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TUF Forecasts Growth in Tuna Business Despite Market Lull

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THAILAND - Despite the flat growth of canned tuna in developed markets, Thai Union Frozen Products' (TUF) 10 per cent growth target for its tuna business is achievable, said a company executive.

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Wai Yat Paco Lee, head of investor relations and corporate investment at the world's largest tuna canner, said that while the tuna market in developed countries has grown by only 2-3 per cent yearly, there are still many other markets where tuna is not yet a popular dish, reports The Nation.

Private labels such as house brands developed by retailers are also growing in many markets. Mergers and acquisitions have continued to be part of TUF's growth strategy, besides organic growth.

Tuna contributes half of TUF's income. The recent spike of tuna raw material prices had halved the firm's profits reported for the first nine months of last year. However, Lee told reporters that the latest trend starting less than six months ago was that tuna prices have continued to decrease, and reaching US$1,400-$1,500 (about Bt46,000-Bt49,400) a tonne at present is quite favourable for the global tuna market.

"The lowered prices should help stimulate consumption. As a leader, we should be able to exploit this important trend better than the others," he said.

Nobody could guarantee that the world's tuna raw material prices would stay at this lower level, and the firm would stick to its policy to be financially conservative.

TUF, which owns many leading canned and frozen seafood brands including John West, Chicken of the Sea, Sealect, Petit Navire and Mareblu, claims 20 per cent of the world's canned tuna production, which is estimated at 1.4 million-1.5 million tonnes, valued at about $6 billion-$7 billion annually.

Market expansion

Innovations can also help create new demand but they will take time. Market expansion will be a more near-term strategy. TUF will push for expanding its tuna sales such as through expanding market coverage for each of its canned tuna brands beyond their home markets.

TUF is setting higher growth targets for its non-tuna businesses to help reduce its dependence on tuna sales.

In three years, the company aims to increase the contributions from sardine and mackerel products and pet food to over 10 per cent from 6 per cent and 7 per cent at present, and value-added products and "other products" to 15 per cent from 10 per cent.

For the first nine months of last year, tuna contributed 49 per cent of TUF's total income, followed by processed shrimp and shrimp feed meal at 24 per cent, pet food at 7 per cent, sardine and mackerel at 6 per cent, salmon at 4 per cent, and value-added and other products at 10 per cent.

The value-added and other products include ready-to-eat foods and bakery items such as pies. TUF is the sole provider of pies sold at McDonald's stores in Thailand.

TUF would focus on sardines rather than tuna for Asean markets due to the former's lower price points.

The turmoil in emerging markets' currencies triggered by the devaluation of Argentina's peso should benefit most exporters in the longer term, he added.

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