Canned Tuna in the Middle East: A market in turmoil?

Transcription

1 Canned Tuna in the Middle East: A market in turmoil? September 2017 Arnab Sengupta Phoenix Commodities

2 This document aims to answer the following: Key Questions 1 Is Middle East an interesting market for canned tuna? 2 Parameters processors should take into account while entering ME 3 What should be done to gain more market share

3 Table of Contents Tuna Market Overview Market Entry Opportunities Communication Review

4 Middle East Canned Tuna Market The regional canned tuna market is about USD1B Its one of the few growing markets for canned tuna Though categorized as a region, habits for tuna consumption differ A growing category, but facing a challenging future Price sensitivity & Local devaluation Raw tuna ( frozen) picking up in high end restaurants of Dubai. But even then a very small % Source: Retail Audit/Customs Data 4

5 Middle East Tuna Market: Overview Frozen is limited to very niche sushi stores and some local coastal catch near Oman and Yemen and some in Iran. Catching's are seasonal, near coast and not consistent Tuna consumption in Middle East and North African is primarily in canned format (not fresh) or Frozen Growing Interest from international brands, though the market is driven by familiarity and heritage. Rio Mare, John West carving a niche in the premium segment The region does not have any non tariff barriers. Arab league 0% rest of the world 5%. Sustainability growing interest 5

6 Market Sizes Canned Tuna Tuna market size is big, and growing in value The canned tuna market in the region is around USD 1 Billion, (at the store level) with major markets being Saudi Arabia, Libya and Egypt, and UAE. Tot. Val in Millions (USD) THAI & GFI TUNA Sl. No Country 2015 FY 2016 FY 2016 YTD JUN Qty Apprx. FCL Val. USD Millions Qty Apprx. FCL Val. USD Millions Qty Apprx. FCL Val. USD Millions 2017 YTD JUN Qty Apprx. FCL Val. USD Millions 1 SAUDI ARABIA 1, , U. ARAB EMIRATES KUWAIT OMAN QATAR BAHRAIN EGYPT 3, , , LIBYA 1, , LEBANON IRAQ JORDAN Tot. To Spcific. Mkts 8, , , , Conversion Factors: 18,000 Kg = 1 FCL Volume declining due to downsizing and reduced share of stomach as prices go up Exchange rate devaluation increasing prices in North Africa Credit tightening in Arab countries after oil price collapse. 6

7 Sinusoidal Volume Behavior with 50%+ Value Captured by Libya and Egypt Tuna Volumes Full Year Trend Tuna Value Market Distribution 4,000 3,401 2,999 3,092 3,013 3,000 2, ,206 2,205 1,967 2,080 2,092 1,872 2,000 2, ,000 1,431 1, Tuna Volumes Jun YTD Trend 75,000 74,202 73,882 70,000 66,734 65,000 60,000 55,000 50,000 57,074 63,614 44, Africa VOL-FCL Mid-East VOL-FCL YTD JUN 73,412 69,779 66,636 64,253 58,330 59,388 51,910 48, Africa Avg. Price per FCL in USD Mid-East Avg. Price per FCL Val by mkt in USD LIBYA Val by mkt in USD EGY 2013 Val by mkt in USD KWT KSA Val by mkt in USD UAE 7

8 THAILAND dominates export of canned Tuna market; MENA attracts 17% of all Thai exports circa $350m market Canned tuna has become a commodity where volume over profit% counts. Efficiency matters Thailand Canned Tuna & Tuna Loin Exports Footprint ( ) (In % and In $m) USA EU Others MENA Japan 2, ,998 1,992 Production (In 000 Tons) (17%) , marketing-insider.eu/porter-diamond-model/ 8

9 Canned Tuna Typical Cost Analysis Thai Tuna Category Scope Without having any local tuna catching as well not the cheapest labour, Thailand has been the most competitive origin the market, focusing on efficiency and clustering effect Cost Breakdown Low RM Cost Breakdown High RM Advantages of Thailand Impact of inter industry cold storage. Local canning industry, fruits, seafood etc. Fish Cost 57 Fish Cost 70 Printing and packaging industry. Processes and RND knowledge. Logistic Condiments Condiments Packaging Labour Utilities Overhead Profit Packaging Labour Utilities Overhead Profit Illustrative Price structure for a canned of tuna when raw material is low and when high Price Policy is just for illustration and not for a particular factory 9

