... 11 Positioning ...... 12 Consumers ...... 12 Marketing ...... 13 Sustainable Seafood ...... 15 Market Segments ...... 17 Distribution...... 17 Wholesale and Retail ...... 18 Restaurants ...... 19 Reflections and Recommendations ...... 20 Overarching Reflections ...... 20 Short-Term Recommendations and Next Steps ...... 21 Long-Term Recommendations and Next Steps ...... 22 Other Recommendations and Next Steps...... 22 Risks & Challenges ...... 23 Conclusion ...... 24

Appendices ...... 26 Appendix A. Pricing Data from Whole Foods and Costco ...... 26 Appendix B. Example of Meat Producer Stories from Whole Foods ...... 28 The photos below were taken at Whole Foods in Milford, Connecticut. While they do not tell a sustainable story, they demonstrate the basic level of transparency highlighted by Whole Foods for consumers of their meat products and emphasize the type of feed and living conditions experienced by their animals. No producer information was present for fish producers during this visit. Also note the emphasis on local farmers...... 28 Appendix C. Case Studies ...... 29 1.Growing the Market for Australis Barramundi ...... 29 2.Introduction of Acai in the US Market: Sambazon ...... 29 3.Fair Trade Certified Wild Capture Fish ...... 29 4.Verlasso: Chilean Salmon ...... 29 5.Selling Paiche: A Peruvian Model ...... 29 Appendix D. Interviews and Contacts ...... 36

Executive Summary This report highlights key considerations for Peixes da Amazonia to consider when thinking about entering the US market, with a particular focus on California. Kaete Investimentos, Peixes’ largest shareholder, engaged a group of students from Yale School of Management in Connecticut, USA, and FGV, in Sao Paulo, Brazil to investigate the following research questions:

1. What and where are the key potential market entry points for Peixes de Amazonia? 2. How can Peixes successfully position its products while leveraging its impact story? 3. Who are the major players and what are the key market dynamics?

Through the framework of a course on Global Social Enterprise, the team conducted expert interviews and performed literature reviews between January and May, 2015. The resulting report focuses on relevant information and insights on key market entry points, product positioning, major players and key market dynamics.

The report is organized into three main sections. The first section, Overview of US Market, provides a brief overview of the fish and seafood industry in the US to provide context for the report. It describes the main market segments and important regulations, and introduces the sustainable seafood certification landscape. The second section, Detailed Analysis: California, presents the key findings from efforts to answer the research questions listed above. It distills information deemed most relevant to inform the positioning of Peixes’ products in the California market as well as the key considerations for potential ways to enter the market. The final section, Reflections and Recommendations, provides overall reflections from the GSE team and a discussion of short and long-term recommendations for Peixes to consider as it prepares to export to the United States. The final section identifies a number of potential risks Peixes should consider when evaluating its decision to enter the California market. The Appendices include a comparison list of current protein pricing at two major consumer outlets, five case studies that offer tangible examples relevant for Peixes as it evaluates exporting to the US market, and a list of interviews and contacts.

Overall, the study found that price and quality are the most important factors for consumers and buyers. Buyers also prioritized consistent supply over other issues like volume. Sustainability is important to a significant niche market, but generally is perceived as an “added bonus” rather than a top priority for purchasing decisions in all segments. Transparency and documentation of processes is a must, particularly for buyers, even if formal certification isn’t sought. Because US consumers are hesitant to try new seafood products, restaurants, which are seen as trendsetters, would be a better starting avenue than grocery store or other retail outlets. However, due to the decentralized nature of restaurants (particularly high-end restaurants), we recommend that Peixes seeks to partner first with a distributor who can market on their behalf, help them navigate the process of selling to restaurants and retailers, and advise on certification questions, pricing, and marketing strategies. In sum, opportunities for market entry exist, but Peixes will likely need to make some significant investments in its own processes before it can successfully do so.

Introduction & Overview The global population is expected to reach 9.6 billion people by 2050. Determining how to feed a growing world is top of mind for the public and private sector alike. As global incomes rise, people are increasingly demanding high-protein diets, yet the amount of arable land available remains fixed. Fish, largely seen as healthy and input-efficient, has the potential to emerge as the go-to protein source for a growing world. Unfortunately, wild fish stocks have been decimated by years of overfishing and seem unlikely to be able to provide a lasting supply. Increasingly, aquaculture is viewed as a promising option to produce protein-rich foods and meet growing demand. Many governments, like India and Brazil, see fish production as a way to feed growing populations while also boosting local economies. In April 2015, Brazil announced that it intends to increase aquaculture production to two million tons by 2020, of which pirarucu is a major focus.1

Seeking to capitalize on this growing trend, Peixes da Amazonia was founded. The fish complex located in Acre, Brazil was designed to produce three species of native Amazonian fish while boosting the local economy and reducing deforestation.2 To achieve its objectives, Kaete Investimentos, the main investor in Peixes da Amazonia, engaged a team in the Global Social Enterprise course at the Yale School of Management to review potential market opportunities for Peixes to export its products to the California market.

The purpose of this engagement, which began in January 2015, was to answer the following three questions as they relate to the market in California.

4. What and where are the key potential market entry points for Peixes de Amazonia? 5. How can Peixes successfully position its products while leveraging its impact story? 6. Who are the major players and what are the key market dynamics?

Methods The student consulting team, comprised of students from Yale’s School of Management and School of Forestry and Environmental Studies, joined by a student from FGV in Sao Paolo, conducted a literature review, in-country research, and expert interviews to address the research questions above. Because of the time constraint of this project, the team limited their scope to targeted, high-impact topics and case studies as outlined in the scope developed in conjunction with Kaete Investimentos. The team interviewed experts representing 22 organizations. This report is a summary of the research, analysis and recommendations. Readers should note that this report is not intended to be an exhaustive analysis of the US market. It is meant to provide a starting point for Kaete and Peixes as they consider expanding into the US.

1 http://www.thefishsite.com/fishnews/25493/brazil-aims-to-quadruple-aquaculture-production/ 2 Cattle-ranching is one of the biggest drivers of deforestation. By encouraging the shift of protein production from cattle to less-resource intensive farmed fish, deforestation, by extension, would decrease. 4

Road Map The report is organized into three main sections. The first section, Overview of US Market, provides a brief overview of the fish and seafood industry in the US to provide context for the report. It briefly describes the main market segments, important regulations, and introduces the sustainable seafood certification landscape. The second section, Detailed Analysis: California, presents the key findings from efforts to answer the research questions listed above. It distills information deemed most relevant to inform the positioning of Peixes’ products in the California market as well as the key considerations for potential ways to enter the market. The final section, Reflections and Recommendations, provides a discussion of short and long-term recommendations for Peixes to consider as it prepares to export to the United States. In Appendix C, five case studies are provided to offer tangible examples relevant for Peixes as it evaluates exporting to the US market.

Overview of US Market To better understand the prospects for selling pirarucu, pintado, or tambaqui (the three species of fish being considered by Peixes for export) in the United States, this section provides a general overview of the US seafood market and the regulatory environment. Subsequent sections of this report will provide additional detail around market dynamics and key insights for various entry opportunities in California.

Market Sizing The United States is the world’s third-largest seafood importer, behind the European Union and Japan. The fish and seafood market is considered fairly mature, with revenue of approximately $2.3 billion per year, and annual growth of 1.3%. Consumer interest in healthier protein sources and an increase in disposable income are expected to drive modest growth in this industry, despite negative global events that have curbed some demand for seafood (e.g., Fukushima nuclear disaster, Deepwater Horizon oil spill). Significant future growth in this market is not expected, as industry growth has largely mirrored economic growth in the US over the past several years.

Within this market, consumers primarily eat finfish (such as salmon, tuna, and rockfish) and approximately ⅔ of seafood purchased is consumed in buyers’ homes, as opposed to in restaurants (see Figure 1).

Figure 1: Products and Market Segmentations

Key Species In general, the most consumed species of seafood have remained largely consistent throughout the past decade, with a heavy concentration on the top three species. For example, in 2009-2010, the top three species—shrimp, canned tuna, and salmon—comprised approximately 55% of all seafood consumed in the US.

Notable trends in new and emerging species include:

1. The increase in consumption of tilapia, which was the 4th most-consumed species in 2013. 2. The appearance of pangasius (a type of Southeast Asian catfish) on the Top 10 list; it first appeared in 2010 and rose to 6th place in 2013.

The top three states for fish consumption are New York, California, and Florida. The following table provides an overview of the national per-capita consumption by species in 20133.

Species Amt (lbs) 1 Shrimp 3.6 2 Salmon 2.702 3 Canned Tuna 2.3 4 Tilapia 1.43 5 Pollock 1.154 6 Pangasius 0.771 7 Cod 0.605 8 Catfish 0.566 9 Crab 0.548 10 Clams 0.352

Figure 2: Major seafood Seafood Imports import countries to the US An increase in global aquaculture has met the increased demand for seafood. The US is a smaller player in the global aquaculture market (currently ranking 13th) and imports over 90% of its seafood. Approximately half of imports are farm-raised, and half are wild- caught.

The United States sources over 75% of all fish imports from Chile and Canada (see Figure 2). Both countries are significant exporters of farm-raised salmon, and Canada’s proximity to the US enables it to be a significant seafood trade partner for other seafood species as well. 4

3 https://www.aboutseafood.com/about/about-seafood/top-10-consumed-seafoods 4 Harris, Zachary. “IBISWorld Industry Report 11251.” Fish & Seafood Aquaculture in the US, April, 2014. 6

Market Players There are multiple categories of market players and some organizations play multiple roles. For example, there are the producers (the fishers) and the various outlets through which fish can be produced. Some fishers serve as their own distributors, working directly with restaurants, hotels and other institutions, but p fishers primarily rely on external distributors to work with these consumer- facing entities.

The channels of distribution for seafood are highly fragmented and complex. For example, there are distributors who sell directly to consumers, restaurants, and retailers, and there are distributors who work exclusively with retailers. Each distributor has a slightly different approach, business model, and network. Additionally, each channel has slightly different needs with respect to working with sustainable fisheries. These needs are discussed in detail later in this report.

