Canned Tuna in the Middle East: A market searching for profit?

Transcription

1 Canned Tuna in the Middle East: A market searching for profit? May 2018 Arnab Sengupta

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

3 Table of Contents Tuna Market Overview Middle East Food Retail How to we consume Tuna

4 Middle East Tuna Market: Overview Tuna consumption in Middle East and North African is primarily in canned format some local catch, negligible in frozen format. In canned format the market is around $800M Frozen is limited to very niche sushi stores and some local coastal catch near Oman and Yemen. Catching's are seasonal, near coast and not consistent 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. Growth for profit, current mantra The region does not have any non tariff barriers. Arab league 0% rest of the world 5%. Sustainability growing interest. Though a region bound by language and religion, tuna eating hobbits differ. 4

5 Market Sizes Canned Tuna Tuna market size is big, but falling will it stabilize and grow? P AFRICAN: Import Of Canned Tuna From Thailand Divided Into Major Destinations In M/T, CFR Perl M/T Diff. % M/T CFR M/T CFR M/T CFR Egypt 57,000 $2,757 28,688 $2,897-50% 5% Libyan 33,817 $3,946 23,786 $4,306-30% 9% Algeria 4,246 $4,183 4,830 $4,636 14% 11% Tunisia 6,315 $3, $3,958-91% 6% Djibouti 1,647 $3, $3,761-45% -2% Others 2,201 $3,402 2,048 $3,567-7% 5% Grand Total 105,251 $21,842 60,832 $23, % 79% The canned tuna market in the region is around USD 800 Milliom, (at the store level) with major markets being Saudi Arabia, Libya and Egypt, and UAE. Saudi Arabia 27,150 $4,025 18,437 $4,401-32% 9% UAE 15,369 $4,059 17,957 $4,425 17% 9% Israel 11,369 $3,951 10,621 $4,223-7% 7% Jordan 9,230 $3,753 8,013 $4,089-13% 9% Lebanon 6,967 $4,460 6,049 $4,792-13% 7% Yemen 7,188 $3,608 4,150 $4,012-42% 11% Kuwait 4,475 $4,654 5,751 $4,765 29% 2% Syrian 3,482 $3,212 3,126 $3,469-10% 8% Qatar 2,051 $4,038 1,554 $3,797-24% -6% Oman 1,910 $3,770 1,603 $4,115-16% 9% Others 10,452 $4,171 10,153 $4, % 6% Grand Total 99,643 43,701 87,414 46, Source: Thai Customs 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. 5

6 Sinusoidal Volume Behavior with 50%+ Value Captured by Libya and Egypt Tuna Volumes Full Year Trend Tuna Value Market Distribution 4,000 3,000 2,000 3,401 2,206 1,967 1,431 2,578 1,872 2,999 2,080 3,092 2,205 3,013 2,193 2, ,000 1, Africa VOL-FCL Mid-East VOL-FCL Tuna Value Trend 75,000 74,202 73,882 70,000 65,000 63,614 66,734 60,000 57,074 55,000 50,000 44, ,636 69,779 64,253 58,330 51,910 48, ,412 59, Val by mkt in USD Val by mkt in USD Val by mkt in USD LIBYA EGY KWT KSA UAE Val by mkt in USD ME Avg. Price per FCL in USD A Africa Avg. Price per FCL 6

7 Typical Value Chain of Middle East Market for Tuna Typical Seafood Value Chain Distributors 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 Import to M.E. Import clearance validation Regulatory checks at destination port Transfer to domestic distribution Payment alignment Wholesaler Dist. HORECA Dist. Warehousing, Transfer to store Quality Assurance Merchandising and assortment Sales & Promo Planning Product & Shipment Audits Specification verifications Price control. Variable margin Transfer to port of exit 7

8 Table of Contents Tuna Market Overview Middle East Food Retail How to we consume Tuna

9 World and Regional Population Growth ( ) % CAGR ( ) The GCC population growth ( ) is one of the highest globally World Population, Bn World Population: Breakdown by Region, year 2020, Bn 0.80% 0.04% 0.50% 1.20% 0.30% 2.20% 1.50% 1.60% 2.60% North America Europe China India Rest of Asia The GCC Rest of Middle East North Africa Rest of Africa 65 Years and Above Source: IMF and Frost & Sullivan Research 9

10 Catering to the new generation consumer is key in the GCC The GCC Population, Mn. Generation Y+Z account on overall population by 2020 and are highly influential on Generation X purchases Years and Above 39% 35% 24% Classification/ Categorisation of the Consumer segments Generation X - Typically born before the 70s. Has less impact of the Oil boom in the GCC and more into traditional consumer behaviour with relative loyalty to a few brands Generation Y/ Millennials Born in the 80s and 90s. Self-involved, Dependent, Racially and Ethnically diverse group raised during the explosion of TV and Internet. Less loyal towards brands Generation Z Born after 2000 Anxious, Highly connected, living in an age of high-tech communication, technology driven lifestyles and prolific use of social media with mindful of the future Source: Frost & Sullivan Research 10

