We’ve been tagging and tracking fish for literally decades. Over those years, there has been a distinct pattern that repeats and repeats.
But in the last several years, that pattern is no longer there. This is Rick Goche. He’s been fishing since he was 13.
Today, he’s the owner of Sacred Sea Tuna, a family-owned Albacore canned tuna business. Rick is just a small part of the massive $40 billion tuna industry, according to its latest tracking from NOAA.
The US imported over 637 million pounds of tuna in 2020. Nearly 71% of that was canned.
The union is around $4 to $4.5 billion, and it has been growing quite nicely over the past two years. But despite its vast scale, the canned tuna industry has faced some serious challenges since 2000.
Per capita consumption has dropped by more than 45%, a decline mainly triggered by shifting consumer preferences.
The CEO of Bumblebee ended up getting indicted and then convicted for price fixing. All sorts of things are going on.
This is a $40 billion industry, so unsustainable, illegal, unregulated, and unreported fishing is a major concern.
inner workings of the $40 billion tuna industry. over 100 miles from the nearest ocean. In the heart of Georgia’s countryside lies one of America’s largest canned tuna processing facilities.
Chicken of the Sea I’m standing in front of our giant drive-in freezer. These frozen pallets are brought in through the Port of Savannah, where we receive them from processing plants all over the country.
Most of our fish are processed in Thailand, but we also receive fish processed from other areas of the world.
Most major tuna brands, like Chicken of the Sea and Wild Planet, do not have their own dedicated fishing fleets.
Instead, fishing is outsourced to third-party suppliers. We don’t have any fishing boats on this one. So we are buying all our fish from third-party suppliers, and we don’t control them at all.
Of course we are significant because we are producing maybe one can out of four or five within the world. Canned tuna has been a staple in American pantries for years, and for good reason.
It’s cheap and loaded with protein. The process of how it gets into American homes looks something like this: The Thai Union and other similar entities primarily gather tuna from global fishing fleets and tuna-rich zones.
Fishing vessels spend days or even weeks catching fish before returning to ports. Some even prolong their time at sea using transshipment, a process where they offload their catch to a carrier ship, resupply, and head back out for more.
The tuna shipped from Thailand is then cooked at the Chicken of the Seas canning facility to about 38 degrees. It’s then unwrapped from its plastic casing and cut to size for cans filled with brine, oil, or water.
Then it is pressure-cooked in its retort process, where about 18,000 cans are cooked at a time. Once the tuna is done cooking, it’s ready for shipping. But there are other ways to prepare canned tuna for the masses.
Just take Wild Planet’s approach. So I began canning tuna in 1999 with just pure tuna in the can with only salt, no water, and no oil, and that cooked in the can.
And so they have to add water or oil and then cook it again in the sterilization process. Catching tuna is exceptionally challenging.
Thai Union Group
even for the largest tuna processor and exporter, Thai Union Group, which brought in $4.3 billion in 2022.
Vessel costs are rising, import tariffs are pricey, oil prices are constantly fluctuating, and tuna migration patterns are becoming unpredictable.
When you head out on the open water and you are trying to catch something that may or may not be there and trying to follow it around the globe, you get it back to your point of origin, have it processed, and then ship it out.
It’s just a much more dynamic space; you know, it’s not a high-margin business. Thai Union brought over $980 million in revenue and a 3% profit margin in the second quarter of 2023.
Overall, our operating margin stood at around 4.56% during the good year. If you’re not performing well, if you’re not efficient in your operations, then you will lose some ground.
Despite being a tight-margin industry, tuna companies like Thai Union have faced dwindling US consumption rates for decades, plateauing from 2016 to 2018. From 2016 to 2018, there was an oversupply of tuna simply because the trends weren’t in the favor of consumption.
But in 2020, there was a high demand for tuna. A big part of that surge was the pandemic, as consumers flocked to this affordable, protein-packed staple.
pushing consumption rates to their highest since 2011. That translated to a near 19% profit spike for Thai Union in 2020, with consumption growing about 18% from the previous year.