The primary buyers in the seafood market in the United States are as follows:

● Distributors ● Wholesalers ● Retailers ● Institutions (e.g., hospitals, universities, prisons) ● Restaurants

In general, there are a few significant players in national wholesale (e.g., SYSCO and US Foods—two of the largest food distributors in the United States) and retail markets (e.g., Wal-Mart, a large consumer goods retailer and Costco, a membership club selling products at close to wholesale prices to regular individuals) with many smaller, regional players. Because most fish available through these large wholesalers and retailers are highly commoditized products, distributors generally compete by offering the lowest prices possible.

In addition to the typical consumer-facing outlets, such as independent markets, delis, fishmongers, and butcher shops, consumers are increasingly purchasing seafood at membership clubs such as Costco (due to the high quality and low prices) and, some consumers are open to purchasing seafood online.

Regulatory Landscape The regulatory landscape for food in the US is vast and complex. The main regulatory body overseeing fish imports is the US Food & Drug Administration (FDA). In addition to the FDA, the US Customs Service ensures that appropriate taxes have been paid, and the National Oceanic and Atmospheric Administration (NOAA) provides inspection services if requested and paid for by importers or distributors.

Fisheries wishing to import products to the United States must develop a Hazard Analysis Critical Control Point (HACCP) plan.5 This plan demonstrates that the fishery is operating within the appropriate safety and cleanliness standards expected by the FDA.

Pirarucu may also require regulation through the US Fish & Wildlife Service (USFWS). Normally, fish products meant for human consumption are exempt from regulation by the USFWS. However, according to the Frequently Asked Questions6 about importing fishery products, this exemption does not apply for pirarucu because of its endangered status. Since wild pirarucu are currently protected under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), imports of pirarucu will be regulated by the USFWS, and the local Brazilian CITES organization7 may have to certify that the fish was farmed (vs. wild-caught) in order to import it into the United States.

Finally, the US has increasingly strict regulations when it comes to fish product labeling. Because of recent estimates that up to 33% of seafood sold in the US is mislabeled,8 the US government has become more aggressive about ensuring seafood is properly labeled. On March 15, 2015, the Presidential Task Force on Combating Illegal, Unreported, and Unregulated Fishing and Seafood Fraud released its current action plan9 on how to combat these issues. While it is possible to rename fish (also discussed later in the Marketing section of this report) by working with the FDA,10 these fraud prevention efforts may result in heightened scrutiny around name change requests.

Sustainability Certifications and Guidelines Unlike the mandatory regulations described in the previous section, sustainability certifications are voluntary. Sustainability certifications and standards define what practices and processes businesses must adopt in order to be considered socially and environmentally responsible. Those that have strong social and environmental practices can apply to receive a certification that indicates compliance with a set of standards, which are usually verified by a third-party audit. The business applying for the certification is usually responsible for covering the cost of this audit, although a buyer, NGO, or government program may offer some funding to offset a portion of the costs.

Certifications typically cover the three pillars related to sustainability: social, environmental and economic. Some may focus more strongly in one area over the others. In addition to certifications, there are a number of other industry guidelines and best practices for sustainable fish production that can inform producers’ management practices and buyers’ seafood purchases.

Certifications As compared with certifications for wild-caught fisheries, certifications for aquaculture are relatively new. The complexities associated with aquaculture processes have delayed their development; however, with the increased demand for sustainably-farmed seafood as an alternative to the overfishing

5http://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/Seafood/ucm2018426.htm 6 http://www.fws.gov/le/pdf/import-export-shellfish-fishery-products-fact-sheet.pdf 7 http://www.cites.org/eng/cms/index.php/component/cp/country/BR 8 http://oceana.org/sites/default/files/National_Seafood_Fraud_Testing_Results_Highlights_FINAL.pdf 9 http://www.nmfs.noaa.gov/ia/iuu/noaa_taskforce_report_final.pdf 10 http://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/ucm113260.htm 8

of wild fish stocks, aquaculture certifications are growing in popularity. Aquaculture certifications can be issued for farms, processing plants, and buyers (through a Chain of Custody certification). Below is an overview of the certifications that were most frequently mentioned in our interviews and are most widely recognized in the US market:

 Global Aquaculture Alliance Best Aquaculture Practices Certification (GAA BAP):11 GAA BAP is the industry standard for finfish in the US market. Its criteria include both social and environmental indicators, as well as a strong food safety component. GAA BAP is managed by the Global Aquaculture Alliance, a Florida-based NGO, and has certified a number of farms in South America (though none in Brazil). Although it has yet to certify pirarucu, pintado or tambaqui, its standard is not species-specific, unlike some of the other certifications. GAA BAP includes the option of a “multi-star production group certification” for integrated operations. This covers processing plants, farms, hatcheries and feed mills, and thus could be a good option for Peixes.  Aquaculture Stewardship Council (ASC):12 The ASC was founded in 2010 by WWF (the World Wildlife Fund) and IDH (the Dutch Sustainable Trade Initiative). ASC has the strongest quantitative indicators of performance, and is generally recognized by the organizations that we interviewed as the most rigorous of the aquaculture certifications. Due to these rigorous standards, the amount of data collection and time required to obtain certification is more demanding. The certification process can often take up to 3 years or more to complete. Also, the ASC standards are species-specific, and Peixes’ species are not yet included. An interesting piece of information that emerged from our conversation with SCS Global Services is that the Rio 2016 Olympic committee has committed sourcing ASC and Marine Stewardship Council (MSC) seafood whenever possible, so Brazil may see an increase in seafood certifications over the next year.  Fair Trade USA Capture Fisheries Program:13 Fair Trade USA, the US branch of the international non-profit certification body, launched its Capture Fisheries Program for wild-caught fish last year. Fair Trade has traditionally focused on the social benefits of certification, but has included environmental sustainability aspects in their wild capture standard. As part of the program, fishermen are guaranteed a premium, which is deposited into a joint account that the community controls for community projects (e.g., schools and vessel safety). It has been perceived as a success so far, and since its launch, Fair Trade tells us that there have been many inquiries as to when the aquaculture standard will be released. They are a few years away from aquaculture, and may decide to create a Fair Trade add-on to the ASC (see the Fair Trade case study in Appendix C for information on how Fair Trade partnered with a US distributor and Indonesian fishers).  Global GAP Aquaculture Standard:14 Global GAP emerged from European-wide standards for food safety in the late 90s. Since then, the standard has expanded to include other social and environmental indicators for agricultural products. Their assessment is largely based on whether or not a solid, documented management system is in place, and is perceived as an

11 http://gaalliance.org/ 12 http://www.asc-aqua.org/ 13 http://fairtradeusa.org/products-partners/seafood 14 http://www.globalgap.org/uk_en/for-producers/aquaculture/index.html 9

entry-level standard in terms of sustainability. Global GAP also has much greater consumer recognition in Europe than in the US, thus, it would not be the best choice for Peixes.

Proprietary Sustainability Standards Many popular retailers and distributors in the US have some sort of sustainability purchasing policy in place, though they usually do not require certification. Aside from a few retailers or distributors that specialize in selling sustainability products to a niche consumer base, a buyers’ internal sustainability policy is primarily to protect themselves from negative scrutiny. A few illustrative examples of proprietary standards are included below:

 Whole Foods: Whole Foods, a high-end grocery store chain targeting consumers who prioritize healthy and ethically sourced products, developed its own standards for seafood through a multi-stakeholder approach. The standards were developed by industry experts, universities, governments, environmental groups and producers, and were made available for public consultation. Whole Foods also requires occasional audits for which supplier farms must pay.15  Trader Joe’s: Trader Joe’s, a grocery chain specializing in healthy and international food, provides a good example of why retailers are concerned with setting up sustainability standards for product sourcing. Trader Joe’s was the subject of a shaming campaign by Greenpeace for their lack of sustainability standards.16 In 2010, Trader Joe’s told us that they created a new seafood policy which committed the company to sourcing only sustainable seafood by 2012. Some of the changes they made included offering GAA BAP certified farm-raised shrimp from Thailand, and referring to the Monterey Bay Aquarium’s Seafood Watch list when selecting other fish to sell. The company also reportedly has developed its own sustainability criteria, but they were unwilling to share it for this report. After these changes, Greenpeace now approves of Trader Joe’s seafood sourcing policies.  CleanFish:17 CleanFish, a California-based seafood distributor specializing in sustainably sourced products, has its own vetting process consisting of a 700-question survey that suppliers must complete before partnering with the company (they declined to share this survey with us as it is proprietary). They also perform a site visit and conduct tastings to make sure that the product lives up to the standards of the CleanFish brand. Retailers and restaurants that prioritize sustainability seek out seafood from CleanFish because they know it has already undergone this vetting process.

For more information about these retailers and distributors, please see the Market Segments section below.

