Canned tuna consumption has increased worldwide for the first half of the year. Major global industries managed to honour contracts while production and supply chain continuity were secured by government policies in most of the cases.

However, the second half of the year remains uncertain given the global economic decline in the pandemic.

Tuna industry experts from the US, the EU, Middle East and South East Asia, together with an expert audience connected from all over the world, recently met to discuss the industry's outlook at the INFOFISH online webinar series 'Tuna trade and market - Evolution and opportunities," that went live on 5 August, 2020.

Canned tuna in the US

Among global canned tuna markets, the US is likely to have experienced the strongest impact because of the Covid-19 outbreak. Customs data shows canned tuna imports rose 17% year-on-year to nearly 130,000 tonnes for the January to June period, while overall retail sales increased 30% year to date.

"Rising retail sales was largely driven by people not going to the store as frequently as before and switching from eating out of home to eating at home. It also became a more attractive protein product as significant local disruptions impacted beef, pork and, to a lesser extent, poultry production," commented John Connelly, president of the US National Fisheries Institute.

US canned tuna retail sales in the first quarter of the year increased 44% year-on-year, while 'fancy' tuna products, mainly pouches, increased 33% y-o-y; sales in the second quarter improved 23% y-o-y for canned tuna and 8% y-o-y for pouches.

"Both canned and pouches experienced growth, although consumers tended to purchase mainly canned tuna, which is the product they are most familiar with," Connelly said.

"During the first half, most of the processors were able to meet retail demand through most of the panic buying periods. There were some areas where the product was short, but nowhere near with what we saw with other proteins, so that is a testament to the robust tuna supply chain," he added.

An attendee at the online webinar pointed out in the Q&A chat that some of the inventory purchased in 2019 fed the system over the last couple of months. Connelly replied: "We are interested, not yet concerned, in monitoring what is occurring in production areas regarding workers confident in getting back into their manufacturing plants, so we can secure product into the winter of 2020/21."

Canned tuna in the EU

Panic buying also influenced canned tuna retail sales in the EU, which jumped by 80% in week 11 compared with the same week of the previous year. Demand has since stabilised at above 20%, on average, compared with the first half of last year. In the meantime, the foodservice channel and gourmet continue to experience dismal sales amid the virus outbreak sanitary restrictions.

The EU, as second top producer of canned tuna worldwide, manufacturing around 364,000 tonnes of prepared tuna per year, is highly dependent on raw material imports to meet an annual domestic demand of nearly 760,000 tonnes.

Imports of frozen fillets of skipjack and yellowfin for canning during the period increased 12% y-o-y to 110,000 tonnes. A bulk of around 60,000 tonnes landed in January - mainly skipjack from China - which secured an adequate raw material supply to the industry for the upcoming months despite logistical disruptions.

The general secretary of Anfaco-Cecopesca, the Spanish canning industry representative body, Juan M. Vieites, highlighted that the European canned tuna market is still able to report growth in the second half of the year.

EU canned tuna intra trade in 2019 reached 236,200 tonnes worth EUR1.2 billion (USD1.4bln). Extra-EU trade reached 24,500 tonnes worth EUR140.7 million. Imports in 2019 (extra trade) were 408,820 tonnes worth EUR1.7 billion.

Canned tuna market in Middle East

Total canned tuna exports to Middle East and North Africa region were 130,000 tonnes, worth USD460.0 mln in 1H 2020, a figure slightly up in volume but down 7% in value year-on-year.

As opposed to western counterparts the EU and the US, whose demand for canned tuna significantly increased in 1Q 2020 amid Covid-19 'panic buying', shipments to some of the largest Middle Eastern markets, such as Libya or Saudi Arabia, fell.

Middle East-based canned tuna consultant Arnab Sengupta highlighted at the webinar there is a demographic flow as a result of the Covid-19 socio-economic impact that is likely to result in a bullwhip effect for the canned tuna market: "Middle East economies have significant volume of expatriate population […] Ongoing changes in the structure of the economy as lower oil prices will result in many people coming come back to their native country," he noted.

Canned tuna market in South East Asia

Independent consultant on international fishery trade, Fatima Ferdouse, said: "While demand remains quite stable in most of the traditional canned tuna western markets, consumption trends in Asia, particularly in south-east Asia, show there is still a preference for fresh/frozen fish against canned tuna if available."

Although Asian supermarkets started buying more product to replenish empty shelves due to panic buying, Ferdouse believes there were no major changes in other large markets besides Japan or Australia. "But interestingly - she continued - Singaporean demand for canned tuna significantly increased, which shows there is a consumer group that can afford canned tuna […] Generally, consumers with lower income in this part of the world usually go for canned sardines or canned mackerel instead, which is much cheaper than canned tuna."

The Singaporean market is still a relatively small market for canned tuna. While imports for the six-month period last year barely reached 1,300 tonnes, volumes quadrupled this year to 5,600 tonnes, customs data shows.

Non-canned tuna market

As opposed to the global canned tuna trade, the fresh and frozen tuna market has weakened in 2020, all speakers at the Infofish webinar agreed.

Ferdouse highlighted demand and supply of fresh tuna meant for sushi and sasimi consumption across the foodservice chain has been "derailed" from the market growth seen in recent years. Imports significantly declined in the two largest markets, Japan and the US, because of the pandemic.

