Major canned fish producers launched an aggressive campaign to reclaim the sector's pre-2000 value share of the canned goods market between 2001 and 2004. The move followed a 20.2% decline in share between 2000 and 2001, driven by cheap prices for tuna.

Increasing promotional activity and added-value tuna launches have helped grow the sector's value, but the introduction of higher prices on both tuna and salmon in 2004 have slowed this progress.

Tuna is growing by 4%

in value but in volume terms the sector is fairly flat, and Heinz's sale of John West to Lehman Brothers in March suggests all is not well within canned fish - particularly in the dominant tuna and salmon markets.

Numis Securities food industry analyst Andrew Saunders says: "John West has been passed round a bit - it was owned by Unilever four or five years ago - and I imagine if it were such a good brand Heinz wouldn't have sold it. The fact that it did suggests the market for tuna is difficult. It's not easy to pass increased costs on and stock levels may also have been an issue."

The canned industry in general has faced inflationary pressures but tuna

has also had to absorb increased import costs, adds Saunders. "Margins are under pressure."

Princes marketing director Neil Brownbill hints at considerable production changes to help the company adapt to the tough economic environment. He says: "Tuna, mackerel and sardines have all experienced price increases after a period of no inflation. I think we are going to see long-term inflation that will continue to put pressure on raw materials and the cost of steel for cans, to the extent that we are reviewing ways of reducing the impact."

In the meantime, the door is wide open for further premium launches to drive volume growth. Brownbill adds: "There is a growing awareness of other varieties of tuna, such as yellowfin, which accounts for 5% of the market in the UK, but it is more expensive than standard skipjack tuna and consumers prefer to buy yellowfin fresh."

Albacore is another type of tuna that UK consumers are becoming more aware of and the company has new product development in the pipeline looking at different formats to drive usage in ­different areas and at different occasions.

For now, oily fish is in

the driving seat. Brownbill says that mackerel, pilchards and sardines have all grown in value.

Lehman Brothers has yet to announce any changes or new developments with John West, so it remains to be seen how the future of canned fish will pan out.n

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