By Maura Dilley, ImpactAlpha.com -- For decades, the five-ounce can of tuna fish has been the 99¢ pantry essential that U.S. families turned to for a quick sandwich or last-minute meal.
Now, a new crew of tuna distributors, including Wild Planet, American Tuna and Ocean Naturals, is breaking the price barrier with brands that promise both sustainability and flavor.
That has caught the attention of big players, such as Bumble Bee and Chicken of the Sea, which have been part of the industry's rapid consolidation in the past decade. Thai Union, which owns Chicken of the Sea, is seeking to acquire Bumble Bee as well, a deal that would give it nearly half of the U.S. canned tuna market. The deal has been held up by antitrust and other investigations.
"You're seeing consolidation of tuna all over largely because of the difficulty of getting the prices up on a can," says Bill Fox, vice president for fisheries for the World Wildlife Fund.
A recent price check at Walmart.com found that a four-pack of BumbleBee's solid-white albacore cost $5.98, or about $1.50 a can. A four-pack of StarKist's chunk-light tuna ran $3.27, or about 82¢ a can. A 12-pack of 5-oz. cans of Wild Planet's Wild Albacore fetched about $50, or more than $4 a can.
We're operating on a model that is built on families, sustainability, traceability, premium quality, and integrity and that's serving us well. -- Joel Cardoza, VP of Operations, American Tuna
The success of boutique insurgents in the face of global consolidation is testimony to the opportunities for investors to realize price-premiums of two or even three times the mass-market products with brands that offer consumers a compelling story of sustainable fishing practices and tasty, healthy protein.
"Small businesses like Wild Planet have had a significant impact," on the industry, says WWF's Fox. "They have penetrated the market with sustainability and brought interest to the area. In a way, they are explorers, laying the way for sustainability and getting people interested in a wholly sustainable supply chain."
Tuna has lost its place as America's go-to seafood, with per-capital consumption falling by nearly 50 percent since a peak in 1989, amid changing tastes, fears of mercury-contamination and concerns over dolphin deaths. But tuna remains a $10 billion global industry and one of the five most-consumed seafoods.
Most of the world's tuna stocks are considered to be sustainably managed, with the exception of the bluefin tuna, prized by sushi-lovers, which makes up only one percent of the global catch. Environmental organizations generally consider most skipjack stocks strong and well managed. The sustainability of albacore stocks varies by geography.
Nonetheless, "The global tuna industry is in the midst of a paradigm shift due to increased production competition, technological innovation and changes in consumer demand," according to an investment report recently released by Fish 2.0, the seafood business competition now underway.
Among the changes is the development of new processing and canning facilities in Papua New Guinea, which may challenge the dominance of Thailand, where nearly half of all tuna is currently processed. "The ability to process tuna within the Pacific Islands can potentially shorten supply chains, improving quality, creating social and economic benefits for the Pacific Islanders, and allowing differentiation of Pacific Island products in the marketplace," according to the Fish 2.0 report. "This could result in improved incentives for sustainability among the Pacific Island nations with large tuna fisheries in their waters."
Such product differentiation could dispel the perception that tuna is cheap and remove an obstacle - or excuse - to investment in more sustainable practices. This winter, Greenpeace released their shopper's guide to canned tuna rating grocery store brands on how sustainable, ethical and fair their tuna products are for the ocean, fishers and fish processors. Out of 14 brands, Wild Planet, based in California, won top honor. American Tuna, also in California, placed second. Bumble Bee ranked 12th. In a statement, Bumble Bee CEO Chris Lischewski accused Greenpeace of bias. Graham Forbes of Greenpeace responded: "We know best practices and they're not using them."
American Tuna, a cooperative fishing company based in San Diego, is working to reintroduce canned tuna as a premium product. Natalie Webster, a Founding Family Member at American Tuna, says it was more than negative publicity about mercury that has hurt U.S. tuna sales. "The canned tuna market had become a watery can of mystery fish: who caught the tuna, where was it processed, what is in the can besides tuna...nobody knew," she says.
American Tuna fishes only by pole and line, which is considered to be a more sustainable approach for tuna because it virtually eliminates bycatch of other species. Pole and line fishing employs more people, by a factor of 10, over purse seine fishing. Pole and line vessels also tend to be small businesses which can be passed down from generation to generation. Indeed, American Tuna is a business created by the American Albacore Fishing Association, a non-profit trade association, as an endeavor to save the American albacore fishing industry.
American Tuna, which consists of six family cooperatives that purchase direct from American pole and line albacore fishers, also advocates improved processing techniques and fishing industry job-creation. Each can is stamped with a vessel ID number that traces the chain of custody from boat to plate. The products are certified by the Marine Stewardship Council; American Tuna says it will apply for the forthcoming Fair Trade Tuna certification as well.
Wild Planet Foods declined a request for an interview, with CEO Terry Hunt writing that "highlighting our success only invites competition." Hunt, a principal with Preserve Capital Group, an investor in Wild Planet, who became CEO in 2008, wrote: "The critical service we provide to the sustainability movement is encouraging retailers to upgrade their sustainability hurdles when deciding on which products to put on shelf and to engage in outreach events with consumers to encourage them to vote for conservation with their purchases."
Wild Planet's success has indeed invited competition. BumbleBee launched its own boutique brand, Wild Selections, in 2013. "We're not looking to sell a million cases," BumbleBee's Lischewski told ImpactAlpha. "This is about raising consumer awareness. This category will grow."
BumbleBee has a partnership with World Wildlife Fund, which for each can sold receives 13¢ to fund ocean conservation efforts. WWF's Fox describes Wild Selections as "a consumer demand experiment to raise awareness with the WWF logo, and to get new buyers for sustainable food."
Joel Cardoza, American Tuna's vice president of operations, says sustainability means not only environmental stewardship but economic inclusion and development as well. Stories from small business owners highlighted on the company's website appealed to Whole Foods, which had carried the American Tuna nationally for almost a decade. Last year, the retailer enlisted American Tuna to produce an exclusive label called Pole & Line. An associated sustainable cat food brand, Deck Hand, uses the trimmings.
"Education is the most important thing," Cardoza says. "Restaurants and chefs can help build trust in a brand so people make more responsible choices, no one changes their purchasing habits until something makes them move in that direction." Cardoza has been working with delis and university food providers to make American Tuna synonymous with a tuna melt sandwich. American Tuna supplies national brands like Pret a Manger, Le Pain Quotidien and 'wichcraft.
"We don't have market share by volume but we're operating on a model that is built on families, sustainability, traceability, premium quality, and integrity," he says. "and that's serving us well."
Photo credit: Pole & Line Tuna