(September 7, 2010-Miami Herald)—Lobsters nearly bankrupted Netuno USA, which explains the seafood importer's new fascination with cheap squid.
When the economy crashed in the fall of 2008, Netuno had about $5
million worth of Brazilian lobster tails in its warehouse freezers.
Prices had been dropping for a year as the housing market melted down,
and now Netuno would be lucky to get $3 million for it.
got pretty damn ugly,'' partner Luciano Bonaldo recalled. ``We had
lobster for so long. . . . It was the guilty pleasure nobody wanted.''
Now Bonaldo paints a far prettier picture of Netuno's
prospects, largely thanks to ditching pricey lobsters for calamari
imported from China and India.
``It costs less and the profits are there,'' Bonaldo said. ``We're making money.''
Netuno's shift from fancy shellfish to a deep-fried favorite
captures a larger shift under way as companies like Netuno lick their
wounds from a crashed economy and begin charting more frugal paths to
Even when companies manage to boost profits in a shaky
recovery, they see little hope of returning to the high-flying business
models of the boom years.
``It's what we call the new normal,''
said Tony Villamil, dean of the business school at St. Thomas
University in Miami Gardens. ``There have been some fundamental changes
in this `Great Recession.' ''
Longtime Miami Beach hotelier
Jeff Lehman recalls charging exorbitant rates for so-so rooms at the
National, an oceanfront South Beach hotel he used to run.
220 square feet on the third floor off Collins Avenue, we shouldn't
have been selling it for $600 a night,'' Lehman said. Now that room
rents for less than $300 and Lehman doesn't see the sky-high prices
returning even if good times do.
``Will those days come back? I
sure hope so. But I don't know,'' said Lehman, now general manager of
the Betsy Hotel on South Beach's Ocean Drive. ``The heyday of hotel
rates was caused by an illusory sense of wealth. And to a point that I
don't think we've ever seen before. Certainly not in the last 70 years.
It may have been similar to what we saw in the Roaring Twenties.''
Netuno roared along in the boom times of the last decade, as
Americans' appetite for pricey lobsters seemed to surge at the same pace
as real estate values.
``Everyone was eating out and buying
flat-screen TVs. They were spending all this extra cash that they
theoretically had from their homes,'' Bonaldo said. He watched lobster
climb too -- from $15 a pound to $23 a pound, more than a 50 percent
spike. ``There was a lot of cash out in the market.''
also spent freely, confident enough to keep $8 million worth of lobster,
fish and other seafood in its rented Medley freezers while it looked
Bonaldo, 38, and partner Guilherme Colaferri, 39,
got their start selling fish out of their car trunks back in the early
1990s. Colaferri's brother had a seafood store in Brazil, and the pair
found they could undercut local competitors with the South American
``We were selling anything we could our hands on,''
Bonaldo recalled. Netuno hit its stride in 2003, thanks to soaring
lobster sales on the heels of a booming economy.
deals to sell lobster to the Royal Caribbean cruise line; Sysco, the
giant restaurant supplier; and Darden Restaurants, parent company of the
Red Lobster chain. In 2007, INC magazine named Netuno one of the 500
fastest growing companies in the country, with sales topping $65
million. About half of that was from lobster, Bonaldo said.
Netuno got caught short in the fall of 2008, when the failure of Lehman
Brothers and other major lenders sent the stock market down 30 percent
percent in 90 days. Bonaldo watched the market for lobster almost
evaporate as buyers panicked and insisted on rock-bottom prices.
``It went down a dollar a pound. Then it came down two dollars a pound,'' Bonaldo recalled.
``You talked to a customer and said, `It can't possibly go down
anymore.' Then it went down a dollar. We didn't know when it was going
The collapse in prices pushed Netuno near the brink.
Falling sales prompted Netuno's lender to declare the company in default
of a long-time loan agreement, clamping down on a nearly $9 million
line of credit and demanding repayment of the $5 million Netuno owed.
Netuno relied on the credit line to buy new seafood, but suddenly was
paying nearly 13 percent in penalty interest on borrowed money that
only cost it 5 percent during boom times. And it didn't have the cash to
fund the called loan.
``The music stopped and they didn't have
a chair to sit down on,'' said James Martin, managing partner of ACM
Capital Partners in Miami. ``Things fell so precipitously.''
Bonaldo and Colaferri hired Martin's firm to restructure Netuno's debt and fix its finances.
Martin installed a CFO to monitor Netuno's cash and negotiated a $5
million credit line at 5 percent with a new lender, BB&T. Meanwhile,
Bonaldo and Colaferri cut costs to combat the grim sales landscape.
They dismissed a few office staffers and moved sales rep off salary and
into a full-commission payment plan.
But the biggest changes came in how Netuno buys seafood.
Gone was the confidence to keep $8 million worth of seafood on ice.
On a recent afternoon, as he enters the zero-degree confines of a
warehouse- size freezer in Medley, Bonaldo estimates he has less than $2
million worth of inventory inside.
``That's snapper,'' he
says of a pallet of white boxes waiting to be shipped by truck. While
there's some Netuno lobster stored on shelves soaring three stories
high, Bonaldo doesn't risk keeping too much of it. Netuno now buys about
half the lobster it used to, he said.
Dollars drive part of
the shift: Bonaldo said he can buy six containers of tilapia for the
price of one lobster container. By focusing on cheaper seafood like
snapper and tilapia, Netuno saw sales drop $10 million this year to
about $30 million. But thanks to higher margins, profits are up 30
Calamari reflects the new approach. Netuno's squid
sales jumped 30 percent this year. Netuno buys them from exporters in
China and India, then sells them pre-portioned as a way for restaurants
to prevent chefs from serving too much squid per plate.
calamari a staple on a range of menus -- from fried bar snacks to fancy
pasta dishes -- Bonaldo sees squid providing the kind of stable profits
that he just can't count on from lobster anymore.
people will go back to that craziness,'' Bonaldo said of the lobster
boom days. There's not ``that mood of abundance we had a few years
``I wouldn't want that back,'' he added. ``It wasn't healthy.''