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Top Species: Tuna rides supply-and-demand roller coaster

Ample yellowfin supply poses pricing, marketing challenges

By Joanne Friedrick
January 01, 2014

With supply exceeding demand in the short term, yellowfin tuna importers are looking for creative ways to start reducing inventories. A shortage of product in 2012 that resulted in a flurry of orders to build tuna inventories has left some importers with excess at a time when demand has waned.

Yellowfin processors in Vietnam, Thailand, Indonesia and the Philippines ramped up efforts at a time when contracts with higher prices were in the market, says Paige Tilghman, executive VP for Twin Tails Seafood Corp. in Miami. As supply grew and prices fell, those with contracts started to feel the pinch, he says. 

At the same time, higher prices pushed foodservice operators and other buyers to look at alternatives such as mahimahi or even pangasius, he adds. 

“Demand hasn’t come back to where it was in 2011,” says Tilghman. “So now it’s the job of sales departments and distributors to get [buyers] to see if it can be a profitable product.”

Jon Rezny, VP-purchasing for Chicago-based Fortune Fish & Gourmet, agrees it has become a buyer’s market because “people got a little zealous with their inventories.” While it’s good from a buyer’s perspective to see some bargains, Rezny doesn’t like to see anyone lose money or put themselves in a financially precarious position. 

Like Tilghman, Rezny says when yellowfin prices were high a year or so ago, restaurant and country club buyers began changing their menus, substituting mahimahi, swordfish and halibut for tuna, or at least trading yellowfin for albacore.

While there are certain items, such as shrimp, that customers won’t take off their menus, tuna doesn’t have that same level of popularity, says Rezny.

Buyers are benefiting because importers who are holding inventory are now running specials to spur sales, according to Tilghman. When tuna was $9 a pound to distributors they looked for other, more profitable choices, says Tilghman. “Now that it is in the $5 range, it’s a value,” he says. 

Price isn’t the only factor, though, that impacts whether tuna gets back on menus or into the retail case, Tilghman says. The seasonality of tuna, which is usually marketed as a grilling item, makes it harder to sell in the winter.

“It’s a summer fish and foodservice demand is in the summer,” he explains.

Frozen tuna sales are higher from May to August, but demand for fresh product is year-round. Fortune buys fresh albacore from the Gulf of Mexico, the East Coast and from Fiji, while its frozen yellowfin is a product of Indonesia, the Marshall Islands, the Philippines or Vietnam.  

One positive, says Tilghman, is that plants aren’t shipping much new inventory, with some plants even turning to other species in the interim. “So we’re not building up additional inventory in the United States,” he says.

He predicts that im-porters will feel “another three to six months of pain” before inventory is gone and demand picks up again. 

Celebrating albacore, bigeye 

Within the domestic albacore market, Nancy Fitzpatrick, executive director of the Oregon Albacore Commission in Lincoln City, Ore., says preliminary numbers showed Oregon’s fishery had its second-best season for ex-vessel value, coming in at $16 million vs. the average $11.8 million. The 2013 ex-vessel price averaged $1.57 a pound, up by about 4 cents a pound over the previous year. 

“It has been a very good year for value and poundage,” says Fitzpatrick about the season, which typically runs from July to October. 

Tuna bought off the boat mostly stays within the I-5 corridor that runs from Oregon to California, says Fitzpatrick, or goes into local stores and restaurants. Frozen tuna is purchased by bigger buyers who put it into the foodservice supply chain, she notes. 

Both Fitzpatrick and Tilghman say that domestic and imported frozen product is making its way into retail as loins that can be hand-cut.

“One of our goals is to have [tuna loins] stay domestic,” says Fitzpatrick. “We want to get it out of the can and into the hands of cooks, because it’s a less expensive seafood that is easy to work with.”

One way the commission has increased albacore awareness among chefs is by participating in various food events such as Bite of Oregon and Feast Portland. The commission has also run commercials when the fleet is in and has taken the message national by supplying tuna to a participant in the annual Great American Seafood Cook-Off in New Orleans.