Benchmarks and Best Practices A number of non-governmental organizations have also created tools, such as benchmarks or sustainability scorecards, which serve to assist buyers in creating sustainability policies and educate

15 http://assets.wholefoodsmarket.com/www/missions-values/seafood-sustainability/WholeFoodsMarketQS_Farmed-finfish- shrimp_Jan1-2014.pdf 16 http://www.traitorjoe.com/ 17 http://www.cleanfish.com/ 10

consumers about what to look for. Some of the tools that emerged from our research and interviews are outlined below:

 Greenpeace “Challenging the Aquaculture Industry on Sustainability” guide: This international NGO has created a comprehensive guide to sustainable aquaculture called “Challenging the Aquaculture Industry on Sustainability.” They have also rated seafood retailers through a widely publicized grocery store rating system and consumer survey. This resulted in a successful adoption of sustainability seafood policies by a number of popular grocery store chains, such as Trader Joe’s (see above).  Monterey Bay Aquarium (MBA) Seafood Watch List: The MBA produces the Seafood Watch List, which is a widely distributed pocket guide and smartphone app that rate species of fish as red (avoid), yellow (good), or green (best). The criteria, which are species-specific best practices rather than an on-site audit model, include social indicators (in response to slavery concerns in Southeast Asia) and health concerns (pesticides, hormones, and other additives in fish meal). Retailers, distributors and consumers look to the species standard to inform their purchasing decisions. While Peixes’ species have not yet been rated, pirarucu is currently undergoing review and should be included by late 2015. Peixes should monitor progress by checking MBA’s website.  Sustainable Fisheries Partnership (SFP Zonal Management Tool): SFP has developed a “zonal management tool” that looks more holistically at areas with aquaculture systems, rather than focusing on the farm level. By creating recommendations to manage population densities and region-wide practices, they hope to curtail some of the negative issues with high fish farm population densities, such as pollution or the spread of disease. Rather than provide a certification, SFP aims to educate major US retailers, such as WalMart, as to the questions they should ask of suppliers when evaluating them.  Global Sustainable Seafood Benchmarking Tool (GSSI): To promote transparency and aid in measuring and comparing the differences between different certifications, GSSI, a sector-wide initiative comprised of academics, NGOs, seafood companies, is developing a benchmarking tool. This tool aims to identify the minimum acceptable level of standards that any certification program should incorporate, and to promote improvement in eco-labeling programs. The tool is based on Minimum Substantive Criteria defined by the FAO Guidelines for the Ecolabelling of Fish and Fishery Products from Marine Capture Fisheries, the FAO Guidelines for the Ecolabelling of Fish and Fishery Products from Inland Capture Fisheries, and the FAO Technical Guidelines on Aquaculture Certification, and is currently being tested. When it is complete, the GSSI tool can help seafood companies such as Peixes determine which certification is right for them.

The certifications, standards and tools described in this section can be used to inform whether or not Peixes decides to move forward with a formal certification.

Detailed Analysis: California This section explores the California market in greater detail, looking at the ideal positioning for fish and the various market segments relevant for fish distribution and sales. In the first section, Positioning, we

present key findings related to consumer preferences, marketing and sustainability. In the second section, Market Segments, we describe three of the more relevant segments—distributors, wholesale/retail, and restaurants. For each segment discussed, we provide a brief overview and explain key insights from our research we deemed most relevant for Peixes.

Positioning Consumers Overview and Key Insights As noted above, consumer interest in fish consumption has increased over time. California is a leading US state for seafood consumption and has a reputation for strong consumer awareness of sustainability issues. These conditions make California a strong contender as a possible geographic entry point for Peixes. This section analyzes the end consumer’s general seafood preferences and how various contexts affect the consumer’s interest in trying new fish species. Deeper discussion of the characteristics valued by seafood consumers (pricing, health benefits, sustainability, etc.) can be found in the Marketing subsection below.

The following key insights emerged from our research:  Consumers are reluctant to select unfamiliar fish species, both at home and in restaurants. As seen by the minimal lack of movement in the “Top 10 Seafood Items” consumed on a yearly basis, US consumers rarely switch their seafood consumption preferences at the grocery store or in restaurants. At the grocery store, consumers are more likely to purchase a new fish if samples are being provided or if they have prior awareness of the product (from a magazine recipe or from trying it in a restaurant). In a restaurant, consumers are more likely to order a new fish if the wait staff can ‘sell’ them on a unique dining experience (e.g., a giant fish from the Amazon paired with heart of palm and acai berry salsa). Distributors have realized they can play a role in influencing these consumer trends. For example, Royal Hawaiian Distributors in California has created a Royal Fishbox,18 in which they place a familiar fish in a weekly box along with new fish species, providing information on fish preparation and species sustainability. This model allows customers to maintain some familiarity with the contents of the box, but branch out and try new items.  Fish compete with other protein options. Seafood not only competes with other seafood products, but also with chicken, beef, pork, and other types of protein. As a result, new fish species are not only competing against familiar and popular types of fish, such as salmon and shrimp, but also with widely accepted and convenient meats, such as boneless, skinless chicken breasts. If the prices of alternative proteins are high, seafood consumption tends to rise (and vice versa). More discussion around pricing can be found in the Marketing section of this report.  Consumers desire “ready to eat” options when cooking at home. Retail consumers are constrained by two issues in addition to pricing: time and knowledge. American consumers are wary of making seafood at home, due to squeamishness and lack of know-how.19 As a result, there has been an increase in “[fish] products that feature convenience in preparation and

18 http://www.sfrhs.com/royal-fishbox.html 19http://www.washingtonpost.com/lifestyle/food/one-fish-three-meals-paul-greenberg-makes-the-case-for-americans-to-get- hip-to-seafood/2014/06/20/81621532-f725-11e3-a3a5-42be35962a52_story.html 12

include pre-cooked and peeled shrimp, microwaveable fish sticks and fish patties, and microwaveable meals that feature fish as the protein sources.”20  Even within California, consumer tastes can be quite diverse. Major cities, such as Los Angeles and San Francisco, contain a base of consumers who are concerned about the environmental and social sustainability of their food options as evidenced by the prevalence of grocery stores, co-ops, and restaurants that cater to this interest. However, even within these regions, each fish can meet a different consumer need. For example, high-end restaurants, hotels, and membership clubs seek a more premium fish product, like pirarucu, for their customers. Asian or African-American populations (found in Los Angeles and Orange County/Westminster, for example) are culturally more open to catfish-like products, like pintado, because of their culinary traditions. Finally, bite-size/appetizer-like products, such as tambaqui fish ribs, could find appeal to young, health-conscious professionals in cities seeking a healthier alternative to the appetizers typically found at restaurants and during happy hour.

Because of consumers’ general reluctance to select unfamiliar fish species, chefs are generally seen as the gateway for introducing new products and could be an important constituency to help promote Peixes products. People tend to be more adventurous when dining out, and trust that the chef will create a unique dining experience with this unfamiliar product. As consumers begin to adopt the new fish, fisheries with the capability to process their fish into ready-to-eat options, such as individually frozen fillets, will be well-positioned to work with the time-constrained home consumer.

Marketing Overview and Key Insights For an unknown product, marketing and strong positioning are essential to its success. While there is not a great deal of formal research on the best way to market new fish products, we outline several key insights that have been gathered from chefs, distributors, and other participants across the sustainable seafood value chain. Overall, consumers care most about price and health benefits, with sustainability as a less important consideration. Therefore, although a new product may be superior in all three aspects, price and nutrition will play a more major role in positioning than a sustainability story. One interviewee commented that “once you take away the packaging [and sustainability story], the consumer needs to feel like they’re still getting value out of this fish fillet.”  The health benefits of a new product can drive consumer interest, and professional nutritionists can help build credibility. Producers of both Sambazon acai, a berry product from the Amazon, and Australis Barramundi , a new fish species which was introduced 10 years ago in the US, shared that highlighting the superior health benefits of their products was helpful in gaining consumer acceptance of their products (please see both case studies in Appendix C for more detail). After conducting thorough nutritional analysis of their product, Australis Barramundi specifically networked with nutritionists, who would write articles and blog posts about the fish. Both acai and barramundi were named superfoods by independent groups, which dramatically raised consumer awareness of their products. Two companies selling paiche (Amazone21 &

20 Neville, Antal. IBISWorld Industry Report 42446. Fish & Seafood Wholesaling in the US. October 2014. Page 14. 21 http://www.amazone.com.pe/paiche.php 13

ArtisanFish22) provide nutritional details such as protein levels, omega-3 levels, and omega-6 levels on their websites and compare the data with the nutritional values of other popular fish, like Black Cod and Chilean Sea Bass.  Pricing must be in line with competing protein products, including chicken and beef. Because consumers are risk-averse, they will largely be unwilling to pay more for an unfamiliar fish in a retail setting. As mentioned in the Consumer section, they are also comparing seafood prices with non-seafood options (please see Appendix A for a listing of recent Whole Foods and Costco prices for a variety of meat options). Fish producers may need to offer discounts or coupons to entice shoppers to purchase an unfamiliar option. If fish is sold as a bag of individually frozen fillets, the price of the bag should be roughly equivalent to the price of competing products, even if that could mean putting less fish in the bag so that the pricing is in line (i.e., bags of salmon and pirarucu are in the same price range, but the bag contains are fewer ounces of pirarucu).  To gain consumer acceptance, marketers can position new fish species as filling a “harvest gap” for a more popular fish. Since many consumers perceive fresh fish as superior to frozen fish, restaurants sometimes seek an alternative fish to fill a gap in the availability of a popular fish. For example, sustainably raised arctic char was introduced to fill the gap in the salmon harvest season. It is similar in color, texture, and taste to salmon. Arctic char was relatively unknown in the US several years ago, but is now growing in consumer popularity, and was mentioned by multiple chefs as a success story for newly introduced sustainable fish species.  Peixes may be able to leverage growing interest in paiche to sell pirarucu. Paiche is slowly growing its name recognition amongst consumers, though the name is still largely unknown. Unfortunately, both “paiche” and “pirarucu” are not the most consumer-friendly names as they are difficult for Americans to pronounce. Though it is possible to change the name of a fish, the FDA regulates the creation of acceptable market names23 for fish, and whether approval will be given is dependent on a number of factors, such as the scientific name of the fish and how well- known the product is in the United States.24  A growing “local foods” movement may work against international importers. As consumer interest grows in eating local, international importers may find that their country of origin works against them.  Consumers associate Brazil with positive attributes but do not yet recognize it as a provider of premium fish products. Brazil is primarily known for premium beef products. Though the Brazilian government seems interested in building its seafood reputation in the global marketplace, consumers still associate Brazil with beef. Brazilian fisheries may have more success positioning their products as an “exotic product from the Amazon” in order to begin to build a strong reputation for good quality seafood.

