Why the Seaweed Sector Should Work More Closely with Big Business

Introduction

Mitchell Lench, founder of Ocean's Balance, suggests that the seaweed sector in the West could succeed by collaborating with large corporate food and pet food companies. Rather than focusing on creating novel consumer products from scratch, the sector may benefit from these collaborations.

Ocean's Balance: A Case Study in Collaboration

Ocean's Balance, founded in 2016, sources seaweed from Maine, New Brunswick, and Central America. The company operates a large seaweed processing hub in New England and collaborates with major human and pet food multinationals, including Purina and Mars. Lench, who previously managed a fund for impact investments, recognized the ecological, social, and business opportunities in the seaweed sector in Maine.

Initially, Ocean's Balance established its farms to develop consumer seaweed food products. However, as Maine’s seaweed supply chain grew, the company shifted its focus to processing, building a custom-made drying facility with a capacity of approximately 1,000 lb of seaweed per hour. To ensure the dryer’s consistent operation, Ocean’s Balance built strong relationships with third-party suppliers to maintain a steady supply of raw materials.

Benefits of Collaboration

• Access to Established Markets: Collaborating with large corporations provides seaweed companies with access to established markets and distribution channels.
• Scalability: Partnering with big businesses can help seaweed companies scale up their operations to meet the demands of larger clients.
• Reduced Marketing Costs: Instead of creating new consumer products, seaweed companies can supply ingredients to existing products, reducing marketing costs.
• Focus on Core Competencies: By concentrating on processing and sourcing, seaweed companies can specialize in their core competencies.
• Financial Stability: Securing contracts with large, stable companies can give seaweed businesses a more secure financial base.

The Importance of Customisation and Expertise

Lench emphasizes the importance of customization in seaweed processing. He notes that different seaweed species require specific drying processes, and it is crucial to work with experts in the field. Ocean's Balance collaborated with Bennet’s, a South African firm with experience in seaweed drying, to design a custom-built dryer. The dryer is highly automated, requiring on and requires to operate.

Building a Reliable Supply Chain

Ocean's Balance works closely with third-party growers to secure a consistent supply of seaweed. This includes training indigenous farmers in Panama over eight years. By working directly with farmers, Ocean's Balance can ensure quality, control costs, and provide more value to the farmers. The company is also exploring partnerships with farmers in East Africa and Asia to diversify its sources of tropical seaweed. In addition, Ocean’s Balance acquired a seaweed harvesting company in New Brunswick to better control the quality and consistency of its supply. Ocean's Balance aims to transition to 100 percent farmed seaweed but acknowledges that farming some species is still more of a scientific undertaking than a commercial one. They are collaborating with marine science labs to accelerate the development of seaweed farming.

Adapting to Market Needs

Ocean's Balance has learned to adapt its product line to meet customer needs. Initially, the company pushed product-promoted products that it would want, but now focused focuses products based on customer feedback. Currently, 92 percent of their revenue is from repeat customers. Ocean's Balance has introduced a product line in the hydrocolloids sector that caters to food manufacturers, including pet food companies. This helps to meet the demand for clean-label ingredients and become more aware of chemical extraction processes and health studies.

Future Growth and Investment

Ocean's Balance has experienced high growth, particularly in its ingredients business, which has grown significantly. The company is now focused on increasing volumes and improving its supply chain. While Ocean’s Balance has grown organically, it is now seeking investment to expand its team and purchase equipment. Lench believes that the company is well-positioned to reach critical mass due to its processing hub, supplier network, and in-demand ingredients.

Conclusion

Mitchell Lench suggests that the seaweed sector should focus on working with larger companies and meeting their needs for functional ingredients. He believes that the potential benefits of seaweed, such as its impact on gut health and antimicrobial properties, are just beginning to be understood by food and pet food companies. By focusing on these areas and building strong relationships with corporate partners, the seaweed sector can achieve significant growth and success.