11 Result of Megatrends Megatrends Megatrends Shaping up the Food & Beverages Sector POPULATION URBANIZATION HEALTH & WELLNESS GLOBALISATION Growing Baseline Market Improving rate of organization of the Industry Good For You Campaign Exposure to multicuisine / products Creating a Pool of Sub Trends Change in Lifestyles Growing Income Choice to Choose Quick Serve Healthy Food Product Level Impact Industry Level Impact Product Categories Micro Segmentation Processed Food Food Retail 11

12 Categorizing consumer trends No artificial ingredients, low fat, high fibre and organic version of products Good for you! Something which offers ease towards multiple consumption occasions on the go. Also, which suits the Style Statement Packaging Product which is new to the palate Taste Nutritional Facts Increasing habit of reading labels to understand product claims and nutritional facts Functional Products Look out for functional products which reduce risk of chronic diseases beyond basic nutritional functions Consumption Experience Products which suit Snackification while skipping conventional meals. Source: Frost & Sullivan Research 12

13 Which segment companies should act? Products with benefits Ready to eat, Protein based breakfast offering added benefits Opportunity for Opportunity for Dairy companies Beverage companies Snack companies DINNER BREAKFAST Meat processing companies Bakery companies Breakfast cereal companies Nutraceutical companies SNACKS Target consumer segment LUNCH Target consumer segment Generation Y and Generation Z Entire range of consumers Probably focus on kids 13

14 Table of Contents Tuna Market Overview Middle East Food Retail How to we consume Tuna

15 Consumer Insights 15

16 Cooking still a domain of Housewife The majority of consumers claim to do most of the cooking themselves Some get help from house maid or other members of the family Working women rely heavily on housemaid Cooking seen to be the duty of a good wife and mother Some do not openly admit to getting help Housewife is always challenged to prepare dishes all will like Men feel that only the lady of the house should cook, seen as a matter of pride Makes him feel important if she cares enough to cook for him 16

17 Lunch is the Main Meal of the Day Lunch requires the most planning and preparation More complex / heavy Entire family sits together Main meal of the day Dinner is often unplanned and spur of the moment Lighter More diverse / variety Family may eat independently Breakfast is a very individual meal Except Fridays which turns into brunch Light cold dishes mostly Diverse / variety of dishes Lunch in Arab world can happen at 5pm meal when we sit together and eat LUNCH DINNER BREAKFAST 17

18 TUNA BUYING HABITS 18

19 Insights Tuna is a staple available in every household Stocked quite heavily by the majority Most families consume Tuna at least 2 times a week. In some cases consumption goes up 4-5 times a week For the majority Tuna is used more for dinner and lunch and often at parties and for outings (Picnics) It is also seen as nutritious and liked by children who often do not like fresh fish Tuna is considered quick and versatile and liked by the entire family Often for short notice unplanned meals Tuna is considered on economic dish for everyday use-but also seen as a commodity 19

20 Insights for us. The number of cans consumed per occasion are quite high when used in main dish Opportunity for family pack / economy pack Overall, consumers are aware of different type of tuna, but in some cases the terminology used is not common to the industry There is little awareness off difference between solid pack and other. Clearest distinction is between flakes and chunk tuna - prefer chunks Few consumers take note or consider the oil type in which the tuna is packed. Majority agree it should be a light oil Most consumers are aware of Tuna in brine, but use is limited to use when dieting. Do not like fishy smell. 20

21 Tuna Category is Driven by Familiarity Mainly. BRAND CONSIDERATION Driving BRAND EQUITY Equity Drivers For Tuna Sources of Industry Norms Brand Equity Awareness: 30% Familiarity: 10% Associations: 60% Awareness 11% Familiarity 64% Association 25% Importance of Association Factors in Tuna Based on FMCG & Retail categories 8% 8% 7% 2% LIGHT & HIGH QUALITY Source: Winning Brands Categories HEALTHY & PROVIDES VALUE AESTHETICS MEAT QUALITIES 21

22 Canned Tuna MENA Positive and Negative Factors + Positive factors Variety of eating usage for tuna Side dish, cooked to sandwich Recognition of healthy option Part of growing up Costal fishing heritage Growing market Negative factors New food option/packing Matured category Low margin, trade uninterested Status of low cost protein My tuna recipe 22

23 Communication Review

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

25 Activations 25

26 In-Store 26

27 In-Store Presence 27

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 28

29 Digital 29

30 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 Benefits Potential ~M USD Low hanging fruits Key Strategic Initiatives Tuna Efficiency of production, work on packaging and printing technology. Catering size opportunities Restaurant Items Focus on Horeca needs. Ready to serve sushi, pouch tuna, opportunity to grow Market Outlook Canned tuna market in Middle East has seen more than 20% dip this year due to currency. Frozen Fresh tuna demand increasing in GCC. Pet food market in UAE 65% of human food Pet Food Hit directly, high margin category. Allowing for efficiency gaps 30

31 Thank you

32 Main markets for Tuna in the region. Libya, KSA and Egypt. 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 Tunisia Libya Egypt KSA 33

33 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 YTD'15 Diff VOLUME SHARE YTD'14 CHUNK FLAKES SOLID READY TO EAT SLICES Diff 34

34 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 35

35 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