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Article: Canned tuna market revival in the context of global crisis?
02 September 2020
Canned tuna consumption has increased worldwide for the first
half of the year. Major global industries managed to honour
contracts while production and supply chain continuity were secured
by government policies in most of the cases.
However, the second half of the year remains uncertain given the
global economic decline in the pandemic.
Tuna industry experts from the US, the EU, Middle East and South
East Asia, together with an expert audience connected from all over
the world, recently met to discuss the industry's outlook at the
INFOFISH online webinar series 'Tuna trade and market - Evolution
and opportunities," that went live on 5 August, 2020.
Canned tuna in the US
Among global canned tuna markets, the US is likely to have
experienced the strongest impact because of the Covid-19 outbreak.
Customs data shows canned tuna imports rose 17% year-on-year to
nearly 130,000 tonnes for the January to June period, while overall
retail sales increased 30% year to date.
"Rising retail sales was largely driven by people not going to
the store as frequently as before and switching from eating out of
home to eating at home. It also became a more attractive protein
product as significant local disruptions impacted beef, pork and,
to a lesser extent, poultry production," commented John Connelly,
president of the US National Fisheries Institute.
US canned tuna retail sales in the first quarter of the year
increased 44% year-on-year, while 'fancy' tuna products, mainly
pouches, increased 33% y-o-y; sales in the second quarter improved
23% y-o-y for canned tuna and 8% y-o-y for pouches.
"Both canned and pouches experienced growth, although consumers
tended to purchase mainly canned tuna, which is the product they
are most familiar with," Connelly said.
"During the first half, most of the processors were able to meet
retail demand through most of the panic buying periods. There were
some areas where the product was short, but nowhere near with what
we saw with other proteins, so that is a testament to the robust
tuna supply chain," he added.
An attendee at the online webinar pointed out in the Q&A
chat that some of the inventory purchased in 2019 fed the system
over the last couple of months. Connelly replied: "We are
interested, not yet concerned, in monitoring what is occurring in
production areas regarding workers confident in getting back into
their manufacturing plants, so we can secure product into the
winter of 2020/21."
Canned tuna in the EU
Panic buying also influenced canned tuna retail sales in the EU,
which jumped by 80% in week 11 compared with the same week of the
previous year. Demand has since stabilised at above 20%, on
average, compared with the first half of last year. In the
meantime, the foodservice channel and gourmet continue to
experience dismal sales amid the virus outbreak sanitary
restrictions.
The EU, as second top producer of canned tuna worldwide,
manufacturing around 364,000 tonnes of prepared tuna per year, is
highly dependent on raw material imports to meet an annual domestic
demand of nearly 760,000 tonnes.
Imports of frozen fillets of skipjack and yellowfin for canning
during the period increased 12% y-o-y to 110,000 tonnes. A bulk of
around 60,000 tonnes landed in January - mainly skipjack from China
- which secured an adequate raw material supply to the industry for
the upcoming months despite logistical disruptions.
The general secretary of Anfaco-Cecopesca, the Spanish canning
industry representative body, Juan M. Vieites, highlighted that the
European canned tuna market is still able to report growth in the
second half of the year.
EU canned tuna intra trade in 2019 reached 236,200 tonnes worth
EUR1.2 billion (USD1.4bln). Extra-EU trade reached 24,500 tonnes
worth EUR140.7 million. Imports in 2019 (extra trade) were 408,820
tonnes worth EUR1.7 billion.
Canned tuna market in Middle East
Total canned tuna exports to Middle East and North Africa region
were 130,000 tonnes, worth USD460.0 mln in 1H 2020, a figure
slightly up in volume but down 7% in value year-on-year.
As opposed to western counterparts the EU and the US, whose
demand for canned tuna significantly increased in 1Q 2020 amid
Covid-19 'panic buying', shipments to some of the largest Middle
Eastern markets, such as Libya or Saudi Arabia, fell.
Middle East-based canned tuna consultant Arnab Sengupta
highlighted at the webinar there is a demographic flow as a result
of the Covid-19 socio-economic impact that is likely to result in a
bullwhip effect for the canned tuna market: "Middle East economies
have significant volume of expatriate population […] Ongoing
changes in the structure of the economy as lower oil prices will
result in many people coming come back to their native country," he
noted.
Canned tuna market in South East Asia
Independent consultant on international fishery trade, Fatima
Ferdouse, said: "While demand remains quite stable in most of the
traditional canned tuna western markets, consumption trends in
Asia, particularly in south-east Asia, show there is still a
preference for fresh/frozen fish against canned tuna if
available."
Although Asian supermarkets started buying more product to
replenish empty shelves due to panic buying, Ferdouse believes
there were no major changes in other large markets besides Japan or
Australia. "But interestingly - she continued - Singaporean demand
for canned tuna significantly increased, which shows there is a
consumer group that can afford canned tuna […] Generally, consumers
with lower income in this part of the world usually go for canned
sardines or canned mackerel instead, which is much cheaper than
canned tuna."
The Singaporean market is still a relatively small market for
canned tuna. While imports for the six-month period last year
barely reached 1,300 tonnes, volumes quadrupled this year to 5,600
tonnes, customs data shows.
Non-canned tuna market
As opposed to the global canned tuna trade, the fresh and frozen
tuna market has weakened in 2020, all speakers at the Infofish
webinar agreed.
Ferdouse highlighted demand and supply of fresh tuna meant for
sushi and sasimi consumption across the foodservice chain has been
"derailed" from the market growth seen in recent years. Imports
significantly declined in the two largest markets, Japan and the
US, because of the pandemic.