"Supplies of air-freighted fresh tuna, generally transported on passenger flights, were seriously disrupted everywhere […] In the meantime, there is a very negative trend for frozen tuna, as major markets reporting growth until 2019, such as the US, Spain or Russia - Japan is an exception - shrank during this period.

To date, there is still a significant volume of frozen stock available, due to lockdown and foodservice disruptions in Asia, especially those imports of bluefin frozen loins that came from the Mediterranean region. "The stockpile will continue," Ferdouse foresees.

Whereas canned tuna is considered an essential food commodity and trade flow between major industrial countries and markets was protected from supply constraints - except for a few exceptions -Middle East-based Arnab Sengupta flagged a very different situation in the fresh and frozen segments.

"I know Oman producers exporting yellowfin tuna into the EU horeca segment whose trade opportunities were halted as demand collapsed, ending up with a huge inventory. The challenge now sits on how that stock, initially targeting the horeca segment, could be managed and diverted to the end consumer," Sengupta said.

Ferdouse added: "The consumption pattern of fresh tuna will be different from now for a while, as actual prices will be higher because of logistics costs. However, we do see some movement in the frozen segment, particularly the ready-to-cook category in the Japanese household environment at least, as it was getting popular until last year. Other markets, such as the US, will continue weakening as frozen tuna is an expensive product, even more considering the rising unemployment rates and declining disposable income foreseen."

Main drivers of growth in the context of pandemic

In the US, price and product availability remain the drivers of growth for canned tuna consumption, according to Connelly. "During the first half and Covid-19 lockdown, the convenience of being able to buy a product that you can keep in your pantry is very helpful […] Now the market challenge is to keep those consumers that have come back to canned tuna recently and those who have introduced themselves to tuna for the first time. I believe the key is to demonstrate the versatility of the product in order to capture consumers in the long term […] There are other ways to consume canned tuna, not just in a sandwich," he added.

Middle East-based consultant Arnab Sengupta believes the industry is "really competitive" and there is not much differentiation possibilities for the product. "The power of the buying side, together with product launches is very limited. The force that defines demand anywhere in the world is mainly the supplier's power, hence raw material prices […] Although canned food sales have temporarily improved significantly, keeping those customers will be really challenging once the market comes back to normal because of the way the industry is structured: price and supply, these are the only forces with power in this industry and I think it impacts the whole tuna market."

In Europe, canned tuna sales returned to normal volumes in June, Vieites confirmed. Sustained growth is expected for the second half of the year. "In the meantime, the local industry will continue to innovate by seeking new flavours, new packaging and formats to diversify the product range. The main drivers of growth are directly linked to innovation, sustainability and new product launches related to healthy claims and ready cook meals," the Spanish canning industry representative added.

Tuna industry growth in Asian markets will remain limited, according to Ferdouse: "Consumer household demand still remains strong for fresh and frozen, as people have time to cook and they enjoy it. But at the same time, canned tuna imports have sharply increased in specific locations, particularly in Malaysia, Singapore, Taiwan and other smaller markets where the per capita income is much higher compared with other south-east Asian territories.

"This shows that canned tuna is not yet part of the daily food basket like in the US, but more kind of a fancy product people eat as tuna sandwiches, mainly at restaurants. In overall terms, I believe the south-east Asian consumer will keep canned tuna as a shelf stable product to consume eventually, but consumption trend is very different in this part of the world compared with the US. I don't expect much change here," she added.

The online retail platform as an opportunity to drive sales growth was also analysed during the webinar. The Spanish canning industry representative noted the online retail channel for canned tuna is slightly expanding, although it remains quite behind other food categories; Connelly said e-commerce canned tuna sales have been experiencing significant growth lately in the US; Meanwhile, in the Middle East, Arnab suggested this channel would create sales opportunity for the frozen segment targeting end consumers.

The role of sustainability among tuna production these days was also subject to discussion, with all speakers agreeing on sustainability as a necessary move for the business and a long-term view that is not going to be impacted by the Covid-19 crisis.

With this regard, Middle East consultant noted sustainability concern in the region is almost non-existent but believes "it will change in the near future"; in the US, Connelly added that tuna "is always a very competitive product" and "adding cost to the product becomes a challenge".

For the second half, speakers agreed on a weakening trend to continue for the frozen and fresh tuna products worldwide and canned tuna sales to continue strong amid a Covid-19 outbreak fear remaining in consumers.

"The global tuna industry should keep an eye on consumers' disposable income and employment rates across all markets, as well as what will inflation rates be like after huge amounts of money, currently coming into the system from governments, without any production activity involved behind. At the end of the day, the supply chain is managed by the cash or capital available in the system, very influenced by the cost of money," Middle-East consultant Sengupta added.

Connelly, from the US, concluded: "In the short term, lockdowns have a positive impact on canned tuna sales. However, if workers feel insecure commuting to work or while at work, is a concern to us. In the long term, this is an opportunity to show returned or new customers canned tuna products as a healthy and innovative options. Lastly, we are aggressively communicating with the World Health Organization and the academic hub, who have all been adamant that the virus is not transmitted through tuna, shrimp, salmon or food in general, in the context of increasing stories with this regards on the internet and even governments testing samples of imported food."

Customs data shows world canned tuna trade was nearly 650,000 tonnes worth USD2.8 bln for the January to May period this year, up 6.3% in volume and 2% in value compared with the same period of the previous year.

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This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.