I've obviously declared I own a lot of stock so you know where I'm at...
You are right, on a level, that low international prices are not as good as high international prices.....your flow on impacts for Tassal are not balanced however...Here's why
Australian salmon consumption is low relative to similar countries....in line with this, domestic salmon consumption has been increasing about 15% a year......if this growth were to stop, Tassal's growth would be in big trouble
Tassal is actually increasing local salmon prices, not decreasing....Woolies can't ask for lower prices: it's a duopoly...at least, that is the market evidence for last few years
Australia already enjoys 'genuine international competition'....its just that, they can't get the fish here quickly and efficiently enough for sale except in particular cooked, canned markets....This is unlikely to change.
Other than that, the international market is the cream on the top.....Tassal gets a price premium in Japan...they love the Tasmanian fish, for example, and makes sure that it services that market...no matter what the price...its about relationships...the other markets are nice if the price is high....
Tassal's CapX spend of last few years has the goal of absolute global competitiveness....
Whether they achieve that or not does not really matter....its about growing domestic consumption...Tassal is about 70% of domestic supply!
That's why all their innovative branding and marketing is so long term focused.....it's not so much about 'buy Tassal Salmon'....its buy Salmon
TGR Price at posting:
$1.25 Sentiment: None Disclosure: Held