22 http://www.artisanfish.com/index-2.html 23http://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/ucm113260.htm%2 2%20%5Cl%20%22principles 24 Though Chilean Sea Bass is often used as an example of a fish which changed its name, it is possible that under today’s guidance and standards for name changes, it might not have been granted that name change. 14

In sum, consumers will be more willing to try a new product if it has superior nutritional benefits or a lower price point than a more popular fish.25

Sustainable Seafood As discussed previously in the Sustainability Certification and Guidelines section in Part 1, aquaculture certifications are not required for market entry. And, as mentioned briefly in the Marketing section above, sustainability does factor in to market considerations, but perhaps not as much as we initially assumed. The following key insights emerged from our research in regards to sustainability:

 Consumer demand in the US for sustainably certified products is generally low, but growing: Demand lags behind that of other regions such as Western Europe, but is higher than in most of Asia, Latin America, and Africa. Aside from a rather niche group of savvy consumers, brand recognition for sustainability certifications and demand for sustainable products is still quite low. However, demand for sustainable seafood is higher than for that of other proteins such as beef, pork, or chicken. Within the US, California is one of the states in which demand for sustainable food is highest.  If used, the sustainability story must be clear and concise for consumers. While there is a subset of savvy consumers who demand full transparency and proof of sustainable practices prior to making seafood purchases, the majority of consumers are satisfied with the most basic details about sustainability and rely on the research done by the restaurants or retail stores they frequent. Particularly in restaurants, consumers want less detail as they are in a setting where they want to enjoy themselves—not feel guilty about the environment or others’ socioeconomic plight. Two examples of the type of story that consumers might see in a grocery store can be found in the photos from a Connecticut Whole Foods store, in Appendix B.  Certifications are more useful as a business-to-business, rather than as a business-to-consumer, marketing tool: The advantage of certification is that they provide credibility to suppliers’ claims that their product is being produced with do-no-harm management practices. In the absence of the availability of certifications for a wide number of fish species, buyers may create their own standards  The social story may be surpassing the environmental story as most important: Some of the experts we interviewed felt that the social story was more important than the environmental story. The Sustainable Fisheries Partnership thought that while the environmental story was more important in the past, many buyers and consumers now assume their seafood producers are forced to meet at least minimal environmental regulations, and that the stories that have been attracting negative attention, such as slavery in the Thai shrimp industry, were most important. The Environmental Defense Fund echoed this, confirming that the social claim is more important to buyers because one of their top concerns is seeing their company’s name appearing in the headlines for irresponsible practices. Since different certifications focus on different aspects of sustainability, Peixes should evaluate which aspects of its story it feels is strongest and which are most important to potential buyers.

25 Anecdotally, when one of the GSE team members went to Whole Foods to obtain data on meat prices, she saw paiche being sold at the fish counter. When she asked the fishmongers to tell her about the fish, they described it as similar in taste to Chilean Sea Bass (which was also for sale that day) but half the price, so price was their primary selling point. 15

 Transparency about processes and data to back up sustainability claims are key: When asked what one piece of advice the New England Aquarium would provide to Peixes, the interviewee responded, “Be very transparent and offer lots of information.” Peixes should begin to document its positive social and environmental practices in order to provide this information to potential partners as requested. Several of those interviewed recommended that Peixes begin by documenting evidence that they are complying with the “hot button” or “deal breaker” issues. The practices that were most commonly referenced during our interviews and research are::  Fish meal content: Fish meal should not contain GMOs or antibiotics.  Fish meal conversion: The lower amounts of trash fish and the higher the vegetable content in fish meal, the better. The ideal conversion is 1:1.  Anti-escape measures: Practices that ensure fish are properly contained.  Risk-sharing with farmers: Policies should protect farmers against shocks so they don’t enter a cycle of indebtedness.26  Broodstock: Fish, particularly endangered fish like pirarucu, must not be removed from wild populations, and inbreeding amongst broodstock should be avoided.  Certification can be costly. Making the required changes in operations and paying for the certification audit can be costly. Much of the advantage of certification is to differentiate a product in a crowded market. As the Sustainable Fisheries Partnership pointed out, since Peixes’ fish products are already differentiated due to their unique story, it may not gain significant benefit from seeking certification.  Peixes may be eligible for financial support for sustainability: Due to concerns about wild capture fishing, aquaculture is perceived as a growing sector of the industry and a good investment. Thus, there are a number of funding sources that may also be accessible to aquaculture businesses like Peixes, particularly to help with the improvement of environmentally and socially sound management practices. Possible funding sources include: o Responsible Aquaculture Foundation27 o Fishwise28 o IDH Farmers in Transition fund29 The Brazilian federal government or government of the state of Acre may also have funds that Peixes and Peixes farmers can access to invest in changes to their operations.

In sum, transparency and good documentation of practices is important, but third-party certification is not a high priority for most buyers or consumers.

26 SCS Global mentioned that a critique of Ecuadorean shrimp contract farming is that poor farmers absorb all of the risk from die off. 27 http://www.responsibleaqua.org/ 28 http://www.sustainablefishery.org/ 29 http://www.fitfund.com/en/home 16

Market Segments Distribution Overview and Key Insights There are two types of distributors in California: larger, well-networked distributors, like CleanFish, and smaller distributors, like Santa Monica Seafood and American Fish. CleanFish has extensive experience in introducing new fish species, whereas a company like Santa Monica doesn’t have the bandwidth to promote new species. Thus, the distributors vary in the amount of support they can offer when introducing a new fish species in the market.

Key insights that emerged from our research include:  Consistency of supply matters more than volume: The distributors, whether large or small, do not have a strict minimum volume requirement for importing fish. However, a key concern they have when introducing a new fish species is ability to source a consistent supply.  Price, quality & health matters more than sustainability: As stated in the Marketing section, consumers care most about price, quality and health benefits. Thus, while evaluating a new fish species, distributors take into consideration these three factors into account. Even distributors that prioritize sustainability may struggle to prioritize sustainability with a highly commoditized product like fish. In order to stay competitive, distributors feel pressured to purchase products from fisheries offering a lower price point. However, sustainability standards can suffer as margins are squeezed.  Products can be offered as fresh or frozen seafood: Distributors have varying preferences for fresh versus frozen seafood. For example, 70% of Santa Monica Seafood’s business focuses on fresh seafood. Although they believe that carrying frozen paiche eases logistical and inventory constraints, Santa Monica did not pursue frozen paiche because it specializes in selling fresh seafood.  Distributors sometimes establish direct partnerships with fisheries: To introduce a new fish species, a fish farm could partner with a distributor and negotiate the signing of an exclusive contract. In exchange, the distributor would commit to undertaking rigorous marketing efforts to promote the fish. But even with a partner distributor, it takes time for a new seafood species to get traction. For example, even with the CleanFish brand, it took almost three years for Laughing Bird, a sustainable shrimp brand, to gain a position in the US market.  Important lessons can be learned from paiche: The CEO of CleanFish believes that there is a market for paiche in the US, largely because of its easy to cook attributes and growing consumer interest in South American cuisine. He compared parts of paiche to Chilean Sea Bass, cod and amberjack, depending on how it is cut. CleanFish worked with ArtisanFish to introduce paiche in the US market. In addition to vetting paiche, CleanFish crafted a compelling story and created a diverse range of recipes to introduce paiche to the American consumer. Santa Monica Seafood started selling paiche only after it was endorsed by CleanFish. CleanFish is no longer working with ArtisanFish because of the high price point requested by the fishery (see more information in the paiche case study, Appendix C).

Thus, while evaluating a new species, like consumers, distributors are most concerned with the price, quality and taste of a fish, and sustainability is an added bonus. Distributors are concerned about interruptions in supply, so fisheries should consider keeping buffer stock, especially in periods outside the harvest cycle of the fish to handle any contingencies.

Wholesale and Retail Overview and Key Insights The wholesale and retail market for the seafood industry is directly linked with the changing landscape and power dynamics between the supermarket, grocery and warehouse chains that carry seafood in the US. On the wholesale end of the value chain, the distinction between wholesale, distribution and retail becomes narrower as companies strive to capture greater market share. SYSCO Corporation and US Foods, two of the biggest wholesalers in the US, also engage in retail activities, and have been in a merger discussions with each other for a year, further demonstrating the dominance by a few key players in this buying arena.

Safeway and Albertsons, the two largest retail grocery store chains in California, recently merged in January 2015.30 As a result of this merger, additional players have been able to gain a foothold in the California grocery market. For example, the Bellingham, Washington-based supermarket chain called Haggen Inc. recently purchased about 150 stores made available as part of the approval of the Safeway- Albertsons merger. Trader Joe’s, on the other hand, is a privately held chain of specialty grocery stores headquartered in California. Out of its 418 stores located throughout the US, half of them are based in California. Many of the products at Trader Joe’s are environmentally friendly and their stores carry a wide and affordable selection of gourmet food items and staples. Whole Foods Inc. has 56 stores in California. For the purpose of this research, we interviewed key stakeholders at Whole Foods and Trader Joe’s under the retail category because of their emphasis on sustainability. Under the wholesale category, we interviewed Costco, which is a large retail and a warehouse membership-based club that sells in bulk at near-wholesale prices for individual consumers.

Based on our literature research and expert interviews in this sector, the following are key insights that will be valuable for Peixes:  Wholesale/retail face stiff competition to reach customers: Customers are highly selective when selecting where to shop for food. They evaluate retail and wholesale outlets based on the following criteria: experienced and knowledgeable workforce, proximity to key markets, product presentation (promotions and displays), ability to control stock on hand, and production of goods currently favored in the market. This in turn influences retailer/wholesaler purchasing decisions.  Producers must demonstrate supply chain reliability – Just as for distributors, a strong logistical system that ensures consistency of supply in a timely fashion is a key consideration for a retail store or a wholesale operation to consider a new species of fish. When introducing a new fish species, grocers like Whole Foods and Trader Joe’s conduct their own marketing through their blogs, recipes and free samples provided for customers in the store. Efforts like these become an expensive waste of resources when suppliers cannot ensure regularity in their supply.  Ability to deliver high quality products consistently is more important than minimum volumes - Whole Foods, Trader Joe’s, and Costco emphasized the importance of maintaining high quality standards and due diligence for the aquaculture process in order to be eligible for shelf space in these stores. Costco requires a thorough documentation process with evidence of protocols and

30 https://www.albertsons.com/albertsons-and-safeway-complete-merger-transaction/ 18

processes in place to deliver the product as well as contingency plans should something go wrong.

Therefore, building a reliable supply chain and demonstrating consistency and reliability will help Peixes build credibility within the seafood wholesale and retail sector. Similarly, documenting the processed for each stage within the aquaculture operation will be essential as Peixes starts conversations with potential buyers.

