As a new strain of bird flu spreads in Gauteng and Mpumalanga, Lucky Star’s owner sees an opportunity to keep punting its pilchards as an affordable protein.
Chicken and egg prices are set to rise, with egg shortages already being experienced in Gauteng as the bird flu strain first recorded in Mpumalanga in June remains prevalent.
Two weeks ago, the SA Poultry Association warned of supply-chain shortages if the contagious new strain spread further, leading to the continued culling of chickens.
Oceana, producer of Lucky Star fish, as well as fishmeal and fish oil, held an investor call on Tuesday, before it enters a closed period as it prepares its September year-end financial results.
Small Talk Daily analyst Anthony Clark asked if an expected shortage of eggs and chickens, due to the culling of layer chickens, creates an opportunity for Oceana to increase its sales of canned fish in SA. He said 6-million fewer chickens are being produced weekly countrywide.
Lucky Star fish and sauce is used as a protein in a single meal for a family of four to eight instead of chicken or other meats.
Oceana CEO Neville Brink said it could increase pilchard imports if demand increases. Some of its pilchards are caught in SA while it also buys in from China and Thailand. “We can react to a major shortage of chicken,” he said.
Lucky Star is being priced aggressively as consumers come under pressure.
Oceana tries to keep prices of the large cans on the shelf at R21-R23 despite tomato paste, cans, oil used by fishing boats and a weak rand making pilchard imports more expensive. The fishing firm is choosing not to recoup all its expenses in what it charges.
Brink said “pricing is a key driver of consumption [so] we have to keep Lucky Star as affordable as possible”.
Sales volume
Lucky Star’s canned sales volume for the 11-month period to August was 8% higher than the previous year at 8.7-million cartons, it said earlier this week in a voluntary trading update.
Load-shedding is also driving demand for canned fish.
Brink said: “We have taken consumption away from chicken in the wholesale sector, because a lot of the stores and spazas in the townships are not prepared to carry frozen goods, because of the risk of load-shedding and spoilage.”
The poultry industry is facing huge pressure as it has had to endure record maize price increases since 2022, making animal feed expensive, while power cuts delay the slaughtering of chickens and affects egg production and meat storage.
Raising chicken prices is a difficult balancing act because consumers buy less if prices spike, leading to excess chicken, which becomes a storage problem for producers. They need to increase prices while having the smallest effect possible on sales. The more chickens culled, the more prices will rise.
Oceana said its fish oil business in the US is benefiting from global shortages. The oil is used as a food for farmed salmon in Scandinavia, which is a more sustainable way of producing the popular fish.
Brink said Oceana aims to increase its catches of horse mackerel and other fish in SA used to produce fish oil, as it does not catch as much of these fish as it is permitted to.
Oceana can increase its catch by improving the capability to offload boats at the factory and send boats back to sea quicker. This requires SA factory upgrades, Brink said. The firm’s US fishmeal operations have much quicker turnaround times and better catches and production, he said.
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