Canned Tuna Angles for a Lifeline

The canned tuna industry is swimming upstream, hurt by health warnings of mercury contamination and a perception that its product is just plain boring.

Now the major players are renewing efforts to hook customers.

Canned tuna producers are promoting the fish as a low-fat protein, laden in omega-3 fatty acids that are believed to benefit the heart. They’re trotting out new advertising. And they’re moving beyond the can, offering products in foil pouches, including steaks and flavored fillets, available near the tuna cans.

“Tuna doesn’t always equal sandwich,” said John Signorino, chief executive of San Diego-based Chicken of the Sea International. “This can be a dinner food.”

The effort is starting to rejuvenate business at Chicken of the Sea and its rivals Del Monte Foods Co. of San Francisco and Bumble Bee Foods of San Diego.

Signorino’s goal is to push consumers to more lucrative products such as Chicken of the Sea’s ahi steak in a garlic and herb marinade. Signorino wants to develop other offerings in line with America’s increasingly sophisticated palate.

The steaks, which retail for $2.89 to $3.89 for a 5.25-ounce serving, are anywhere from three to five times as profitable as a 99-cent can of tuna, the company said.

“We would like to see the steaks grow to become 10% of our business,” Signorino said.

In addition, Chicken of the Sea is diversifying into other lines of seafood. The company is the nation’s largest purchaser of salmon, making up 8% of sales, Signorino said.

And though the company thinks there is still a “good future” for tuna, Signorino said, salmon looks to be a growth business. It has all the healthful benefits of tuna, he said, but “none of the baggage.”

New products like the steaks and updated packaging of its entire range of offerings helped Chicken of the Sea, a unit of Thailand’s Thai Union Frozen Products, one of the world’s top canned tuna producers, swing from a loss to a small profit last year, Signorino said. Chicken of the Sea, whose financial results aren’t made public, has an estimated 20% of the U.S. consumer market. Its revenue is believed to be about $400 million a year, including sales of seafood and salmon products as well as sales to wholesale clubs and the food service trade.

Likewise, Bumble Bee owner Connors Bros. Income Fund of Toronto said in a recent report to shareholders that “the expansion of flavored and ready-to-eat tuna items continues to add volume and profit to the business.”

And Del Monte Foods, the nation’s largest tuna company with an estimated third of the market, said last month that sales in its consumer division rose 3.5% to $573.4 million, helped in part by its new StarKist Tuna Fillets.

The nascent growth is welcome news to an industry that saw sales of “shelf stable” tuna -- in cans or pouches -- drop almost 6% to $1.01 billion last year from 2001, according to market researchers at ACNielsen. The data don’t include sales at Wal-Mart Stores Inc. or kits with tuna and other food such as crackers.

During the same period, the volume of tuna sold sank 18% to 383 million pounds as prices climbed because of rising costs of both the fish itself and the metal that goes into cans, ACNielsen said.

In a study of national eating trends, market researcher NPD Group found that 19% of those surveyed last year reported eating canned tuna at least once in the previous two weeks. That’s down from 25% in 2001.

Tuna executives attribute much of the decline to the mercury issue, which continues to dog the industry.

Studies have found that high concentrations of mercury in pregnant women, nursing mothers and young children are harmful to brain development. Large predator fish, such as swordfish, shark and tuna, tend to contain more mercury than smaller species. Canned light tuna typically contains less of the heavy metal than does canned albacore tuna.

Two years ago, the Food and Drug Administration and the Environmental Protection Agency warned pregnant women, nursing mothers and young children to limit consumption of fish species that have elevated mercury levels, including tuna.

Consumer Reports magazine this year went further, advising in its July edition that pregnant women “avoid canned tuna entirely.”

The magazine said women who wanted to become pregnant and young children should sharply limit how much tuna they eat.

Consumer Reports reached its conclusions after reviewing federal data that showed canned light tuna can sometimes contain as much or more mercury as canned albacore.

FDA testing updated in January found that the average level of mercury in light canned tuna was 0.12 parts per million, well below the 1-part-per-million federal limit for commercial fish. Albacore tuna averaged 0.34 parts per million, about a third of the FDA maximum.

However, the FDA tests also found that some samples of light tuna were close to the federal limit, and that some albacore exceeded the limit.

Industry representatives called the Consumer Reports warning irresponsible, noting that the FDA had said that pregnant women and young children could safely eat 12 ounces of canned light tuna per week, or about four sandwiches.

“Consumer Reports is not the right organization to be giving health advice to the U.S. consumer on food and nutrition. The right organization is the FDA,” said Anne Forristall Luke, president of the U.S. Tuna Foundation, a trade group representing tuna canners.

The industry won a round in May when San Francisco Superior Court Judge Robert Dondero ruled that under state law tuna cans don’t have to carry mercury warnings on labels.

California Atty. Gen. Bill Lockyer had sued the canners under Proposition 65, which requires companies to warn consumers of products containing hazardous ingredients. But Dondero ruled that the state law was preempted by the FDA advisory, that mercury levels weren’t high enough to require warnings and that tuna was exempt because the mercury occurred naturally.

Although there’s no doubt that the mercury debate has hurt tuna sales, other factors also contributed to the decline.

“Many years ago this was a category with a lot of advertising and consumer marketing,” said David Melbourne, senior vice president for consumer marketing at Bumble Bee.

StarKist’s Charlie the Tuna and Bumble Bee’s Horatio were the industry’s marketing icons. But until last year, tuna advertising -- beyond coupons -- had largely disappeared.

The ads were discontinued because tuna producers slashed advertising and marketing budgets amid falling profit margins and sales, Melbourne said. Now Bumble Bee is mulling over a return to the broadcast advertising market, he said.

Chicken of the Sea is already there. Its jingle, “Ask any mermaid you happen to see, what’s the best tuna? Chicken of the Sea,” returned to the airwaves last year after a 14-year absence. In one current television spot, an attractive female model walks through an office of men into an elevator. Once the doors close, the model sighs and lets her formerly tight belly flop as the Chicken of the Sea jingle plays.

The commercial “is advertising that is out of the mainstream for something like canned tuna,” Signorino said. “We want people to view both our brand and the category more favorably.” He declined to reveal the size of the company’s broadcast advertising budget.

Advertising alone won’t be enough to create a nation of tuna eaters, Signorino said. All three of the major players must continue to improve the quality of their fish, he said.

To that end, Signorino and his top managers gather once a week around a stainless steel table at the company’s corporate headquarters. They open the cans of tuna, which are shipped from the company’s cannery in American Samoa.

After the liquid drains away, they lift the containers and examine what remains on the table. “We want to see big chunks of tuna with no bones, no skins and no scales,” Senior Vice President Donald George said.

Ideally, Signorino said, “the fish should hold the shape of a hockey puck.” Occasionally, it sags into “a pile of fleshy mush,” which represents a quality-control failure, he said.

Improvements in canning technology and more stringent fish selection, Signorino said, are helping to reduce the number of mush piles the company discovers.