Despite the high raw material costs for tuna, consumer demand remains strong enough to take on higher prices in supermarkets and restaurants.
Ex-vessel prices for H&G yellowfin tuna have risen steadily along with fuel costs, and the current selling price is up $1.50 (€1.13) to $2 (€1.51) per pound from two years ago, Fortune Fish co-founder Mark Gorogianis told IntraFish. Gorogianis is also responsible for buying tuna, the company's second largest volume fresh fish product.
Gorogianis said he has been able to pass those costs on to the consumer without problem. Tuna loins are now fetching $2 (€1.51) to $5 (€3.78) per pound more than they did two years ago, depending upon the grade. His buyers include high-end retailers, such as Whole Foods, and restaurants.
At the wholesale level, he is charging $11 (€8.31) to $19 (€14.36) for fresh tuna loins, depending on the grade. No.2 grades are going for $11 (€8.31) to $12 (€9.07) and No.2+grades for $13 (€9.83) to $17 (€12.85). He charges $18 (€13.60) to $19 (€14.36) for No.1 grades. The retailers and restaurants he sells to, of course, add their own markup.
Despite these higher prices, demand for the species has increased in recent years at the retail level, with sales rising from 10 percent of his total sales ten years ago to 30 percent today, he said.
If ex-vessel prices continue to rise, he will raise prices further.
“We’ll have to,” Gorogianis said.
But Fortune is always engaged in efforts to keep their costs and selling prices down, he said. They have always bought in bulk from large suppliers and have found new ways to save costs.
“We’re trying to negotiate better freight rates with some of the key airline companies we use, like United and Southwest and Delta,” said Gorogianis, who is also Fortune’s main tuna buyer. “We also utilize our loyalty to certain air shippers to negotiate better freight rates.”
High fuel prices, natural disasters and strong demand for tuna loins from China have all converged to bring supply down dramatically, sources told IntraFish.
In the Gulf of Mexico, where Gorogianis sources tuna, the fleet has dropped from 200 boats before Hurricane Katrina in 2005 to 80 boats today.
Demand from China has also contributed to a lack of supply, Phil Rush, Jensen Tuna vice president of sales and marketing, told IntraFish.
“China has really come on strong with their economy,” said Rush, who sells 90 percent of his fresh, H&G tuna to distributors such as Gorogianis. He sources from the Gulf of Mexico as well as China, and has stopped shipping tuna over from Vietnam 6 months ago "because the (delivery) price was so high."
Hurricane Katrina ransacked the Gulf’s tuna fishing fleet, and many fishermen never recovered the costs lost from the disaster. The cost of bate and steadily rising cost of fuel made it difficult for many to get back into the business, Gorogianis said.
Tuna operations are highly dependent on fuel in order to catch the highly migratory species, and the price of bate – squid, mackerel and sardines – has gone up 100 percent, Gorogianis said.
When the BP oil spill hit the gulf in 2010 it brought more challenges to the gulf fleet.
“That hurt us,” Rush said.
The spill also offered tuna fishermen a more attractive business alternative to fishing.
“A lot of these guys made more money skimming oil then they did fishing...” Gorgianis said.