TUF To Invest 10’s Of Millions In Middle East J/V

Often not getting the attention it deserved from the world’s largest tuna industry players, the Middle East’s potential appears to have been recognized by Thai Union, as the firm shakes hands on a multi million joint venture (JV) with the largest manufacturer of consumer goods in Middle-Eastern markets.

The deal includes bringing John West branded tuna products to consumers in Middle East countries, which together boast a population of more than 409 million people.

TUF has inked a cooperation plan with Savola Foods Company, which describes itself as a fast growing multinational, offering edible oils, margarines, sugars and pasta under its significant portfolio of brands. Until now, the company has not played any major role in the Middle East canned tuna and seafood market, but brings in a very well develop logistics, supply chain and marketing infra structure.

Together the firms say they are focusing on bringing “sustainable, innovative, and quality seafood products to Middle-Eastern consumers.”

The joint venture, according to Thai Union, will combine the global resources and expertise of TUF with the regional resources and expertise of Savola Foods. The deal has been dubbed as a joint venture of equals, and will aim to leverage deep consumer and marketing expertise of both partners, including bringing the John West tuna brand to the Middle Eastern markets.  Making use of the marketing and distribution expertise TUF, which lacks Arab speaking staff, will obtain the experience to develop its John West brand in these markets.

In 2014, when Thailand’s exports of canned tuna suffered an overall YoY drop, there was one destination market where its products showed strong recovery. Middle Eastern countries were the number one regional market for the Thai canned tuna, with 15 percent more volume being shipped there than the previous year.

One of the biggest tuna brands already existing in the Middle East is California Garden, with around a 20 percent share of total tuna imports into the region. Previously speaking to the firm, atuna.com was told that one of the main drivers of the growth in this consumer market for canned tuna was the war-torn state of some of the region’s countries, providing the ideal shelf-stable, protein packed food.

Previous forecasts from Thai-based analyst, SCB securities predicted that TUF will likely focus on M&A deals in the Middle-East and Asia, aiming to boost the firm’s long-term sales to USD 8 billion by 2020.

The product line for the JV will include all seafood products; ambient, frozen, and chilled seafood, as well as ready-to-eat meals. It will operate in 12 Middle Eastern markets: Saudi Arabia, United Arab Emirates, Oman, Kuwait, Bahrain, Qatar, Jordan, Lebanon, Syria, Iran, Iraq and Egypt.

Savola boasts ownership of 50 retail outlets (super/hypermarkets) throughout Saudi Arabia, and has a 62 percent and 70 percent respective share of the edible oils and sugar market in the country. The company also operates two sugar refinery, packaging and warehousing facilities located in Egypt.

Thai Union notes that the targeted markets are estimated to have a value of over USD 3 billion, with substantial growth expected over the next few years. It is anticipated that the JV will be able to capture a significant share of that market and accordingly, the annual sales revenues with the next three to four years are expected to be in excess of USD 400 million.

Mr. Maaraf Abderrahim, CEO of Business Development at Savola Foods Company, says: “Seafood plays a special role in our consumers’ diet. Yet, the products offered in the market appear to be rather basic.”

Both firms together plan to invest USD 30-50 million in the Joint Venture over the next two years.