By Lucy Craymer 

HONG KONG--Tuna fish has surged in popularity thanks to pantry loading during the coronavirus pandemic, but producers of the canned fish are dealing with higher prices and other challenges that are making it difficult to keep up with the increased demand.

Americans have been buying more canned tuna during the economic downturn, in part because it is one of the cheapest proteins on the market, costing as little as $1 for a 5-ounce can. Bumble Bee Foods said sales of canned and pouched tuna jumped as much as 100% from mid-March to early April, while Costco Wholesale Corp. put limits earlier this year on how many tuna containers a customer could purchase.

Even after the initial feeding frenzy, canned tuna producers say sales for these products have remained significantly higher than a year earlier.

Companies have been able to keep retail prices steady for tuna so far, even though average wholesale prices for tuna were up 41% from a year earlier in the year through May after reaching decade lows late last year, according to data from the Food and Agriculture Organization of the United Nations.

Prices vary depending on where the fish is bought. Skipjack tuna purchased in Bangkok cost $1,200 a metric ton in June, up 14% from December 2019 but down from a peak of $1,500 in March, according to data from Thai Union Group, a global seafood-based food producer that owns the Chicken of the Sea canned tuna brand.

Tuna has gone the opposite way of wholesale prices for other seafood, which have broadly declined due to sharp drops in restaurant demand.

The tuna industry has a very long supply chain. Analysts say wholesale prices could remain elevated or trend higher in the coming months due to challenges of getting enough fish to meet the surge in demand.

More than 40% of the world's commercially caught tuna comes from the western and central Pacific Ocean, in the waters around tiny nations such as Tuvalu and Kiribati. The fish are then shipped to processing plants on islands in the Pacific, in Asia or South America. Tuna is often canned in a third country before landing on supermarket shelves.

Tuna stocks have been ample this year, say food-industry analysts, but border controls and other supply-chain issues are hampering production.

Pittsburgh-based StarKist Co., which is owned by a South Korean conglomerate, processes and cans most of its tuna in American Samoa, a tiny territory that is closer to New Zealand than it is to the continental U.S.

The company has wanted to increase production, said Andrew Choe, StarKist's president and chief executive, but it has been unable to buy tuna from some of its regular suppliers during the pandemic. Border restrictions and fishing-port closures at some neighboring Pacific islands--where StarKist often buys tuna--have prevented fishing vessels from coming in and delivering their catch.

Compounding matters, StarKist's plant on American Samoa recently encountered mechanical issues that took a while to fix, in part because the company had to charter a plane to fly in people to bring parts and do the repairs. Then shipments of canned tuna to the continental U.S. were held up because the ship that services the archipelago broke down twice and had to be replaced.

"There have been a lot of complaints--rightly so--because they're not getting their products," said Mr. Choe, referring to retailers. He added that problems at the plant probably could have been easily and quickly been fixed were it not for the pandemic.

For decades, the world's largest producers of canned tuna struggled to reverse falling sales and shed negative perceptions that their products were old-fashioned, pungent, high in mercury and environmentally unfriendly. Then the pandemic occurred, and the 20th-century pantry staple became popular again.

Thai Union, the owner of El Segundo, Calif.-based Chicken of the Sea, said in May that sharply higher sales of canned tuna during the first quarter helped the group achieve its best operating performance in years. In March alone, sales of so-called ambient seafood--which includes canned products--jumped 50%.

"People are asking, is this pantry-loading? Is this consumption? I would say, every pantry-loading leads to higher consumption. People are not just leaving that in their pantry. They are consuming it," Joerg Ayrle, Thai Union's chief financial officer, said on a conference call. He also said the company has released videos with recipes for various types of tuna fish cakes and tuna pancakes.

Darian McBain, Thai Union's global director of corporate affairs and sustainability, said the company expects demand for canned tuna to remain elevated, though not at the level it experienced earlier this year.

Chicken of the Sea had to close a canning facility in Lyons, Ga., for one day last month after a coronavirus outbreak at the plant. "It's our new normal," Dr. McBain said.

At a Bumble Bee Foods facility in Santa Fe Springs, Calif., the company has added Saturday shifts for workers to meet increased demand.

Todd Putman, Bumble Bee Foods' executive vice president and chief growth officer, said the company's tuna stocks are running low.

"The product is available; it's just a matter of getting it into the U.S.," Mr. Putman said. "Our supply chain is strained."

Write to Lucy Craymer at Lucy.Craymer@wsj.com

 

(END) Dow Jones Newswires

July 15, 2020 05:44 ET (09:44 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
Costco Wholesale (NASDAQ:COST)
Historical Stock Chart
From Jul 2020 to Aug 2020 Click Here for more Costco Wholesale Charts.
Costco Wholesale (NASDAQ:COST)
Historical Stock Chart
From Aug 2019 to Aug 2020 Click Here for more Costco Wholesale Charts.