Report on the Implementation of the derogation to ... - Trade Websites

Final <strong>Report</strong>
RoO Derogation under the PACP-IEPA
as profitable canned tuna businesses without ownership of processing facilities simply by contracting
processors to produce finished product for their brands. Conversely, MW Brands and Thunnus
Overseas Group (TOG) both own substantial processing capacity and rely on these facilities for a
large proportion of their total supply. In other words, processing is a significant part of their business
operations.
On a global scale, there is a widely recognised and growing overcapacity in tuna processing facilities.
This contributes to deeper price volatility as canneries compete for raw material and a greater
politicisation of access to tuna resources as firms compete to ensure future supply. In these
conditions, it is highly likely that some processors will eventually be squeezed out and that the
industry will become more concentrated. 291 Given that a large number of Spanish branded firms are
competing for a market dominated by private label, a future of mergers and acquisitions may well be
facing this segment. In this competitive context, investments in new processing facilities, such as in
PNG, are more to do with securing access to fish rather than meeting increased demand for product.
A strategy pursued by some Spanish firms to grow the sales volumes is to focus on new markets,
especially in Latin America.
292 In mature markets – in recognition of most canning-grade tuna stocks
having reached, or approaching, their maximum sustainable yield – a strategy deployed to enhance
profit margins pursued by some firms in principal EU markets is to try to shift consumer focus to
quality and a range of differentiated, ‘value added’ products. 293 However, while there has been
growth in principal EU market for value added products, it is yet to be seen how far this desired
transformation will translate into mass consumption by EU consumers. As a reflection of the limits of
this strategy, it is worth noting that only some firms are focussing their energies on their portfolio of
value-added products. Instead standard canned tuna will likely remain the main product type for the
foreseeable future.
291 Hamby 2009: Hamilton et al. 2011.
292 Hamilton et al. 2011.
293 McGowan and McClain 2010; Hamilton et al. 2011. ‘Value added’ products normally contain less tuna raw
material and more less-costly other inputs (e.g. salad, potato, etc), making them more profitable, not least as
they are also often sold at a higher price point that standard canned tuna.
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