10 Typical Value Chain of Middle East Market for Tuna Typical Seafood Value Chain Importers Scope of Direct Influence Wild-Caught (WC) Harvesting Retailer Dist. Regional wildcapture Transfer to processing Farm-Raised (FR) Production Insignificant Processing Primary Processing Freezing for storing and transport Secondary Processing (fileting, trimming, packing) Canning or retail pack frozen Transfer to port of exit Import to M.E. Import clearance validation Regulatory audits Transfer to domestic distribution Payment alignment Wholesaler Dist. HORECA Dist. Warehousing, Transfer to store Quality Assurance Product & Shipment Audits Specification verifications Merchandising and assortment Price control. Variable margin Sales & Promo Planning 10

11 Within MENA, KSA & Egypt Captures 55-60% of Canned Tuna Market ALL Canned Tuna Exports Footprint ( ) (In % and In $m) % 5% 11% 15% 22% 37% 1% 1% 3% 2% 4% 5% 8% 26% 21% 32% 494 5% 5% 4% 10% 31% 20% 24% 510 3% 4% 7% 11% 24% 17% 31% 490 2% 4% 5% 5% 12% 15% 21% 35% Bahrain Iraq Oman Qatar Kuwait Lebanon Jordan UAE Libya KSA Egypt

12 KSA Market Overview Market Size +11% on volume +16% on value Total Market (KSA) MAT'15 MAT'14 Diff-15/14 Sales Volume 1000KGS % Sales Value SR % Solid: Biggest segment (68.4%), yet declining (-2.6ppts). Chunks: Fastest growing (+1.1ppts), reaching 11%. Flakes: Grew (+0.4%) to reach 11.9%. Total Market VOLUME SHARE VOLUME SHARE Diff YTD'15 YTD'14 Diff CHUNK FLAKES SOLID READY TO EAT SLICES

13 Egypt Market Overview Market Size -8.5% on volume -5.5% on value Total Market MAT'15 MAT'14 Diff-15/14 Sales Volume 1000KGS % Sales Value LE % Flakes: Biggest segment (53.2)% declined a few points (2.3%) Solid: Growing segment (13.7%), growing Chunks: Fastest growing (+1.1ppts), reaching 30.8% Egypt currency has devalued ( 8.5 to 18) pushing the prices in the market 13

14 UAE Market Overview Market Size +6% (volume and value) Total Market MAT'15 MAT'14 Percentage Growth Sales Volume 1000 KGS % Sales Value 1000 AED % Solid: Remains to be the largest cut at 54.9% (flat vs. YA), followed by Chunks: at 18.8% (also flat), then Flakes: at 16.2% (+0.4ppts) Total Market VOLUME SHARE YTD'15 YTD'14 Diff SOLID CHUNK FLAKES READY TO EAT SLICES

15 Main markets for Tuna in the region. Libya, KSA and Algeria and Tunisia. Libya is the largest per capita tuna consumer in the world. With its small population, it consumes more chunks pack than Egypt around 3 Million cases of 48 cans in 2016, a low year. KSA is a growing market for chunks pack, while being predominantly a solid market. The market of chunks and flakes are around 22% of around 3.3 M Cs Total market. Tunisia and Algeria are potential markets, which are protected by hi tariff for non Arab league tuna, competition is limited. Domestic consumption of tuna in Egypt is around 6.5 M cases of 48, of which 48% are flakes and rest chunks& solid. Algeria Egypt Tunisia Libya KSA 15

16 Opportunities in the Middle East Market Seafood Category Overview ME Internal Demand Market demand's cheap source for protein. Tuna satisfy key criteria Devaluation of regional currencies in North Africa. Demand of tuna at the HORECA level Demand falling, lead by North Africa Sourcing Process Tuna pricing is driven by commodity index hence spot purchased in favorable periods A mix of and spot buy are popular. Usually contacts are in 20 fcl or 2 fcl lots Market Outlook Canned tuna market in Middle East has seen more than 15% dip this year due to currency. Frozen Fresh tuna demand increasing in GCC. Pet food market in UAE 65% of human food Benefits Potential ~12-15 M USD Low hanging fruits Key Strategic Initiatives Tuna Efficiency of production, work on ancillary business. Packaging and printing technology. Catering size opportunities Restaurant Items Focus on Horeca needs. Ready to serve sushi, pouch tuna, opportunity to consolidate Pet Food Hit directly, high margin category. Allowing for efficiency gaps 16

