An overview of the global tuna market
11/04/2017 Two main products drive tuna production; traditional canned tuna and sashimi/sushi. These products demonstrate relevant differences in terms of the species utilized, quality requirements and production systems. In the canned market, light meat species – namely skipjack and yellowfin –are dominant, whereas in the sushi and sashimi market, the fatty tuna of bluefin and other red meat species like bigeye are preferred. Bluefin tuna is the top preference for the sushi and sashimi market with most of it going to Japan. In a new trend however, the market for bluefin is significantly shrinking, as Japanese consumers are moving away from traditional foods such as sashimi to more westernized food items.
The canned tuna industry is entirely supplied by the wild fishery. For the sushi/sashimi sector, tuna ranching of bluefin has emerged as a supplier in the last two decades, supplying somewhere around 20 percent or less. In terms of demand, for canned tuna it is distributed worldwide, involving companies of different dimensions, with some also including large processing companies. While integration is also a trend in the sushi and sashimi market, almost all trade is concentrated in Japan, which represents almost 90% of the global trade for fresh and frozen bluefin tuna. However, this does not take into account the significant domestic consumption of bluefin tuna in Spain and Italy, where it is eaten as steaks and chunks.
The traditional markets for canned tuna products in developed countries have slowed in the last decade. Fortunately for producers, new markets in the Near East and Latin America have emerged and traded volumes have increased into these countries, helping to maintain both volume and value growth in world canned tuna trade. However, in recent years, there has been growing public concerns over tuna sustainability and safety issues, demonstrating several major challenges for the canned tuna sector.
Markets for canned tuna
The canning industry remains the main destination for most of the world's tuna catches. Thailand is by far the largest exporter of processed tuna in the world. From 2000 to 2011, Thai exports increased by 119%, which is a similar trend for Ecuador and Spain. Indonesia and the Philippines increased their exports as well, though below 50%. For canned products, the raw material is supplied both from local landings as well as imports, though by different proportions depending on the country.
The major markets for canned tuna are the USA, the EU, Egypt, Japan and Australia. However, consumption in the last decade has stagnated in the EU and the USA, and has increased only moderately in Japan. Consumption is growing in the less traditional markets of Latin America and the Near East, where the volume of imports has risen by around 50 percent in the last five years.
The organization of the canned tuna industry is comprised of complex international trade networks. It is common practice in the European and US industries to locate the first steps of processing in developing countries close to the main landing areas and then export semi-processed products to the facilities in developed countries for completing the process up until final distribution and consumption. These networks involve the trade of a wide variety of product forms across countries, which may vary in their levels of processing. Tuna loins are now the main product in the market.
The overall growth in demand of canned tuna has resulted in price increases in all producing countries. Spanish exports, which mainly focus on intra-EU trade with yellowfin, hold a price differential as a result of its preimium quality and the high income of the EU destination markets (Fernández-Polanco, J.M., Llorente, I., Luna, L. & Fernández, J.L. 2012. El mercado de productos pesqueros en España [The market for fish products in Spain]. GLOBEFISH Research Programme No. 106. Rome, FAO).
Increasing retail consolidation worldwide has resulted in supermarkets dominating canned tuna sales in the traditional developed markets. Retail chains in the developed markets have been promoting canned tuna as an affordable and very convenient food, and have been able to maintain relatively low prices both at the wholesale and retail level in order to sustain increasing consumption. The price of raw materials is then a key determinant of the processors' profit margins. Some processors have tried to increase their margins by shifting from yellowfin and albacore to lower priced skipjack, which is also of lower quality. However, this strategy has resulted in even lower retail prices in quality driven markets such as France and Spain.
Despite retail concentration, canned tuna persists in being a brand dominated market although private labels owned by supermarkets are increasing their market share. In order to counterbalance these profitability challenges to processors, the processing sector has focused on product development, increasing convenience and alternatives for preparation and consumption such as salads or pouched tuna fillets in traditional sauces.