Hawaii is another domestic source of tuna, producing bigeye, yellowfin, albacore and skipjack. Hawaii’s tuna fishery catches primarily bigeye (Thunnus obesus), says John Kaneko, program manager for the Hawaii Seafood Council in Honolulu. Hawaii’s longline fishery produced 88.7 percent (13.5 million pounds) of U.S. bigeye tuna landings and 24.6 percent (2.1 million pounds) of domestic yellowfin tuna landings. The longline fishery also produced 1.5 million pounds of albacore tuna and half a million pounds of skipjack tuna in 2012.

Nearly all of the longline catch is sold through the Honolulu Fish Auction, operated by the United Fishing Agency, where fish prices are determined via competitive bidding by wholesalers and retailers, says Kaneko. 

Auction buyers process and market fish to local restaurants and retailers, to secondary wholesalers on the mainland and increasingly through direct shipments to restaurants across the country. True exports of tuna direct from Hawaii are minimal, he says.

Prices for Hawaii bigeye and yellowfin tuna tend to be on the high side in comparison with imported tuna because of high operating costs and a very strong local market, says Kaneko. “Discriminating buyers and consumers drive prices higher for Hawaii tuna,” says Kaneko. “There is only so much genuine ahi from Hawaii.”

Looking at the U.S. tuna market overall, domestic commercial landings of fresh and frozen tuna for 2012 were 136.7 million pounds for canning and 484.8 million for “other.” Tuna imports in 2012 were 400.6 million pounds for canning and 212.1 million pounds for other. 

Canned tuna holds its own 

In the shelf-stable category, tuna consumption continues to fall, moving down to 2.4 pounds per capita in 2012 from 2.6 pounds in 2011, 2.7 pounds in 2010 and 3.5 pounds in 2000. While domestic product numbers were largely unchanged from 2011 to 2012, the drop in consumption of canned tuna was attributed primarily to a decrease in imports and an increase in exports, according to the National Marine Fisheries Service’s Fisheries of the United States 2012 report.

In 2012, the U.S. canned tuna supply was 387 million pounds of U.S. packed and 353.8 million pounds imported, for a total of 740.8 million pounds. 

“Demand for tuna among U.S. consumers has remained relatively flat the past several years,” says Christie Fleming, VP-marketing for Chicken of the Sea in San Diego. As one of the world’s largest providers of tuna in cans, pouches and cups, Chicken of the Sea sources albacore, skipjack, yellowfin and tongol tuna primarily from the West Pacific, Central Pacific and Indian oceans, as well as portions of the South Atlantic.

Fleming adds that tuna “is an incredibly volatile commodity in the seafood sector and we have seen raw material costs nearly double in the past couple of years, with a slight softening in the past 12 months.”

The company’s growth is coming in other species, she says, such as salmon. “As a leader in salmon and other specialty seafood, Chicken of the Sea is experiencing growth in these specialty categories as more Americans are embracing new seafood choices in both everyday meal-planning and special-occasion recipes,” she says, pointing to growth of the company’s Premium Skinless & Boneless Pink Salmon Pouches as a good example.

This year is the 100th anniversary for Chicken of the Sea, which plans several major events to celebrate. “We’ll be launching Chicken of the Sea: 100 Years of Good,” which is a yearlong effort that combines special commemorative packaging, promotions and retailer programs. New pouched products will also be part of the centennial promotion, says Fleming.

“While our Chicken of the Sea Solid White Albacore Tuna and Chunk Light Tuna, packed in 5-ounce cans in both water and oil, continue to rank as our most popular products, we’re seeing an increase in demand for our tuna and salmon pouches as packaged tuna continues its evolution” beyond its status as a lunchtime staple, she says.

For the tuna industry overall, the desired outcome for this year is that supply and demand get back into balance as the fish continues to develop new avenues for fresh, frozen and canned sales.

Contributing Editor Joanne Friedrick lives in Portland, Maine 

  January 2014 - SeaFood Business

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