Market Analysis – 10101718 – Live frigate tuna fish or melva fish

Market Analysis Brief: Live Frigate Tuna (Melva)

1. Executive Summary

The global market for landed Frigate Tuna (Auxis thazard) is estimated at $380 million for the current year, with a projected 3-year CAGR of 2.1%. Growth is driven by steady demand for affordable canned and processed seafood, particularly in Europe and Southeast Asia. The single greatest threat to the category is increasing pressure from regulatory bodies and NGOs to improve sustainability and reduce bycatch, which could lead to stricter quotas and higher operational costs. Securing supply from fisheries with robust management and traceability systems presents the most significant opportunity.

2. Market Size & Growth

The global Total Addressable Market (TAM) for landed Frigate Tuna is based on global catch volumes and estimated ex-vessel (dockside) prices. The market is mature, with growth tracking closely with population increases and demand for shelf-stable protein. The primary value is in its use as a raw material for the canning industry.

Largest Geographic Markets (by Catch Volume): 1. Indonesia: Consistently the world's largest producer, supplying both domestic and international processors. 2. Spain: A major European hub for both catching and processing, especially for the "melva" canned market. 3. Philippines: A key supplier in the Southeast Asian region with a large fleet of small-scale and commercial vessels. [Source - FAO Fisheries and Aquaculture, Dec 2023]

3. Key Drivers & Constraints

1. Demand for Canned Tuna: Frigate tuna is a primary input for canned products, often positioned as a cost-effective alternative to skipjack or yellowfin. Its demand is therefore highly correlated with the $42B+ global canned tuna market.
2. Fuel Price Volatility: Marine fuel can account for up to 60% of a fishing vessel's operating costs. Fluctuations in global oil prices directly and immediately impact the cost of goods sold (COGS).
3. Fisheries Management & Regulation: Regional Fisheries Management Organizations (RFMOs) are implementing stricter quotas and gear regulations to ensure stock sustainability. This can limit supply and increase compliance costs.
4. Climate Change & Stock Fluctuation: As a tropical/sub-tropical pelagic species, Auxis thazard populations are sensitive to changes in sea surface temperatures and ocean currents, leading to unpredictable annual catch volumes.
5. Labor Costs & Availability: The fishing industry faces persistent challenges in attracting and retaining skilled crew, particularly in developed nations, leading to upward pressure on labor costs.
6. Competition from Other Species: Frigate tuna competes directly with other small tuna and mackerel species (e.g., skipjack, chub mackerel) for canning. Processor purchasing decisions are highly price-sensitive.

4. Competitive Landscape

The catch market is highly fragmented, comprising thousands of independent vessels. The true competitive power lies with the large-scale processors who are the primary buyers.

⮕ Tier 1 Leaders (Processors/Buyers) * Thai Union Group (Thailand): World's largest canned tuna producer with an immense global processing and distribution network. * Bolton Group (Italy): Dominant in the European market with brands like Rio Mare; strong purchasing power in the Atlantic and Indian Oceans. * Dongwon Industries (South Korea): Major player with a large fishing fleet and the Starkist brand, providing significant vertical integration. * Grupo Calvo (Spain): Key processor in Spain and Latin America, specializing in high-quality canned seafood including Spanish "melva."

⮕ Emerging/Niche Players * Frinsa del Noroeste (Spain): Focuses on high-quality, sustainable sourcing for private label and its own premium brands. * Century Pacific Food (Philippines): A dominant player in the Philippines, expanding its export reach throughout Asia and the Middle East. * Ocean Brands (Canada): Emphasizes MSC-certified sustainable sourcing for the North American market.

Barriers to Entry for new processors are medium-to-high, requiring significant capital for processing plants, establishment of a global supply chain, and compliance with international food safety standards (HACCP, BRC).

5. Pricing Mechanics

The price build-up begins with the ex-vessel price, the amount paid to the fishing vessel at the dock. This price is determined daily by supply (total landings for the day) and demand (processor capacity and orders). From there, costs for logistics (cold transport to the plant), processing (labor, energy, water), packaging (cans, labels), and overhead are added. The final price to a CPG or food service company is heavily influenced by volumes and contract length.

The most volatile cost elements are tied to the initial catch and spot market dynamics: 1. Ex-Vessel Fish Price: Highly volatile based on daily catch success. Can fluctuate +/- 30% within a single season. 2. Marine Gas Oil (MGO): The primary fuel for fishing fleets. Has seen price swings of +45% over the last 24 months. [Source - Ship & Bunker, Mar 2024] 3. International Freight: Costs for shipping frozen raw material or finished goods from catch regions (e.g., SE Asia) to consumer markets (e.g., EU, NA) remain elevated and can shift +/- 20% quarterly.

6. Recent Trends & Innovation

• Traceability Technology (Jan 2024): Major processors like Thai Union are expanding the use of blockchain-based traceability systems. This allows buyers to track fish from vessel to can, verifying legality and sustainability claims, a key feature for ESG-conscious customers.
• Focus on Bycatch Reduction (Sep 2023): Increased pressure from NGOs has led to wider adoption of Fish Aggregating Devices (FADs) that do not entangle other species and changes in net design to reduce the bycatch of sharks and turtles.
• Consolidation in Processing (Jun 2023): Ongoing M&A activity sees larger players acquiring smaller, regional processors to gain market share and secure access to raw material supply in strategic locations.
• Sustainability Certification (Ongoing): A growing number of frigate tuna fisheries are undergoing assessment for Marine Stewardship Council (MSC) certification, particularly in the Eastern Atlantic, to gain access to premium markets in Northern Europe and North America.

7. Supplier Landscape

8. Regional Focus: North Carolina (USA)

Frigate tuna is a common seasonal species off the coast of North Carolina, typically caught as bycatch in fisheries targeting king mackerel or other coastal pelagic species. Demand is low and localized; there are no large-scale canneries or processors for this species within the state. The catch is primarily sold into local fresh fish markets or used for bait. State landings of Auxis thazard are minimal and not tracked as a distinct commercial category by the NC Division of Marine Fisheries, often being lumped into "other tuna" or "mackerel." The state's favorable business climate and port infrastructure (e.g., Morehead City, Wilmington) offer potential capacity, but developing a frigate tuna fishery would require significant investment to build local processor demand and a dedicated supply chain.

9. Risk Outlook

10. Actionable Sourcing Recommendations

1. Implement a Dual-Region Sourcing Strategy. Mitigate supply and geopolitical risk by diversifying procurement volume between top-tier suppliers in Southeast Asia (e.g., Thai Union, Century) and the Eastern Atlantic/Europe (e.g., Grupo Calvo, Bolton). Target a 60/40 split to hedge against regional catch failures, trade disputes, or logistics disruptions. This strategy protects supply continuity and provides price leverage.

2. Mandate Supplier Sustainability & Traceability. Require that at least 30% of spend within 12 months is with suppliers who provide full vessel-to-plant traceability and hold a recognized sustainability certification (e.g., MSC) or are in a credible Fishery Improvement Project (FIP). This de-risks the brand from ESG challenges, secures supply for eco-conscious product lines, and can justify price premiums in certain markets.