"Supplies of air-freighted fresh tuna, generally transported on
passenger flights, were seriously disrupted everywhere […] In the
meantime, there is a very negative trend for frozen tuna, as major
markets reporting growth until 2019, such as the US, Spain or
Russia - Japan is an exception - shrank during this period.
To date, there is still a significant volume of frozen stock
available, due to lockdown and foodservice disruptions in Asia,
especially those imports of bluefin frozen loins that came from the
Mediterranean region. "The stockpile will continue," Ferdouse
foresees.
Whereas canned tuna is considered an essential food commodity
and trade flow between major industrial countries and markets was
protected from supply constraints - except for a few exceptions
-Middle East-based Arnab Sengupta flagged a very different
situation in the fresh and frozen segments.
"I know Oman producers exporting yellowfin tuna into the EU
horeca segment whose trade opportunities were halted as demand
collapsed, ending up with a huge inventory. The challenge now sits
on how that stock, initially targeting the horeca segment, could be
managed and diverted to the end consumer," Sengupta said.
Ferdouse added: "The consumption pattern of fresh tuna will be
different from now for a while, as actual prices will be higher
because of logistics costs. However, we do see some movement in the
frozen segment, particularly the ready-to-cook category in the
Japanese household environment at least, as it was getting popular
until last year. Other markets, such as the US, will continue
weakening as frozen tuna is an expensive product, even more
considering the rising unemployment rates and declining disposable
income foreseen."
Main drivers of growth in the context of
pandemic
In the US, price and product availability remain the drivers of
growth for canned tuna consumption, according to Connelly. "During
the first half and Covid-19 lockdown, the convenience of being able
to buy a product that you can keep in your pantry is very helpful
[…] Now the market challenge is to keep those consumers that have
come back to canned tuna recently and those who have introduced
themselves to tuna for the first time. I believe the key is to
demonstrate the versatility of the product in order to capture
consumers in the long term […] There are other ways to consume
canned tuna, not just in a sandwich," he added.
Middle East-based consultant Arnab Sengupta believes the
industry is "really competitive" and there is not much
differentiation possibilities for the product. "The power of the
buying side, together with product launches is very limited. The
force that defines demand anywhere in the world is mainly the
supplier's power, hence raw material prices […] Although canned
food sales have temporarily improved significantly, keeping those
customers will be really challenging once the market comes back to
normal because of the way the industry is structured: price and
supply, these are the only forces with power in this industry and I
think it impacts the whole tuna market."
In Europe, canned tuna sales returned to normal volumes in June,
Vieites confirmed. Sustained growth is expected for the second half
of the year. "In the meantime, the local industry will continue to
innovate by seeking new flavours, new packaging and formats to
diversify the product range. The main drivers of growth are
directly linked to innovation, sustainability and new product
launches related to healthy claims and ready cook meals," the
Spanish canning industry representative added.
Tuna industry growth in Asian markets will remain limited,
according to Ferdouse: "Consumer household demand still remains
strong for fresh and frozen, as people have time to cook and they
enjoy it. But at the same time, canned tuna imports have sharply
increased in specific locations, particularly in Malaysia,
Singapore, Taiwan and other smaller markets where the per capita
income is much higher compared with other south-east Asian
territories.
"This shows that canned tuna is not yet part of the daily food
basket like in the US, but more kind of a fancy product people eat
as tuna sandwiches, mainly at restaurants. In overall terms, I
believe the south-east Asian consumer will keep canned tuna as a
shelf stable product to consume eventually, but consumption trend
is very different in this part of the world compared with the US. I
don't expect much change here," she added.
The online retail platform as an opportunity to drive sales
growth was also analysed during the webinar. The Spanish canning
industry representative noted the online retail channel for canned
tuna is slightly expanding, although it remains quite behind other
food categories; Connelly said e-commerce canned tuna sales have
been experiencing significant growth lately in the US; Meanwhile,
in the Middle East, Arnab suggested this channel would create sales
opportunity for the frozen segment targeting end consumers.
The role of sustainability among tuna production these days was
also subject to discussion, with all speakers agreeing on
sustainability as a necessary move for the business and a long-term
view that is not going to be impacted by the Covid-19 crisis.
With this regard, Middle East consultant noted sustainability
concern in the region is almost non-existent but believes "it will
change in the near future"; in the US, Connelly added that tuna "is
always a very competitive product" and "adding cost to the product
becomes a challenge".
For the second half, speakers agreed on a weakening trend to
continue for the frozen and fresh tuna products worldwide and
canned tuna sales to continue strong amid a Covid-19 outbreak fear
remaining in consumers.
"The global tuna industry should keep an eye on consumers'
disposable income and employment rates across all markets, as well
as what will inflation rates be like after huge amounts of money,
currently coming into the system from governments, without any
production activity involved behind. At the end of the day, the
supply chain is managed by the cash or capital available in the
system, very influenced by the cost of money," Middle-East
consultant Sengupta added.
Connelly, from the US, concluded: "In the short term, lockdowns
have a positive impact on canned tuna sales. However, if workers
feel insecure commuting to work or while at work, is a concern to
us. In the long term, this is an opportunity to show returned or
new customers canned tuna products as a healthy and innovative
options. Lastly, we are aggressively communicating with the World
Health Organization and the academic hub, who have all been adamant
that the virus is not transmitted through tuna, shrimp, salmon or
food in general, in the context of increasing stories with this
regards on the internet and even governments testing samples of
imported food."
Customs data shows world canned tuna trade was nearly 650,000
tonnes worth USD2.8 bln for the January to May period this year, up
6.3% in volume and 2% in value compared with the same period of the
previous year.