Canned Tuna in the Middle East: A market searching for profit ? May - - PowerPoint PPT Presentation

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

May 2018

Arnab Sengupta

This document aims to answer the following:

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

Table of Contents

Middle East Food Retail How to we consume Tuna Tuna Market Overview

Middle East Tuna Market: Overview

4

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 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 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. 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

5

Market Sizes – Canned Tuna

5

Tuna market size is big, but falling… will it stabilize and grow? 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.

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.

P AFRICAN: Import Of Canned Tuna From Thailand Divided Into Major Destinations In M/T, CFR Perl M/T 2016 2017

• 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 $3,725 570 $3,958

• 91%

6% Djibouti 1,647 $3,829 910 $3,761

• 45%
• 2%

Others 2,201 $3,402 2,048 $3,567

• 7%

5% Grand Total 105,251 $21,842 60,832 $23,125

• 195%

79% 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 $4,405

• 2.9%

6% Grand Total

99,643 43,701 87,414 46,493

• 1

1

Source: Thai Customs

Tuna Value Trend

Sinusoidal Volume Behavior with 50%+ Value Captured by Libya and Egypt

6 Tuna Volumes Full Year Trend Tuna Value Market Distribution 4 29 22 23 27 40 36 36 33 22 36 35 33 4 4 6 2016 Val by mkt in USD 2014 Val by mkt in USD 2 2015 Val by mkt in USD 3 2 2013 Val by mkt in USD 3

UAE LIBYA KWT KSA EGY

1,555 3,013 3,092 2,999 2,578 3,401 2,092 2,193 2,205 2,080 1,872 1,967 3,000 4,000 1,000 2,000 2,206 1,431 2011 12 13 14 15 16 17

Mid-East VOL-FCL Africa VOL-FCL

60,000 70,000 75,000 55,000 50,000 65,000 51,910 15 73,412 66,636 48,299 17 16 59,388 66,734 57,074 14 69,779 74,202 13 44,938 64,253 12 58,330 63,614 73,882 2011

ME Avg. Price per FCL in USD A Africa Avg. Price per FCL

7

Typical Value Chain of Middle East Market for Tuna

Typical Seafood Value Chain

Wild-Caught (WC) Harvesting Processing Farm-Raised (FR) Production Import to M.E. Retailer Dist.

• Primary

Processing

• Freezing for

storing and transport

• Secondary

Processing (fileting, trimming, packing)

• Canning or retail

pack frozen

• Transfer to port
• f exit
• Import clearance

validation

• Regulatory

checks at destination port

• Transfer to

domestic distribution

• Payment

alignment

• Merchandising and

assortment

• Sales & Promo

Planning

• Warehousing,
• Transfer to store
• Regional wild-

capture

• Transfer to

processing

• Insignificant

Distributors Scope of Direct Influence Wholesaler Dist. HORECA Dist. Quality Assurance

• Product & Shipment Audits
• Specification verifications
• Price control. Variable

margin

Table of Contents

Middle East Food Retail How to we consume Tuna Tuna Market Overview

World and Regional Population Growth (2010-2020)

9

The GCC population growth (2010- 2020) is one of the highest globally

World Population, Bn World Population: Breakdown by Region, year 2020, Bn

1.8 2.0 1.2 1.2 3.3 3.9 0.5 0.7 2010 2020 0.1 0.1 0.3 0.4 0.5 0.1 0.1 0.4 0.1 0.2 0.2 0.3 0.2 0.2 0.4 0.8 0.7 0.9 0.1 0.1 0.4 0.1 0.1 0.2 0.1 0.1 North America Europe China India Rest of Asia The GCC Rest of Middle East North Africa Rest of Africa

65 Years and Above 35-64 15-34 0-14

6.9 7.7 0.38 0.74 1.43 1.35 1.8 0.06 0.30 0.23 1.08 0.80% 0.04% 0.50% 1.20% 0.30% 2.20% 1.50% 1.60% 2.60%

…% CAGR (2010-20)

Source: IMF and Frost & Sullivan Research

Catering to the new generation consumer is key in the GCC

10

The GCC Population, Mn.