US consumption stabilized, while Thai Union’s profits saw record highs. But in 2021, Tuna’s consumption rates dropped again, and consequently, Thai Union’s profits went down by about 20% from 2021 to 2022.
Due to its unique positioning, Thai Union has protected itself from serious downturns. The company began as a processor and exporter of canned tuna in the 1970s, but over the last 46 years, the conglomerate has steadily invested in acquired tuna brands in order to compete in new markets.
So very, very rapid growth over the first 30 years, I would say the past ten years. I think we have been facing a more mature market.
So the challenge we are facing is really: how can we attract, again, some new consumers in the category? The tuna industry has experienced significant
consolidation, all of which has had implications for market control and pricing. In 2014, Chicken of the Sea pursued a $1.
5 billion deal to acquire Bumblebee, but that never materialized. Instead, it opened up Pandora’s box of legal woes for the top US tuna brands as the DOJ unmasked a price-fixing scandal.
Bumblebee and Starkist pleaded guilty, agreeing to fines of $25 million and $100 million, respectively.
In September of 2017, the Thai Union acknowledged the fact that Chicken of the Sea had taken on the role of whistleblower, therefore avoiding direct penalties. Nonetheless, the company didn’t emerge unscathed.
It took on settlements of approximately $39.5 million and went through a comprehensive overhaul of policies and leadership structure.
First of all, we have been changing many people in the top management and in the executives as well. Plus, we have been launching a very strict compliance and training program for, again, the top management, the executives, and also the whole sales force.
We made it very clear that there cannot be any discussion at all with competitors, even friendly discussions. You cannot have friends with your competitors because it’s too dangerous and too risky.
On this one, the The facts of the scandal trickled down to consumers as well. The DOJ estimated $600 million in losses for both customers and retail and business partners.
The pandemic caused serious supply chain backlogs in 2023. Inflation increased operational costs because We had to do some price increases, and the whole industry has been doing some price increases to cope with the inflation.
One pressing concern for Thai Union has been freight costs. Being a global supplier with a vast manufacturing base in Asia, shipping from Thailand to its largest importer, the US, has ballooned.
Of course, we have a very large manufacturing footprint in Asia and in Thailand, so the price of a container from Thailand to the US is very important for us. And we have been facing some prices multiplied by 4 or 5.
Last year, we were also dealing with inflation, energy prices, packaging, and utility prices as a result of the war between Russia and Ukraine.
The cost of tuna itself has spiked. Typically, Thai Union sources skipjack tuna for anywhere between $1300 and $1700 per ton, or 2,000 pounds in 2023.
Those figures hover between 1800 and $2000. And the issue we are facing is that when you reach this level of tuna price, many customers will just wait and see, okay?
And this is a bit of the situation we have been facing since the beginning of 2023. To better mitigate these price shocks, Thai Union has been proactive, trying to push for automation and, of course, raising prices.
Beyond inflation and record prices, the industry is also battling more existential threats. Sustainability, climate change, and illegal fishing are just a few areas affecting large conglomerates like Thai Union and smaller business owners like Rick O’shay.
The way I see it, the biggest threat to the viability of the Albacore fishery for future generations of fishermen is climate change.
Climate change is changing virtually everything about what we do, about where the fish are, where the bait is, what kind of bait we’re seeing, and what kind of fish we’re seeing.
The $40 billion tuna industry spans 70 countries, teeming with fisheries competing for a market share of the world’s most popular fish.
Amid this sustainability, challenges persist. Brands like Wild Planet are leading with traceability to combat illegal fishing, hoping to foster a more sustainable future for the industry.
The Wildlife Fund is urgently advocating for more sustainable fishing regulations, fearing the industry will otherwise collapse.
And what we are seeing in the last few decades is a 20-fold increase in conflict over fish, and with climate change, tuna and other fish are going to move to other parts of their territory.
So we are going to see 23% of fish in the next eight years, including tuna, move from one place to another. And this is really, really dangerous for food, livelihood, peace, and security, considering just how important tuna are in general.