17 Consumer Insights

18 Tuna Category is Driven by Familiarity Mainly by BRAND CONSIDERATION Driving BRAND EQUITY Equity Drivers For Tuna Sources of Brand Equity Industry Norms Awareness: 30% Consideration: 10% Associations: 60% Awareness 11% Consideration 64% Association 25% Importance of Association Factors Based on FMCG & Retail categories 8% 8% 7% 2% LIGHT & HIGH QUALITY Source: Winning Brands Categories HEALTHY & PROVIDES VALUE AESTHETICS MEAT QUALITIES 18

19 Purchase & consumption frequency remain stable, so has the quantities purchased in each type of shopping trip WITH AN INCREASE IN QUANTITY PURCHASES IN THE TOP UP SHOPPING TRIP THIS QUARTER CONSUMPTION FREQUENCY WEEKLY MEAN: 1.8 times 44% 46% 49% 42% 45% 41% 46% 49% 47% 51% 3% 2% 1% 0% 0% 6% 4% 6% 2% 2% 4% 2% 2% 1% 1% Once or more a day 4-6 Times a week 2-3 Times a week Once a week Bi-Weekly W4 '14 W1 '15 W2 '15 W3 '15 W4 '15 Cans of Tuna Bought Main Shopping Trip Cans of Tuna Bought Top Up Shopping Trip Average 5 cans 5 cans PURCHASE FREQUENCY WEEKLY MEAN: 1 time 2% 1% 1% 0% 0% 2% 3% 3% 0% 1% 14% 14% 17% 18% 14% 34% 39% 42% 36% 28% 25% 27% 27% 21% 23% 24% 29% 17% 22% 14% 2% 0% 0% 0% Once or more a day 4-6 Times a week 2-3 Times a week Once a week Bi-Weekly Once a month Less than once a month W4 '14 W1 '15 W2 '15 W3 '15 W4 '15 Base: W3 14: 201, W4 14: 206, W1 15: 192, W2 15: 190, W3 15:209, W4 15:210 Source: Q37ab, Q35ab 19

20 Consumer Perceptions on tuna Perceived to be a VALUABLE variant of fish protein and meat that is affordable It is a main and regular meal, that they happily arrange the appropriate setting for, to strengthen their bond with the product and create a pleasant eating experience. With some additions it becomes a main meal It has a ritual and special way of eating Its valuable its fish Tuna is very versatile, and family members accustom it to their taste preferences using simple ingredients The main trigger of purchase is the eating experience and its affordability, plus convenience and time saving A protein within reach It tastes good, and everyone eats it in their special way 21

21 Consumer Consumption habits Who consumes it? All Family members: Each one has his/her taste preferences, but everyone consumes tuna either alone, or with the family as a family dish Who prepares it? Usually, Mothers prepare tuna for the whole family. However, at occasions when family members eat it alone/ quickly/as snack, they may prepare it for themselves. When do they eat it? Tuna can be eaten at lunch or dinner, or as a late snack. It can be put as a main dish during lunch/dinner, or as part of a dish (pasta, salad). C1 and C2 class eat tuna in lunch, dinner, and late night snack. B class consumers mainly consume Tuna for dinner (with other small dishes), and serve it at lunch only when it is an ingredient in another dish (pasta/salad). 23

22 Consumer Purchase habits How often? High consumption families (C1 and C2): 3 times/week. Lower consumption (B-class): 1-2 times/week. How many cans opened per serving? Depending on the occasion, the number of cans varies. Generally, ONE can per family member is the NORM. When tuna is served as a main dish along with other sides/additives, 3 cans can be enough for a family of 4-5 members. 24

23 Communication Review

24 Communication: Tuna middle East Mostly promotions, with secondary display Merchandising support growing ATL in certain premium brands, category lead by Rio Mare Internet based tools are gaining popularity 26

25 Activations 27

26 In-Store 28

27 In-Store Presence 29

28 Communication review Going beyond display campaigns few tuna brands are building microsites on popular portals that included games/competitions as well as content sharing and knowledge sharing about tuna From the Internet 30

29 Digital 31

30 TV Copy KSA Sunshine Goody 33

31 Recommendation Middle East is big enough and easy enough to enter to make it a market of focus, for new origin for canned tuna. No preapproval needed. Basic Cordex specs followed All variants/ quality finds a market here Price competitiveness being paramount in large part of the market, current high price of tuna gives a good opportunity to beat Thailand advantage of clustering Regional semi-govt. groups could market, freshness of regional tuna, sustainability, at the grass route consumer level, while demonstrating the quality and texture of the product. ( eg. Australia Meat Work at retail level) Focus on high value & profitable pet food and frozen fish market: Focus on a niche or a single market and create success Source: Ipsos Pan Arab-GCC

32 Thank you