Restaurants As previously mentioned, American consumers are more adventurous and willing to try new fish when dining out at a restaurant. Since pirarucu is still rather unknown to US consumers, we explored this market segment as we anticipated it would be a potentially viable outlet for Peixes products. This section includes a brief overview of the restaurant industry in California with a focus on recent trends related to seafood and sustainability. It then provides a brief discussion on how restaurants operate and their key considerations when deciding to incorporate a new fish on their menu.

Overview and Key Insights The San Francisco Bay Area and the Los Angeles area are the two largest metropolitan regions in California and are both well-known for having strong food cultures. There are over 65,000 restaurant locations in California.31 Within this robust restaurant industry, there are many types of restaurants designated based on cuisine type and price segment targeting consumers based on preference for food, ambiance, convenience and other factors. Within California there are thousands of restaurants ranging from fast food to very upscale.

The key insights that emerged from our research include:  The farm-to-table or local movement has taken over the restaurant scene: There is a growing trend of mid-level restaurants in metropolitan regions offering locally grown/raised food on their menus. These restaurants are targeting the niche market of sustainably-minded customers by providing information about where ingredients were sourced. In recent years, this has begun to apply to fish products as well. These restaurants often list farms for the shellfish on their menu and provide details about where and how fish were caught/raised.  There are a handful of restaurants entirely focused on sustainable seafood: Fish in Sausalito, California, Bamboo Sushi in Portland, and Miya’s Sushi in New Haven demonstrate how the locavore movement (consumers who primarily eat food grown close to where they live) applies to fish products as well. Other restaurants use sustainable seafood certifications, e.g., MBA Seafood Watch Guide, when creating their menus. Again, while demand for sustainability is still not mainstream, it is an important niche market segment.  Celebrity chefs influence trends across restaurants and within the home: There has been an explosion of celebrity chefs highlighted via media outlets for their skill and advocacy. Channels like The Food Network have 24-hour food programming while major networks typically have modest yet popular food-related TV shows. For example, Top Chef is a competitive series where professional and nonprofessional chefs compete to create the best dishes with often obscure

31 http://www.restaurant.org/Downloads/PDFs/State-Statistics/2015/CA_Restaurants2015 19

ingredients. Additionally, there are reputable awards like James Beard who recognize chefs for the work they do for culinary achievements.  Decisions to add a new fish depend on logistical factors as much as the fish’s flavor and quality: Restaurants rarely source fish products directly. Typically they work directly through their regular seafood purchaser who must have a supply connection. Type of cuisine and restaurant pricing will greatly influence fish purchasing decisions of a restaurant, but operational capacity and constraints will play a big factor as well. For example, the restaurant needs to have not only the knowledge of how to cut and cook the fish, but also the equipment to process and store the fish. Should a chef decide to add a new fish to its menu, he/she will want to sell it on special in order to test it out. What this means is that the chef will contact his/her fish supplier and offer it as a daily special until the initial quantity sells out. Based on the success of these sales, the chef will reevaluate whether or not it should become a regular item offered on the restaurant’s menu.

Reflections and Recommendations In this section, we begin by sharing our overarching reflections on the project and potential segments for Peixes to engage with buyers. This is followed by a series of tangible recommendations that Peixes could pursue over the short- and long-term. The recommendations are presented based on the following:

1. Short-Term Recommendations and Next Steps: refer to strategies that can be pursued in the next 6-12 months and includes “low-hanging fruit.” 2. Long-Term Recommendations and Next Steps: include strategies that will likely take longer than 12 months to complete and likely require additional preparation and evaluation. 3. Other Recommendations and Next Steps: include additional strategies that emerged from the research despite not being the main focus of the engagement.

Overarching Reflections The GSE team feels Peixes should first try and build relationships with one or more key distributors in order to enter the US market. Distributors are more willing to partner with fisheries to introduce new fish species than retailers who are usually risk-averse and need persuasion to replace current seafood with new seafood due to limited shelf space. Importantly, distributors have an intimate knowledge of the market and a strong partner can guide Peixes on pricing, certifications, and marketing strategies. An important criterion for Peixes to consider when selecting a distribution partner would be whether Peixes wants to sell fresh or frozen fish or both. For example, 70% of Santa Monica’s business focuses on fresh seafood; thus, it would not be an ideal partner if Peixes wants to sell frozen fish.

Of the distributors we talked to, we felt that the strongest partner for Peixes would be a distributor like CleanFish that has extensive experience and expertise in introducing unknown fish species (including paiche). Peixes would not require any external certification before partnering with a company like CleanFish, but, should be aware that. CleanFish employs a proprietary and extensive vetting process to evaluate sustainability standards. Peixes should consider having an exclusive contract with CleanFish or a similar distributor (at least at first) as it will incentivize the distributor to undertake rigorous marketing 20

efforts. Peixes could fund 1-2 salesmen to work with CleanFish when introducing the new fish. This would enable Peixes to get better understanding of the US market, establish a valuable network and bring Amazonian fish expertise to CleanFish. Peixes should partner with smaller distributors like Santa Monica only after establishing a relationship with a distributor with extensive regional connections like CleanFish as it will be easier to get their buy-in after the fish has been endorsed by CleanFish.

Restaurants can inspire food trends and provide an opportunity to showcase fish, but without a close contact it will likely be hard and time intensive to create these relationships. It will require boots on the ground to build the relationship such that the chef will want to be a pirarucu ambassador to his or her patrons. You will need someone who is as passionate as the chef from Brasil a Gosto and it is not clear from our research who a similar chef in California might be. Should Peixes still wish to pursue the restaurant strategy, we would suggest reaching out the restaurants that already sell paiche or have a cultural connection to paiche. Some of these chefs/restaurants are: Jose Duarte at Taranta, 32 Boston; Ricardo Zarate at Zarate Catering33 in Los Angeles and Danny Kou of San Francisco’s La Mar Restaurant.34A similar strategy could be applied for tambaqui as there are a few restaurant that sell tambaqui fish ribs (sold as “pacu” in the U.S.). Some restauranteurs include Chef Paul at Octagon Steakhouse35 in Connecticut and Chef/Owner Carlos Barroz at La Pulperia36 in New York. Distributors selling pacu include: Samuels and Son 37 in Philadelphia and Town Dock 38 in Rhode Island.

There also may some opportunities to sell Peixes products at wholesale and retail vendors in California. For example, Whole Foods and Costco have indicated interest in exploring new products. Unfortunately, they were not willing to share many specifics about their needs during our interviews, and again, a well- informed distributor could help Peixes navigate this process.

Short-Term Recommendations and Next Steps Below is a summary of the key recommendation and next steps for Peixes to consider in the next 6-12 months.  Analyze and document key nutritional information for all of Peixes products: For Americans, quality and health considerations are key drivers of fish consumption. Accordingly, all buyers will want to know the nutritional breakdown of the fish products concentrating on protein levels, omega-3s, omega-6s, and fat content. Of particular importance is the feed used to raise the fish as it can greatly affect the nutritional quality of the fish products. Individual consumers will care more about the nutritional breakdown while distributors, wholesalers/retailers, etc. will care more about the feed inputs. Peixes should conduct this analysis and clearly document the information so that it can be readily available to interested parties.  Formalize and document operational processes: Of utmost importance to food buyers is the consistent supply of high quality products. Before they will consider offering a product on their

32 http://www.tarantarist.com/ 33 http://www.chefzarate.com/ 34 http://www.lamarcebicheria.com/san-francisco/ 35 http://octagonsteakhouse.com/upd8/cooking-with-the-chef/ 36 http://www.pulperianyc.com/home 37 http://www.samuelsandsonseafood.com/ 38 http://www.towndock.com/ 21

shelves or menus, they will want to conduct a thorough assessment of the farming and business practices of the fish complex. Peixes will need to prepare not only the documentation of its processes, but also the quality assurance and quality control processes it follows in order to ensure reliable delivery of its products, and, how Peixes will respond if its products have been compromised in any way (e.g., recall procedures). Peixes may need to hire additional staff to own and manage these processes. Peixes should seek to set its standards such that it meet the minimum ‘deal breaker’ issues described in the Sustainable Seafood section of this report. Even if Peixes does not pursue certification, most American buyers will want to know their products meet this basic level of quality. By documenting these processes, Peixes will be prepared to begin conversation with US buyers.  Develop Materials to Articulate Peixes Business and Impact Values: Based on our conversations, it seems that the social impact story about economic development may resonate more with American consumers than the environmental story. To share this information, Peixes could spotlight several different individuals (e.g., farmers, Peixes employees) on a website or brochure and show how the Peixes partnership has improved their economic condition. The following could be used as a basic template to demonstrate the type of information that would be useful to track and share: o Before working with Peixes, [individual’s name] and his/her family were making $x a month and could not afford to [education, health, etc.]. Through Peixes’ fish-farming program, [name] is now able to afford [x, x, x] and has expanded his production and his/her family’s financial stability. Heifer International39, an organization dedicated to ending poverty and hunger through sustainable agriculture and commerce, does an excellent job of telling the stories of its recipients and showcasing their theory of change.40

Long-Term Recommendations and Next Steps  Explore and develop partnership with key players who can be advocates for Peixes products and help bring them to market in the US: Partnerships can be cumbersome, but can also help to open doors and facilitate sales. For example, national government agencies, like ApexBrasil, regularly help companies prepare and showcase their products on international markets. Other partnerships with environmental nonprofits and or certification agencies can help highlight products to pre-screened buyers. For example, Fair Trade helped negotiate the sale of its recently certified wild capture fish in Safeway stores throughout Northern California. Peixes should evaluate potential partnership strategies based on target goals, e.g., marketing materials, distribution discussion, and reach out to appropriate parties to begin developing beneficial partnerships.