In the Japanese canned tuna market, the high-value yellowfin is still a preferred product generally processed by local canneries. Imports of canned tuna largely consist of skipjack-based products.
Markets for sushi & sashimi
The sushi and sashimi market is the other main destination of tuna production, particularly red meat tuna. The most valuable species for sashimi is bluefin, which has been the case for the last five decades as its high oil content is preferred in Japan. More recently, bluefin's value has only been further compounded by the fact that supply volumes are now quite low with the bluefin resource under conservation measures.
A relatively new development on the market is farmed tuna, known as tuna ranching. Tuna ranching has influenced market and distribution systems by driving shifts in consumer preferences and pricing. Bluefin from ranching sources has provided a more affordable option to those Japanese consumers who are unable to afford the most prized product, wild-caught bluefin. Today, tuna ranching firms have been vertically integrated into transnational corporations and have had a moderate to strong impact on the markets by opening up this emerging medium-quality sushi market.
Japan is the largest importer of bluefin tuna species of any kind. Although less significant than Japan, other countries such as the USA, Spain and Italy have increased their consumption of bluefin. The increase of Japanese bluefin tuna imports is a result of changes in the consumption structure of the market (Kurokura, H., Takagi, A., Sakai, Y. & N. Yagi. 2012. Tuna goes around the world on sushi. Aquaculture Economics & Management, 16(2): 155-166). These changes include the fact that in the past decade, supermarket and restaurant chains have gained relevance in sale volumes as opposed to the traditional auction system. Fresh tuna are normally marketed whole through auctions, but now around 70–80 percent of frozen products are sold to other agents outside the auction system. This shift in the distribution of tuna in Japan contributed to the growth in Japanese consumers' preference towards lower cost foods.
Overall, sushi and sashimi consumption is declining in Japan as consumers are gradually changing their preferences and some segments are driven to lower-cost foods. However, sushi consumption is now a global trend as consumer concerns about healthy eating increases and international culinary experiences gain popularity worldwide (Lappo, A., Bjørndal, T., Fernández-Polanco, J.M. & Lem, A. 2015. Consumers' concerns and external drivers in food markets. FAO Fisheries and Aquaculture Circular No. 1102. Rome, FAO). The second market in volume for sushi and sashimi is the USA, with an estimated share of 8–10 percent of global sashimi consumption. In the last decade, popularity of Japanese food also increased in the EU. Important markets have also grown in Australia as well as other Asian economies such as Thailand, Taiwan Province of China, Republic of Korea and China. Sushi bars are also becoming popular in the capitals of Latin America. Although different tuna species are used as red meat sashimi, the future of the bluefin market, and by extension the tuna ranching industry, appears to be linked to the success of the Japanese cuisine in becoming an essential part of a global multicultural diet.
Tuna production has faced important challenges in recent years, and as a result has had to adapt its production, organizational and marketing methods to improve its efficiency, respond to environmental concerns and growing demand. Production has especially faced significant issues regarding the preservation of wild stocks and the sustainability of harvesting methods such as the ban on FADs in the supply of canned tuna. Although ranching production has reached important levels of development in the last two decades, future growth is still limited by the availability of wild juveniles, also rendering its sustainability to be determined.
Despite these challenges, markets for tuna products continue to increase based on the growth of consumption in new regions of the world and the dissemination of sushi as a global dietary trend. The traditional markets show signs of maturation but still represent a significant and profitable volume for business. Growing interest is focused on developing new value-added products, which may help increase margins for the sector in the likely scenario of growing raw material prices.
Consumer concerns regarding safety and sustainability issues with tuna, already a major issue, may continue to rise and pose a greater challenge to future market development. At times, consumer concerns can originate from conflicts in the international arena, as is the case of the trade disputes between Mexico and the USA due to the requirement of the Dolphin Safe labeling scheme. The industry must address concerns, through transparency and dialogue between the industry and the public.
Author: José Fernández-Polanco