Thai Union Europe CEO: Chilled branded business holds huge promise for group

Company is using Meralliance as a platform to grow its chilled offering across the various brands, including John West, just one of many innovation moves the group is rolling out, top exec tells IntraFish.

Despite facing a number of challenges in 2016, Thai Union’s European division still saw “significant growth," with revenue now hitting the €1.1 billion ($1.2 billion) mark, Elisabeth Fleuriot, CEO of Thai Union Europe, told IntraFish in an exclusive interview.

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Fleuriot is responsible for Thai Union’s European operations, overseeing the growth and development of brands including Petit Navire, Parmentier, John West, Mareblu, and more recently King Oscar, and Ruegen Fisch’s brands, including Hawesta.

The unit grew across all the different geographies by 10 percent in volume and 7 percent in net sales, and has increased market share in all the separate countries in which it is present across Europe, Fleuriot said.

For example, in France Thai Union’s market share for canned tuna is now more than 33 percent -- up around 1 point versus last year.

In the UK -- with John West -- the share is now close to 40 percent and in Ireland the company holds 69 percent of the market share.

Following a successful revamp of the Mareblu brand in Italy, the company has grown its share by about  2 points and now has 8 percent of the market and is in second position.

“But it’s also the case in Germany, in Norway, and it’s also the case with King Oscar in the US -- so overall where we are operating we have grown our market share,” Fleuriot said.

Chilled, whitefish expansion

While in recent years the company has clearly been growing through mergers and acquisitions such as King Oscar, Meralliance and Rügen Fisch, it has also been growing organically, Fleuriot said.

And specifically it has been positioning itself towards growing its chilled business, using Meralliance – a major European player in private label, particularly salmon -- as a jumping off point. “A significant part of our business is now in chilled,” Fleuriot said.

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In September 2016, the company launched its Petit Navire brand in the chilled seafood aisle.

“We are using Meralliance now as our platform in chilled to launch our brands across the different shelves,” she said.

The focus is on quality and innovation, as where Thai Union considers itself the category leader in terms of canned seafood, it now wants the same position for chilled seafood.

“We bought Meralliance to have a platform, a route to market in chilled, because we were not familiar with that previously,” said Fleuriot. Using Meralliance’s “solid base” in the private label and chilled sectors, Thai Union plans to capitalize on this and launch its other brands -- whether it’s John West, Mareblu, or some other of its European brands into the chilled section.

“This started in September with the launch of Petit Navire in chilled, and the first results are really encouraging," said Fleuriot.

The company brought out some main SKUs for chilled salmon under the Petit Navire brand, but also some minced and sliced salmon products. Interestingly the company also launched some whitefish species in the range, including cod, haddock and tuna.

“We are basically building on the very good brand image of Petit Navire -- the seafood lover brand -- and launching species other than salmon, and whitefish also,” said Fleuriot.

“Petit Navire, and later on John West, will be launching in chilled through acquisition of Meralliance.”

Since 2014, Thai Union Europe has acquired not only Meralliance but also King Oscar in Norway and has, since January 2016, a stake in Germany’s Rügen Fisch too. The company is now planning to capitalize even more on the newly acquired companies’ brands portfolio.

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King Oscar, for example, is already exporting to a lot of countries with its premium King Oscar branded offer, and Thai Union wants to expand this further.

“We are starting to expand this premium brand into a lot of markets -- for example King Oscar brand in China with lobster, and with crabs,” said Fleuriot. “We have also acquired Rügen Fisch in Germany which is the leader in seafood in Germany, which has also been a big part of the growth in revenues.”

Raw material costs take their toll

It is no secret costs have been a serious challenge for Thai Union’s European division throughout 2016, with the salmon business actually posting a loss, thanks to the spike in salmon prices during the year.

“In chilled salmon, the price has been inflating like crazy," said Fleuriot.

Prices increased by more than 60 percent in just a few months due to the algae bloom in Chile and the resulting scarcity on the market place, she noted.

“So we have been really affected by that -- of course the raw material price has been increasing and it has been complicated to pass that on right away to the retailers," she said.

"So we have been struggling like the whole industry, with these very high fish prices.”

It has also been, to some extent, the same problem with prices for tuna and mackerel, “so on the whole for raw material it has been a challenging year,” said Fleuriot.

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Nevertheless, Fleuriot is confident for the future outlook of the salmon business, and the company has put in a number of measures to mitigate the impact.

These include price increases, discussions with customers, discussions with suppliers, implementing a different purchase strategy, and innovation.

“I think the situation is really improving significantly, and all these different initiatives I am much more confident and comfortable for the future," she said.

Focus in 2017 -- Brexit, prices and new markets

Already three months into 2017, Fleuriot still foresees a challenging overall environment in terms of costs this year.

“For tuna, mackerel, sardine prices, also salmon prices -- even though it is a little bit less inflated compared with last year, but still at a very high level," she said.

This will be at the center of Thai Union Europe’s focus with the trade negotiations during the year, with Brexit also now “putting a big portion of cost on top of what we are expecting with the fish."

In Europe, Thai Union imports lots of material from Ghana, from the Seychelles, or from the Eurozone, which will mean inflation for its UK business in terms of costs.

“So this will be a big focus and the price increase execution is of course key,” said Fleuriot.

“On the other hand we want to continue to win in the marketplace so continue to increase our share through innovation, category leadership, through additional listings, expansion in other areas, and also geographic expansion wherever we can – whether it’s in North Africa, or Middle East, that is something we are already looking at.”

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Thai Union already has some of its brands in some African nations, for example Libya where John West is carried, and Senegal with Petit Navire.

“But now we are pushing these brands more heavily, because we believe this continent will be one region for growth in future,” said Fleuriot.

Innovation is the name of the game

Thai Union Europe’s net sales from innovation will have doubled between 2016- 2017 to reach 6 percent of net sales, but the company wants to grow that number to 10 percent from global innovation by 2020.

“This is a big ask as this is not traditionally a very innovative category -- I think we are happy with what we see, but we can do much better, and the group is investing widely in global innovation,” said Fleuriot.

Recent successes in innovation include the 'Tuna Infusions' range in the UK, the concept of which is spread out across the different countries under the different brands with a slightly different name.

“We are launching it in all the markets where we can -- so that means we will roll this product out in Germany as well for example," she said.

Since the decision to acquire a stake in Rügen Fisch, Thai Union is now also launching tuna products in Germany through the Hawesta brand, one of Rügen Fisch’s brands.

“That is also us leveraging our acquisition through synergies with our existing products but also synergies from the acquired companies to expand in some of those markets,” said Fleuriot.

Tuna is a relatively small sector in Germany which is not yet really developed, so Thai Union wants to capitalize on this and be another player “with a differentiated range and an added value proposition."  

“We believe we are a seafood player -- not only tuna, not only salmon -- and we want to place more species in the different temperature regimes: chilled, canned, ambient,” said Fleuriot.

This strategy will also help us the company de-risk the price volatility of the different species.

Ultimately, the company is looking to grow its existing brands, organically and in a number of different ways.

No further acquisitions in the European division are currently on the cards, said Fleuriot, but “you never know, this can change week to week” and the group still has its target of $8 billion (€7.5 billion) in revenues by 2020.

“For now we want to increase significantly our brands, which represent the most valorized part of our business, so this is something we are looking at with a lot of attention,” said Fleuriot.

The European business is looking to increase net sales 7-8 percent in 2017, just like last year, which “compared to other regions is really aggressive.”

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