Other Recommendations and Next Steps Through the course of this research, the GSE team identified other recommendations not tied to a California-focused export strategy. Kaete and Peixes could consider these instead of or in addition to a

39 http://www.heifer.org/ 40 For an example of stories, please see http://www.heifer.org/join-the-conversation/blog/2011/june/one-of-heifers-greatest- success-stories-beatrice-biira.html 22

California-based strategy. They are intended to provide additional information should Peixes decide not to pursue a California-focused export strategy.  Consider other US export markets like Florida: In additional to California, Florida has a strong seafood and fish industry. Additionally, cities like Miami are comprised of more international populations – particularly from countries in Central and South America – that are more accustomed to eating fish regularly and have preferences that may benefit Peixes products. Conversations with retailers indicate that customers in Florida are more inclined to buys obscure fish and whole fish. Lastly, Miami is the entry point for many South American imports and may provide convenient ports for Peixes’ products.  Consider other international export markets like China and major cities in South America: China is the largest importer of fish products globally. Fish and fish products are staples in the Chinese diet and consumers are more inclined to value rare and obscure fish than Americans. Furthermore, there may be particular marketing strategies one could use to raise the popularity of the fish among Chinese consumers. In addition to China, there are many large and growing cities in South America, e.g., Lima and Bogota, that provide more economical market opportunities for Peixes products. We would also recommend growing national/local demand for Peixes’ fish.  Consider Other Institutional or E-Commerce Buyers: Institutional buyers like hospitals, governments, and school districts often have their own health or sustainability targets and have an extremely large consumer base. There may be opportunities to target institutions where Peixes products help them achieve their own goals. This was not a focus of the report as it was assumed that distributors would likely know these large buyers and be able to guide Peixes where appropriate. Food retail is not exempt from the growth of e-commerce. Although fish purchases are less commonplace, there may be opportunities to work directly with these online vendors in the future. Vital Choice41, which recently bought the local online fish vendor, I Love Blue Sea, is an example of an online vendor. These were not explored for this report as it is a fairly new space and sales involve more popular species like salmon, oysters, etc. If pursuing the online route, Peixes may have to overcome consumer hesitation that the fish may not be fresh. .

Risks & Challenges The GSE team has identified the following risks and challenges to implementing the recommendations described in this report.

 Nutritional Risk – Feed can greatly influence fish quality and its nutritional profile. There is a risk that Peixes’ current feed management does not produce the quality of fish desired by the American market. In order to be able to market the health benefits of its products, Peixes may have to reevaluate its production practices to ensure consistent, high quality nutritional value to compete in the US market, where health benefits are highly valued.

 Farmer Risk – Peixes model relies on contract farmers. This decentralized production can introduce variability in production and potentially impact fish nutritional value (because of

41 http://www.vitalchoice.com/ 23

substitute feed, poor water quality, etc.) Peixes will need to come up with protocols and practices to ensure consistency of quality products.

 Compliance Risk – There is a risk that Peixes production practices do not currently meet HAACP standards and FDA guidelines. Should this be the case, Peixes will need to undergo an overhaul to bring its practices in line with US regulatory requirements. This may take significant financial resources and time further delaying the export timeline.

 Organizational Capacity Risk – The partnerships described in the Recommendations and Next Steps section can contribute to Peixes’ success, but partnerships require a significant amount of time and resources in order to be effective. Similarly, the documentation required to demonstrate sophistication and reliability to US buyers will take time and expertise that Peixes may not currently have. There is a risk that Peixes does not have the capacity to manage these relationships and tasks, particularly if there is a language barrier. It will be important for Peixes to hire and retain enough talent to pursue and manage these types of international relationships and be sure to give those individuals the time and resources to be successful.

 Sustainability Risk – Social and environmental sustainability has been core to the articulation of the Peixes business model, but it may not be as valuable to accessing the US markets as was initially assumed. Although American consumers – Californians in particular – are known to be highly sustainably-focused, our interviews indicate that it is not sufficient to capture significant market share. Furthermore, certification can be a costly process and one that does not guarantee a return on investment. There is a risk that Peixes will pursue marketing efforts to highlight their social and environmental impact without adequate reward.

 Timing Risk – Pirarucu is already being sold at select locations in the US as paiche. Although this can be used to Peixes’ benefit, e.g. less effort needed to make the case for pirarucu and name recognition for “paiche,” it may also pose a risk in that existing paiche suppliers have saturated demand and there may not be growth potentially for additional suppliers at this time.

 Financial Risk – Fish competes with other protein products and consumers are fairly price sensitive. In order to acquire market share, Peixes may have to be willing to offer its products at a below-market price to not only compete with other proteins, but also to entice unadventurous consumers to try the new fish product. There is a risk that Peixes may not be able to financially withstand this pricing structure to justify export to California and long enough to gain market share. Conclusion This report was designed to provide a general assessment of the key areas – overview of US market, sustainability certifications, consideration for positioning and market segmentation – deemed most relevant to inform Peixes’ consideration of exporting to the US, and to California in particular. The findings presented above represent the key insights as perceived by the GSE team following a review of literature and conversations with select professionals representing various organizations. Based on this research, it is clear that there are opportunities to sell Peixes products in California, but the pathway will not be easy and will require additional investment in Peixes. It is our hope that the findings and recommendations provide enough information so that Peixes can have a general understanding of where to focus should it decide to export to the US market. 24

Appendices Appendix A. Pricing Data from Whole Foods and Costco For comparison, the following meat prices were gathered on a recent visit to Whole Foods in Milford, Connecticut in April 2015. There was no specific mention of sustainable practices at the meat counter or in the meat aisle, but, Whole Foods customers are generally aware that all of their meats are sustainably sourced. All meat sold “at a counter” is sold by the pound and “non-frozen” indicates that the meat was sold unfrozen in the case, but was previously frozen. Type of Meat Style Price/Lb ($) Price/Kg (BRL)42

Non-Frozen Paiche Fillet At fish counter, previously frozen, product of $13.99 R$95.10 Peru

Fresh Tilapia Fillet At fish counter, product of Ecuador $10.99 R$74.71

Frozen Blue Tilapia Fillets Frozen, individually packaged, 2lb package $7.99 R$54.31

Fresh Mahi-Mahi Fillet At fish counter, product of Ecuador, processed in $15.99 R$108.70 USA

Frozen Mahi-Mahi Fillets Frozen fillets in a bag, 12 oz. bag $13.32 R$90.55

Non-Frozen Chilean Sea Bass At fish counter, previously frozen, product of $28.99 R$197.07 Fillet New Zealand

Fresh Monkfish Fillet At fish counter, product of USA $7.99 R$54.31

Fresh Cod Fillet At fish counter, product of Norway $10.99 (sale) R$74.41 (sale) $16.99 (regular price) R$115.50 (regular)

Fresh Atlantic Salmon Fillet At fish counter, product of Iceland, color added $12.99 R$88.31

Frozen Atlantic Salmon Value Frozen, individually packaged fillets in 2 lb. $9.99 R$67.91 Pack packages

Fresh Catfish Fillet At fish counter, product of USA $10.99 R$74.71

Non-Frozen Arctic Char Fillet At fish counter, product of Iceland $17.99 R$122.30

Grass-Fed Beef Ribeye Steak At meat counter, fresh $22.99 R$156.29

Organic Chicken Breast, Fresh and individually packaged $6.69 R$45.48 Boneless

For comparison, the following meat prices were gathered on a recent visit to Costco in Milford, Connecticut in April 2015. Most meats at Costco do not appear to be sustainably sourced, however, some are organic. This is possibly indicative of the Costco consumer, who is typically someone who cares about medium/high quality products at low prices, but, is not focused on sustainability.

42 The exchange rate used in this calculation was $1 USD to 3.09 BRL, based on the exchange rate on May 4, 2015. 26

Type of Meat Style Price/Lb ($) Price/Kg (BRL)43

Fresh Farmed Atlantic Salmon Fresh, sold in packages of varying size $7.99 R$54.31 Fillet

Frozen Farmed Atlantic Salmon Frozen, individually packaged, in 3 lb. bags $13.32 R$90.55

Frozen Wild Alaskan Marinated Frozen, individually packaged and marinated, in 2.25 $7.55 R$51.32 Salmon lb. bags

Fresh Farmed Tilapia Fillet Fresh, sold in packages of varying size $4.99 R$33.92

Frozen Tilapia Loins Frozen, individually packaged, in 2.5 lb. bags $5.99 R$40.72

Frozen Panko Breaded Tilapia Frozen, in 3 lb. bags $7.99 R$54.31

Fresh Wild Haddock Fresh, sold in packages of varying size $8.99 R$61.11

Fresh Wild Pacific Halibut Fillet Fresh, sold in packages of varying size $18.99 R$129.09

Fresh Wild Ahi Tuna Fresh, sold in packages of varying size $14.99 R$101.90

Fresh Wild Atlantic Cod Fresh, sold in packages of varying size $7.99 R$54.31

Frozen Wild Mahi-Mahi Frozen, individually packaged in 3 lb. bags $6.66 R$45.27

Boneless Skinless Chicken Individually packaged, various bag sizes $2.89 R$19.64 Breasts

Organic Boneless Skinless Individually packaged, various bag sizes $5.99 R$40.72 Chicken Breasts

Fresh Ground Turkey (93% Sold in packages of varying size $2.59 R$17.61 Lean)

Beef Loin Top Sirloin Steak Sold in packages of varying size $9.99 R$67.91

43 The exchange rate used in this calculation was $1 USD to 3.09 BRL, based on the exchange rate on May 4, 2015. 27

Appendix B. Example of Meat Producer Stories from Whole Foods The photos below were taken at Whole Foods in Milford, Connecticut. While they do not tell a sustainable story, they demonstrate the basic level of transparency highlighted by Whole Foods for consumers of their meat products and emphasize the type of feed and living conditions experienced by their animals. No producer information was present for fish producers during this visit. Also note the emphasis on local farmers.

Appendix C. Case Studies The following case studies provide tangible examples of success and lessons learned for Peixes to consider when entering the California market. We chose these case studies based on the insights they provide on product (taste, quality, price, and standards), marketing and branding, and strategies for new market entry. The five case studies are:

1. Growing the Market for Australis Barramundi 2. Introduction of Acai in the US Market: Sambazon 3. Fair Trade Certified Wild Capture Fish 4. Verlasso: Chilean Salmon 5. Selling Paiche: A Peruvian Model

Growing the Market for Australis Barramundi Australis Barramundi, The Better Fish; Turner Falls, MA

About In 2004, Josh Goldman had a vision that he could bring a new, sustainable whitefish to the US market. He had long been involved with sustainable fish models (even raising fish in his college dorm room), and thought Barramundi was a delicious, healthy and sustainable alternative. Over 10 years later, was he able to succeed in introducing the American consumer to an unknown fish species with a great value proposition?