11.0 11.6 12.7 14.1 14.2 18.5 19.7 20.9 9.7 14.3 19.0 23.1 0.9 1.0 1.3 1.9 2005 2010 2015 2020

0-14 15-34 35-64 65 Years and Above

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

• f social media with mindful of the future

39% 35% 24%

Source: Frost & Sullivan Research

Generation Y+Z account on

• verall

population by 2020 and are highly influential

• n Generation

X purchases

Megatrends Shaping up the Food & Beverages Sector

11

Megatrends

Growing Baseline Market

POPULATION

Improving rate of

• rganization of the

Industry

URBANIZATION

‘Good For You’ Campaign

HEALTH & WELLNESS

Exposure to multicuisine / products

GLOBALISATION Change in Lifestyles Growing Income Healthy Food Choice to Choose Quick Serve Food Retail Product Categories Micro Segmentation Processed Food Product Level Impact Industry Level Impact Result of Megatrends

Creating a Pool of Sub Trends

Categorizing consumer trends

12

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.

Good for you!

No artificial ingredients, low fat, high fibre and

• rganic version of

products

Packaging

Something which offers ease towards multiple consumption occasions

• n the go. Also, which

suits the ‘Style Statement’

Taste

Product which is new to the palate

Source: Frost & Sullivan Research

Which segment companies should act?

13

BREAKFAST SNACKS LUNCH DINNER

Ready to eat, Protein based breakfast offering added benefits Opportunity for

• Meat processing companies
• Bakery companies
• Breakfast cereal companies

Target consumer segment

• Entire range of consumers
• Probably focus on kids

Products with benefits Opportunity for

• Dairy companies
• Beverage companies
• Snack companies
• Nutraceutical companies

Target consumer segment

• Generation Y and

Generation Z

Table of Contents

Middle East Food Retail How to we consume Tuna Tuna Market Overview

Consumer Insights

15

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

• ther 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

• 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

Housewife is always challenged to prepare dishes all will like

16

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

DINNER LUNCH BREAKFAST

17

TUNA BUYING HABITS

18

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

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

Tuna Category is Driven by Familiarity Mainly. BRAND CONSIDERATION Driving BRAND EQUITY

Equity Drivers For Tuna Sources of Brand Equity Industry Norms Awareness: 30% Familiarity: 10% Associations: 60% Awareness 11% Familiarity 64% Association 25%

Based on FMCG & Retail categories

Importance of Association Factors in Tuna

LIGHT & HIGH QUALITY HEALTHY & PROVIDES VALUE AESTHETICS MEAT QUALITIES

8% 8% 7% 2%

21

Source: Winning Brands Categories

Canned Tuna MENA – Positive and Negative Factors

22

Negative factors

• New food option/Packing
• Matured category
• Low margin, trade

uninterested

• Status of low cost protein
• My tuna recipe

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

+ −

Communication Review

Communication: Tuna middle East

24

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

Activations

25

In-Store

26

In-Store Presence

27

From the Internet

Communication review

28

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

Digital

29

30

Opportunities in the Middle East Market

Seafood Category Overview 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 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

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 Restaurant Items

• Focus on Horeca needs. Ready to serve

sushi, pouch tuna, opportunity to grow Pet Food

• Hit directly, high margin category.

Allowing for efficiency gaps Tuna

• Efficiency of production, work on

packaging and printing technology.

• Catering size opportunities

Key Strategic Initiatives Benefits Potential

~M USD

Low hanging fruits

Thank you

arnab@cantab.net

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

33

• 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. Tunisia Libya KSA Algeria Egypt

KSA – Market Overview

34

Market Size +11% on volume +16% on value

Total Market (KSA) MAT'15 MAT'14 Diff-15/14 Sales Volume 1000KGS 25046.9 22878.7 9% Sales Value SR 100000 8932.7 7727.1 16%

• 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 Diff VOLUME SHARE Diff YTD'15 YTD'14 CHUNK 11 1.1 9 1 FLAKES 11.9 0.4 9.1 0.3 SOLID 68.4

• 2.6

69.2

• 2.7

READY TO EAT 2.9 0.5 5.4 0.7 SLICES 5.7 0.6 7.3 0.6

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 61901 72590

• 8.5%

Sales Value LE 100000 25770 24655 +5.5%

• 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

• 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)

UAE – Market Overview

36

Market Size +6% (volume and value)

Total Market MAT'15 MAT'14 Percentage Growth Sales Volume 1000 KGS 3781.9 3554.5 6% Sales Value 1000 AED 144165 132041 6% Total Market VOLUME SHARE Diff YTD'15 YTD'14 SOLID 54.9 55.0

• 0.1

CHUNK 19.8 18.7 0.0 FLAKES 17.2 15.8 1.4 READY TO EAT 7.9 7.6 0.3 SLICES 1.4 2.8

• 0.4