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EU tuna canners get aggressive on pricing

Most are anticipating a healthy year for canned tuna.

Tuna canneries in Europe are currently being “very aggressive” in their pricing strategies, as they anticipate a strong and healthy market for the rest of the year, according to Jose Zarzalejos, director at PwC and former chief corporate officer at Frinsa.

Tuna consumption is very mature in Europe, with consumption per capita in countries such as Spain, France and Italy plateauing, Zarzalejos said.

According to figures from the FAO, canned tuna consumption in Spain is currently floating around 2.2 kilograms per capita and around 2 kilograms per capita in Italy. The European average is around 1.5 kilograms per capita.

“It’s a very mature, stable, resilient market, where you never really see big drops or increases from the demand side,” said Zarzalejos told IntraFish.

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However, that said, the warm weather -- which has been much warmer and earlier than usual -- is always positive for canned tuna consumption, because so much tuna goes into products such as salads and sandwiches.

“In warmer years, tuna consumption typically does well and 2017 will be no exception to this,” said Zarzalejos.

European canneries have been very aggressive in locking up private label agreements in anticipation of the strong demand, he said.

“We’ve seen a lot of this in southern Europe, particularly Spain or Italy," Zarzalejos said.

Companies such as Calvo Group and Frinsa are being aggressive in agreements with discount retailers such as Dia and Eurospin, and other large retailers in Spain and France.

“[They are] locking themselves up for six months to 12-month supply contracts on quite aggressive prices," Zarzalejos said. “They are anticipating that although demand will be strong, prices will not go further up from the current level."

Nevertheless, Zarzalejos is not convinced prices will not edge up in the coming months. For instance, ship owners will notice the high demand and although for the moment oil prices are relatively low, potentially unstable world events such as in Russia or between the United States and North Korea could impact oil prices.

“So all the risk is on the upside,” said Zarzalejos. “My call is we will see prices on the supply side going up -- slightly -- but still going up. So demand needs to do really, really well for those tuna canneries to really make a profit on the agreements they’ve locked up themselves.”

The EU market will likely grow in volume by 2-3 percent this year, Zarzalejos predicted, but said the US market is relatively flat with other categories such as canned salmon doing better.

However, while consumption is still strong in Europe, there is not much room for new brands or new lines of products.

“The segment is so mature it is very difficult to muscle in a new product or new brand,” said Zarzalejos.


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