In our work studying Knowledge Leaders, there’s a common thread: highly innovative companies often exist at the intersection of global trends that demand intensive R&D efforts to solve complex problems the world has never faced before. Coincidence? We don’t think so.
The global population is expected to grow from 7.6 billion in 2018 to 9.4 billion by 2050, creating greater demand for protein food sources. Today only about 2 percent of the world’s food supply comes from the ocean, even though 70 percent of the planet is covered with water.
Enter Mowi, the world’s largest producer of Atlantic farmed salmon. This Norway-based Knowledge Leader sits at the crossroads of the defining issues of the 21st century. For one, salmon farming has half the carbon footprint of pork and one-tenth that of beef, making aquaculture among the most climate-friendly forms of animal husbandry. Two, space for farming in the ocean is plentiful, and three, salmon is one of the healthiest forms of animal protein, with plenty of room to grow. Last year, Atlantic salmon accounted for only 2 million tons of the global protein supply, while poultry accounted for 123 million, pork 120 million and beef 72 million.
But here’s the rub: farming salmon demands constant innovation. It takes place in one of the world’s most valuable natural resources – the ocean – placing Mowi’s operations at the center the global climate crisis. By providing one-fifth of the world’s salmon, Mowi is responsible for elevating health and sustainability standards in seafood farming not only for its own farms, but for the industry at large. (This leadership influence also is a common tendency among Knowledge Leader companies.)
It’s no surprise then, to find according to our intangible-adjusted data, that Mowi is the most innovative Consumer Staples company in Norway and #11 in developed Europe as measured by R&D as a percent of sales. The firm’s internal mantra is “Leading the Blue Revolution.” Its focus is using R&D to grow the market for healthy seafood with a strategy of sustainability.
Since its founding in Norway in 1964, Mowi has taken the unique step of becoming the only Atlantic salmon farmer that owns every step in the salmon lifecycle, from breeding to harvest, processing and distribution. Genetics R&D teams select for the highest quality eggs. From there the juvenile salmon — called smolt – are raised in freshwater lakes or tanks. When smolts are about the weight of a baseball, they’re transferred into large pens in the sea, fjords and bays for the next year or two, depending on their size at transfer. Mowi harvests salmon at about 5-6kg, a little heavier than a gallon can of paint or a large housecat. Because seawater temperature determines the ideal conditions to raise salmon, Mowi farms in Norway, Chile, Scotland, Canada, Ireland, the Faroe Islands, and New Zealand. The firm sells into 70 countries worldwide, with 70 percent of that in Europe.
Live ocean farming is rich with biological challenges like weather, disease and pests, the most troublesome of which is sea lice, which occur naturally but result from farming conditions such as overcrowding. These can cause skin infections in the salmon, and it is toward combating these pests that the firm directs the majority of its R&D investment. Mowi has the largest dedicated research unit in salmon farming. The firm calls its approach to innovation by looking at every stage of the salmon’s life cycle, “a symphony of the value chain.”
This is where it believes it can lead knowledge creation to help advance all of aquaculture. For instance, the longer smolts can stay in the freshwater homes of their youth and the bigger they are at transfer, the less susceptible they are to pests and contagious viruses in the ocean. To this end the firm’s biggest investment in 2018 was the design and construction of four new freshwater hatcheries based on an internally developed technology called RAS, or, recirculating aquaculture system. The new RAS hatcheries — two in Canada, one in Scotland and one in the Faroe Islands — provide precision control over freshwater conditions, so young salmon can stay there longer. Transferring larger smolts to the sea reduces the time to reach harvest weight and biological risks of ocean life. According to Mowi, RAS technology represents the future of the firm, and another hatchery is now underway in Norway.
In other R&D initiatives, last year Mowi introduced its first sea lice-resistant smolts to the ocean, the culmination of years of research into how to select for genetic resistance. At Mowi genetics teams also are at work on genomic sequencing and selection for disease tolerance and other factors like pigmentation and quality. In situations where antibiotics historically have been used to treat salmon, the Mowi team has introduced vaccines, which now are administered to all smolts and have drastically reduced the use of antibiotics in the past few years. To further protect the fish, the ocean and the food supply, Mowi R&D teams are at work implementing natural solutions like new self-cleaning nylon pen nets and deploying live “cleaner” fish and wrasses.
This year, the company will launch the Mowi Cloud, a long-planned upgrade to integrate the Internet of Things, and a major step toward Mowi’s vision for the world’s first smart salmon farm. The cloud-based program ultimately will network all data points from Mowi’s operations, including machine learning that identifies individual fish for real-time welfare monitoring, sizing and feeding, autonomous pest skimmers, cameras, net cleaners and breakage sensors, drone surveillance, and light regimens to promote growth and prevent pests. Environmental data will be collected from smart sensors and uploaded to the cloud for analysis. Net sensors are particularly critical for monitoring pen integrity to alert workers before salmon can escape because farmed salmon escapees that breed with wild salmon are widely considered to be a threat to the gene pool.
Because it farms in the world’s largest natural resource, sustainability is inseparable from production when it comes to Mowi’s R&D efforts. In addition to driving the overall reduction of plastics usage in all seafood supply chains, Mowi monitors the presence of plastic contamination in its own salmon. To date, results show no microplastics detected in salmon fillets and no increase over the years of studies. The firm also is active in the Aquaculture Stewardship Council, an international, independent, non-profit consortium that certifies seafood producers for responsible ocean practices. Mowi’s sites represent 35 percent of the certified Atlantic farming sites globally. Last year, 48 percent of Mowi’s harvested salmon was ASC certified, and the firm aims to achieve 100 percent certification in the coming years. The company employs 14,537 people in 25 countries.
As of 6/30/19, Mowi was held in the Knowledge Leaders Strategy. Intangible-adjusted data as of 9/4/19, source Factset and Knowledge Leaders Capital.