Best Practices  Barramundi Targeted Three Groups: Chefs, NGOs, and Nutritionists. Australis Barramundi (AB) executed a three-pronged approach. They targeted chefs who were known to have a sustainability focus, non-governmental organizations (NGOs) that have served in a “gatekeeper” capacity for sustainable fish, and professional nutritionists. They had completed the nutritional analysis of the barramundi and found desirable characteristics (high omega-3s, high protein levels). They wanted to position this fish in the ‘white tablecloth’ premium market, and felt these players would give them the most access. Through this approach, they had major publicity over time--being featured as a “Dr. Oz superfood,” on the cover of Time magazine, and in over 300 nutrition and cooking articles online and in magazines.  Timing and Market Forces Helped Barramundi Gain a Foothold. At the time AB was started, there was a growing shift from ‘negative screening’ (NGOs emphasizing ‘bad’ producers and what not to do) to ‘positive screening,’ and highlighting fisheries that were doing well with sustainability. Greenpeace was also pressuring major retailers like Trader Joe’s to improve their sourcing of meat. These conditions allowed AB to form partnerships with retailers under pressure to provide sustainable options as products like snapper, grouper, and sea bass were demonized in the press.  Their Website Helps Provide Additional Detail for Various Parties. 29

While having a website is not essential and not the first item to tackle, as AB began getting more interest in the fish, they found that people needed to go somewhere to get additional information and transparency about the fish.

Key Risks & Challenges  The distribution push/pull between demand and supply, even in the context of marketing, can be an ongoing challenge. o AB found that distributors were sometimes impatient with AB’s ability to drive demand. If distributors didn’t feel that the fish would sell, they were unwilling to take on large volumes of the fish. Also, when speaking to magazines and other outlets for publicity, magazines wanted to ensure there was sufficient distribution for their subscribers--for example, if Bon Appetit does an article about barramundi but interested readers can’t purchase it locally, readers are frustrated. o Despite the publicity mentioned above, consumers still have a low awareness of the fish. Sampling as part of marketing is helpful, but, there is more risk with sampling fish as opposed to something easier (like acai or a more processed product)--you need to have a skilled person cooking the fish, or the sampling experience will not be effective.  Changing the fish name can be helpful, but, is not easy to do. o AB considered changing the name of barramundi, many times. However, it is not easy to change the name of a fish through the FDA, and anecdotally, it is unlikely that Chilean Sea Bass would have been granted a name change under today’s guidelines.  Chefs are effective at growing awareness, but volume will be low. o Chefs will typically offer salmon and ‘another fish’ on their menu. Because of high competition to be the ‘other fish,’ volumes generated through chef interest will be low, though, it will help raise the profile of the fish.

Introduction of Acai in the US Market Sambazon (Ryan Black); San Clemente, CA

About ● In 2000, the acai berry (and related products) were relatively unknown in the US. Seemingly overnight, the acai product was touted as one of the top antioxidant foods available, and began appearing in juice bars, smoothie bars, Whole Foods, Costco, and more. How did this relatively unknown product from the Amazon achieve this type of success in the US market?

Best Practices ● Building Product Awareness Was a Combination of Luck and Grassroots Efforts. o The perfect storm: Acai rode the growing wave of consumer interest in ‘antioxidant’-rich

products and food trends in smoothies and pressed juice. Without Sambazon’s influence, acai was named by a prominent “dermatologist to the stars” as the “#1 antioxidant in the world.” This publicity boosted acai’s reputation. Ryan noted the spike in sales immediately after the media/Hollywood coverage of the dermatologist’s comments. o The ‘story’ of acai took almost 10 years to build, and acai had the advantage of being an “easy to sample” item--the product was easy to incorporate into smoothies, people were (possibly) more willing to try a berry product than something more unfamiliar, like fish, and it was easy to sample in volume (e.g., 10,000 customers a day at Costco). o Their progression: juice bars -> natural foods markets -> mainstream markets. ● The Social Story Was Not Critical in Marketing, but, One Legitimate Certification can Help. o Sambazon’s socially responsible story of acai was t originally used to market acai. Based on nutritional analysis of the acai berry, their value proposition was that it was exotic, tasted great, and was good for you--the ‘story’ didn’t come up at all. o Founders did seek a certification that would give them the most ‘access’ to the markets in which they wanted to be.

Key Risks & Challenges  For Premium Products, Pricing and Portion Sizing Can Be Critical. o Because acai is expensive, if the “typical” bag of frozen fruit was 12 oz., Sambazon would sell acai in bags of 10 oz., so that the ‘bag price’ would be comparable and price barriers can be overcome.  American Consumers Struggle Pronouncing Names in Different Languages. o Acai is a challenging product name--Ryan regretted not marketing the berry under a different, more pronounce-able name. Application for Peixes ● Solid nutritional analysis can provide the basis of a strong value proposition. ● Build a market for your product first, then worry about sustainability. Sustainability will not matter unless you have a place to sell your product. If you emphasize a sustainability story, a neutral, third- party (and respected) certification is essential. ● Sampling will be challenging for a fish--rather than ‘sampling’ the general consumer, chefs and restaurants may be the place to start. ● Peixes may consider changing the pirarucu name if feasible--it could be a barrier for consumers.

Fair Trade Certified Wild Capture Fish Fair Trade USA, Anova LLc, and Moluccan Yellowtail Fishermen, Indonesia

About In 2014, Fair Trade USA launched its Capture Fisheries Program in an effort to bring the benefits of Fair Trade to small-scale fishermen and their communities. The organization conducted a thorough stakeholder process to develop a robust standard44. Earlier this year, the first certified fish products became available to consumers in California. The first Fair Trade certified fishery was developed in partnership with Anova Food, LLC,45 a US-based seafood distributor, and a community of yellowfin tuna fishermen in Indonesia. The products are sold at Safeway, a grocery retail chain, across Northern California and has been an overwhelming success.

Best Practices  Strong Reputation Fair Trade USA has a strong record as a certification body. Their decision to extend to seafood worked well within their existing expertise and offerings. Traditionally known for trying to improve the social dynamics associated with international trade, Fair Trade expanded this certification to address environmental considerations as well. The expert advisory board combined with the robust stakeholder input process helped to develop a credible standard that will be respected by retail buyers and end- consumers.  Guaranteed Price Premium for Fishermen A challenge with some sustainable seafood certifications has been ensuring that fishermen are compensated for their behavior change. The Fair Trade certification guarantees a price premium distributed at the community-level based on total fish purchased. This premium is deposited into a joint account that the community controls for community projects (e.g., schools, vessel safety improvements).  Strong Partnership with Distributors and Certification Bodies Anova was a partner from the very beginning. By having a distribution partner, Fair Trade and Anova were able to find a pilot fishery with which to roll out this new certification. Furthermore, the two organizations were able to initiate conversations with large buyers in California to ensure the products would be purchased and be successful. The reputation of both Anova and Fair Trade were instrumental in the success of this program and in developing purchasing relationships with Safeway.

Key Risks & Challenges  Fair Trade has spent many years developing the wild capture fishery standard and although the reaction has been tremendous, there is little information to suggest that an aquaculture standard will be developed any time soon. Therefore, this can be an example of how partnerships can be developed for success, but many not be easily replicable in the immediate future. Despite this, they should be kept in mind as potential contacts should they decide to roll out a standard in the next two one to two years.

44 http://www.befair.org/images/pdfs/Fair-Trade-USA-Capture-Fisheries-Standard-Infographic.pdf 45 http://www.anovafoodusa.com/ 32

Verlasso Chilean Salmon

About  Verlasso had a vision to invent an evolutionary way of raising premium quality salmon to promote our health and the environment’s health. Located in Patagonia, an environment ideally suited to salmon farming, Verlasso is a vital part of the local aquaculture industry. Has Verlasso been successful in selling sustainable farmed Salmon from Patagonia to the US?

Best Practices  Verlasso targeted NGOs, Chefs and Online stores o Verlasso included NGOs early on in the process prior to setting up the salmon farms to discuss best practices for sustainable fish. By closely collaborating with NGOs, Verlasso ensured that the NGOs were on board when the product was launched and the NGOs were willing and able to influence external parties regarding the benefits of the fish. o Verlasso’s primary outlet of sale at the onset was chefs or distributors who supplied premium quality seafood to restaurants. Data from chefs was used as a poster child for retailers to persuade them to sell this new high quality salmon in their stores. o Verlasso started experimenting with online stores early on. In fact, one of its first outlets of sale was Fresh Direct, an online store in Manhattan. Selling online gave Verlasso access to pricing data that is typically difficult to obtain from brick and mortar stores. This data was used by Verlasso to determine its pricing strategy going forward. In addition, it allowed Verlasso to engage more directly with its customers by being able to post videos, recipes and blogs regarding salmon on the Fresh Direct website. This is particularly important as employees in brick and mortar stores often lack knowledge regarding the unique proposition of the fish sold in their store.  Verlasso created a simple and unique marketing strategy o Verlasso did not use the term “sustainable” while selling salmon due to overuse of this term in the US. It branded the salmon as an “all-encompassing holistically raised fish” instead. o Verlasso created a detailed yet user-friendly website so that customers could easily access additional information regarding the fish and its farming practices.  Focused on one certification o Verlasso decided early on that it wanted to focus on getting the Monterrey Bay Aquarium (MBA) certification as MBA had the highest sustainability standards and Verlasso wanted to establish itself as a leader in the premium quality sustainable salmon segment.

Key Risks & Challenges  Sustainable seafood market is trendy. Sometimes it is easy to get early adoption but hard to keep people interested. o Verlasso strived to target different market segments at different points of time to keep

people interested in the fish. It first targeted chefs and then retailers to keep the momentum going in the market.  Customers value wild-caught fish more than farmed fish o American consumers consider wild-caught fish to be ultra-premium and farmed fish to be inferior in comparison. Verlasso had to fight this perception through its branding strategy especially as it charged a 50% premium on the farmed salmon.

