Original Story: Globe and Mail
Larry Hillis is a third-generation fisherman out of Steveston Fisherman’s Wharf in Richmond, B.C.. At 57, he’s spent most of his life fishing for a living. One thing Mr. Hillis has learned: the more steps his catch takes before reaching the dinner plate, the less he gets paid. Once he’s landed the day’s catch, it travels from the dock to the processor, to the wholesaler and retailer, and then finally to the consumer. Closing the supply chain can be the difference between making money and not,” he says.
A few months ago Mr. Hillis found a way to shorten the trip. He began working with Coastline Market Inc., a Vancouver startup whose app connects fishermen direct with restaurants, bypassing the middlemen.
Coastline Market was founded this year by Robert Kirstiuk, a theoretical physics student at Western University, and Joseph Lee, a computer science and business student at the University of British Columbia. Both are 21 and met in high school, where they discovered a mutual love of entrepreneurship. Their first venture, at 17, was an organic candle company. “We made them in our parents’ kitchens and we sold at farmers markets and to our grandparents,” laughed Mr. Lee, Coastline’s chief product officer.
It was Mr. Kirstiuk, the chief executive officer, who came up with the app idea while visiting family in Pointe-Verte, a coastal town in New Brunswick. On the dock buying fish for dinner, he thought: What if there was a way for commercial fishermen to sell more of their catch so they could keep a greater share of the profit and have more control of their income?
The idea prompted him to call Mr. Lee, and the two spent eight months researching the fish business. They hobnobbed with seafood executives at the Boston Seafood Show, the industry’s biggest annual gathering, and wandered onto docks in the Maritimes and B.C. to meet fishermen. At first they were politely rebuffed. “These guys have fished all their lives,” Mr. Lee says. He and Mr. Kirstiuk looked young enough to be in high school. But eventually fishermen did chat.
One was Mr. Hillis, who since September has been one of six B.C. fishermen, and 20 Vancouver-area restaurants, such as Espana and the Farmer’s Apprentice, to work with Coastline. Every week restaurants put out orders for seafood on the app. Fishermen checking the app fulfill them if they can. A truck from Coastline delivers the catch straight from dock to restaurant.
“We don’t have any brick-and-mortar facilities. We don’t store the fish or process it. We deliver same-day and reduce the number of middlemen,” says Mr. Lee.
Fisherman who sell through Coastline are paid 50 per cent to 200 per cent more for their catch than what they’d get from wholesalers, says Mr. Lee, although prices can vary. Coastline pays $2.30 a pound for rockfish; a fish processor might pay 80 cents.
Restaurants, meanwhile, get a price break, paying around 25 per cent less than they would to a wholesaler. Coastline makes money by keeping 20 per cent of the transaction price.
To launch their venture, Mr. Lee and Mr. Kirstiuk received $230,000 in funding from institutional investors, government matching funds and grant programs.
The company has three additional staff and is launching a mobile app in December. The desktop app Coastline built for its test phase is being used by fishermen on their laptops, but the plan is to build out the mobile app as the main platform.
To succeed, Coastline must overcome several obstacles. One is the established supply chain. Price may not be enough for restaurants to switch from reliable suppliers they’ve done business with for years.
The seafood industry also does not tend to buy and sell online. But, as Mr. Kirstiuk points out, that is changing. He cites Gfresh, a two-year-old Shanghai-based company whose online platform lets exporters around the world sell live seafood to restaurants and other buyers in China without having to go through middlemen.
Gfresh has a team in Vancouver and earlier this month raised $20-million (U.S.) from Chinese e-commerce giant Alibaba and Legend Capital. “Three years from now online platforms will be the dominant way of exporting seafood around the world,” Gfresh co-founder Anthony Wan says.
Another potential issue for Coastline is the size of the market it can tap. Besides Vancouver, few Canadian coastal cities seem large enough to ensure big demand from restaurants, says Pierre Verreault, executive director of the Canadian Council of Professional Fish Harvesters, in Ottawa. Still, anything to encourage consumption of Canadian fish is good, he adds. Seventy-nine per cent of seafood harvested in Canada gets exported. But 73 per cent of seafood we eat is imported.
Mr. Lee and Mr. Kirstiuk (who are taking a break from university to concentrate on their venture), peg the seafood market potential in Vancouver at $100-million. That includes restaurants, but also fish markets and independent grocers. They hope to win a share of that by establishing Coastline in Vancouver, followed by Victoria, Seattle and other U.S. cities down the Pacific Coast. They aim to raise $1-million in seed round funding.
Coastline’s app has traceability features, meaning chefs can find out where the fish they’re serving was caught, what fishing method was used and some information about the fisherman. That gives it another advantage over most traditional supply chains.
Carey Bonnell, head of the School of Fisheries at the Marine Institute at Memorial University in St. John’s, says such tidbits of information now matter because chefs want to know where their food comes from so they can buy local. A recent survey by research firm Technomic found 81 per cent of independent restaurant owners in Canada believe a local purchasing policy is important.
Mr. Bonnell recently dined at a restaurant in Ottawa that serves cod from Fogo Island Fish, a company that promotes cod from Newfoundland’s Fogo Island to restaurants in Toronto and other major cities. He was delighted the chef knew all about Fogo Island fishing and was able to tell diners how their meal was landed; using small boats and traditional handline catch methods.
“Here’s an opportunity to get restaurants more excited about Canadian seafood and to turn a restaurant visit into a great eating experience, with a story,” he says.