Application for Peixes –  Unlike Salmon, there are currently no established standards for farming sustainable Pirarucu. Thus, instead of focusing on one certification, Peixes should first decide on the outlet of sale before committing to any certification.  Peixes should have a simple value proposition for its customers. It should either focus on the social impact story or environmental impact story as its primary message.  Peixes should first sell to chefs or distributors who supply to restaurants before focusing on retailers. Endorsement from chefs will allow Peixes to get the buy-in of the retailers and to sustain momentum in the trendy sustainable seafood market.

Selling Paiche: A Peruvian Model Amazone, Peru

About Amazone, nature respect initiative, is a private company based in Peru that aims to reproduce and farm emblematic fish species of the Amazon region. The company follows the investment principles of the Hochschild Group, one of the most important economic conglomerates in Peru and is a corporate social responsibility initiative of the Group. Principles under the Hochschild Group are innovation, value creation and development. Under its mission, Amazone specializes in ‘naturally producing and commercializing to the fine culinary world Paiche and other Amazonian species, using environmentally friendly methods and supplies, ensuring an environmentally sustainable year-round supply of a homogenous quality, innocuous and traceable product.’ The company also states that they promote a green supply chain for their products. Amazone exports pirarucu as paiche, which is another common name for the fish.

Best Practices Amazone maintains a very detailed website that outlines information about the fish, the production process, the supply chain as well as recipes from well-known chefs. A couple of key information highlighted in the website are as follows:  Amazone Paiche is certified by CITES. The CITES certificate ensures that the customer is buying legally traded Paiche. It prevents commercial exports of endangered Paiche. Paiche can’t leave Peru without a CITES inspection, and no Paiche can enter the United States without the CITES certificate and a US Fish & Wildlife Service inspection. Harvests at the Amazone farm are done in coordination with CITES in Peru.  The company has also provided a product information sheet with details on the product, 34

presentation, range, brand, packaging, storage, frozen shelf life, nutritional facts as well as certifications for its hatchery and processing plant. The website also talks about its breeding process in detail highlighting the aquaculture protocols that it has in place to make it unique. Among other certifications, it also has a certification called SANIPE – a sanitary certification for its farm.  The website includes a tab with informative videos about the fish, the project along with recent news in the media about the fish. The news section is kept updated with events as well. Currently, the exhibition on monster fish at the National Geographic Museum in DC is being highlighted.  According to Isaac Gherson, the CEO of the Amazone project, paiche are grown in specially created ponds in the Amazon rainforest where they are fed pellets made from Peruvian anchovies without other animal by-products. They breed naturally and are grown at low densities. The ponds are continuously flushed with fresh, clean water from the Amazon. Key Risks & Challenges  Amazone is a corporate social responsibility initiative of the Hochschild Group which is one of the biggest conglomerates in South America. The connections that the group already has was most likely critical in establishing the brand value that Paiche currently has. Having that kind of capital to invest in expensive certifications might be a challenge for Peixes.  Given that Whole Foods already has Amazone as a supplier for Paiche, Peixes will have to think about how it can differentiate itself as an attractive option when there already is a similar product in the market.

Application for Peixes –  Peixes needs to gather information on the nutritional content of its harvested fish along with detailed information on the production process so that this can go on the website. This kind of information gives the sustainability and socio-economic development story credibility.  Amazone has partnered with ArtisanFish as its main supplier in the US. ArtisanFish has the brand and reputation of being a company focused on sustainable seafood sourcing. Its website has ample information the traceability of the fish species it works with along with recipes. If Peixes can partner with a similar sustainability focused distributor, it could add a lot of credibility to its business. CleanFish is an example of a partnership that Peixes can explore for this purpose.

Appendix D. Interviews and Contacts The following are a list of organizations that the GSE team interviewed for this report. The contact information is included if 1) the GSE team sees value in Kaete or Peixes following up and 2) the individual listed has consented to sharing his/her contact information for follow up.

Organization/Individual Description of Organization Contact for Follow-up (if applicable)

APEX Brasil US branch for Brazilian Fernanda Baker (www.apexbrasil.com.br) government export agency Apex-Brasil América do Norte Apex-Brasil North America 180 Sansome Str. 4th Floor San Francisco, CA 94104 tel +1 (415) 230 2181 cel +1 (415) 254-5474

Contact is interested in understanding Peixes' value proposition and is willing to help the company. Contact also suggested continuing consultations with APEX Brasil in Brasilia.

John Ash Chef and author, serves on the N/A (www.chefjohnash.com) Blue Ribbon Task Force for the Monterey Bay Aquarium Seafood Watch Program.

Aqua Terra Culinary A catering and restaurant N/A (www.aquaterraculinary. company using sustainable com) seafood. The head chef sits on the Blue Ribbon Task Force for the Monterey Bay Aquarium Seafood Watch Program.

Aquaculture Stewardship International, non-profit N/A Council (www.asc- aquaculture certification aqua.org) organization

Australis Barramundi US-based company focused on N/A (www.thebetterfish.com) the sustainable farming of a premium whitefish, australis barramundi.

Organization/Individual Description of Organization Contact for Follow-up (if applicable)

B-Global (US) Strategic consulting firm that Romi Azevedo, US, B-Global (http://bglobal.net.br/) provides solutions for Brazilian Marta M DeVito, Brazil, B-Global companies seeking to expand abroad and global companies seeking expansion in Brazil.

CleanFish Distributor of sustainably wild- Tim O’Shea, CEO and Founder (www.cleanfish.com) caught and farmed fish. Based [email protected] in San Francisco but works with national and international Interested in carrying paiche. Very suppliers. committed to sustainable fishing practices, has deep experience bringing new species to the US market and developing long- term partnerships with their suppliers.

Costco Costco Wholesale Corporation Ken Kimble, Assistant General is an American membership- Merchandise Manager only warehouse club that [email protected] provides a wide selection of merchandise. As of 2014, it is Should Peixes decide to move forward the second largest retailer in with Costco, he likely will be a suitable the United States and the third contact to reach out to first. If he is not largest in the world and the the target buyer, he may be able to link largest membership warehouse you to the correct party. club chain in the United States

Culinary Edge Food and restaurant consulting N/A firm based in San Francisco.

Fair Trade, USA Fair Trade USA audits and N/A certifies transactions between U.S. companies and their international suppliers to ensure that rigorous Fair Trade standards have been met.

Organization/Individual Description of Organization Contact for Follow-up (if applicable)

Environmental Defense A US-based nonprofit that has a Tim Fitzgerald, Seafood Markets Strategy Fund, Sustainable strong fisheries program. They [email protected] Seafood Program work to make fisheries more sustainable and help fishermen access markets. Tim is very knowledgeable about the US seafood industry, particularly when it comes to sustainable seafood markets and access. He also advise Fair Trade in creating their fishery standards. He would likely be a useful resource to understand market nuances.

Monterey Bay Aquarium, The program is an offshoot of Simone Jones, Business Engagement Seafood Watch Program the aquarium, and produces Manager online and offline guides and a [email protected] smartphone app to help consumers understand how to Monterey Bay Aquarium is currently doing make more sustainable seafood a study on paiche. They are also working choices. with the Brazilian government on increasing sustainability with fish production. She is from Brazil and very familiar with the three Peixes species.

Monterey Fish Distributor Wholesale fish distributor N/A located in San Francisco, primarily selling to restaurants.

New England Aquarium The aquarium does research, N/A (www.asc-aqua.org) collaborates with industry and educates consumers on sustainable fishery and aquaculture practices

Royal Hawaiian Seafood One of the largest seafood Cynthia Yeh, Sustainability Coordinator (http://www.sfrhs.com) distributors in California, [email protected] experience working with international fisheries. Royal Hawaiian is potentially interested in carrying paiche and would like to speak further.

Organization/Individual Description of Organization Contact for Follow-up (if applicable)

Sambazon US importer of acai berries and Ryan Black, CEO (www.sambazon.com) acai products. Helped launch [email protected] the growth of this unknown Brazilian berry in the US. Potentially interested in further discussing paiche and possibly working with Sambazon in the future.

Santa Monica Seafood Santa Monica Seafood is a full- N/A (www.santamonicaseafo service fresh and frozen od.com/) seafood processor and distributor. It delivers in California, Las Vegas, NV and the Phoenix, AZ region. It was the first seafood distributor to enter into a formal partnership with the Monterey Bay Aquarium Seafood Watch Program.

SCS Global Provides third-party N/A (www.scsglobalservices.c certification and auditing om ) services for programs like ASC and Fair Trade, and is starting work in Brazil

Sustainable Fisheries NGO that works with major Anton Immink Partnership buyers on their sustainability Global Aquaculture Director, Sustainable (www.sustainablefish.org practices and promotes zonal Fisheries Partnership /aquaculture- level best aquaculture Tel: +44 7964 888 628 (UK) improvement) standards skype: anton.immink [email protected]

Potentially interested in featuring Peixes as a case for an upcoming conference on human development and fisheries

Trader Joe’s Grocery store chain specializing New vendors can obtain information on (www.traderjoes.com ) in healthy food and requirements by filling out this form: international cuisine http://www.traderjoes.com/contact- us/new-vendor-form

Organization/Individual Description of Organization Contact for Follow-up (if applicable)

Verlasso Verlasso raises sustainably N/A (http://www.verlasso.co farmed salmon in Patagonia m/ ) and sells it in the US. Its vision is to raise healthy, delicious fish with minimal impact on the environment

Whole Foods High-end grocery store chain Carrie Brownstein focusing on sustainability Global Seafood Quality Coordinator Email: [email protected] Tel: 718-791-1624

Dan Rand Seafood Procurement Pigeon Cove, Whole Foods Market, NA Region 11-15 Parker St. Gloucester, MA 01930 Office – (978) 283-5592

Both contacts suggested that getting in touch with the Global Buying Office would be the first step to take for Peixes to open up the conversation about supplying pirarucu to Whole Foods.