Cannery row: Spanish fish processors are looking to expand, and Latin America is the perfect springboard.
Spanish canneries produce more canned tuna than any other European Union country, and they are now setting their sights across the Atlantic to Latin America, the United States and Canada. "With globalization, we can guarantee the supply of our raw materials, serve domestic markets and lift our capacity and productivity while cutting costs:' says Juan Vieites, director of Spain's canneries' association.
Spanish canneries export half of their production. Of that, 16% is bound for Latin America and the United States. Establishing a physical presence in Latin American countries is vital for growth and to become more competitive, executives say.
"Being in Europe generally makes it more difficult to get to markets such as Mexico, the United States, Canada and South American countries, especially in Mercosur," says Vieites. "It's very important we position ourselves in Latin America, where there is a strong cultural link with Spain and also the Pacific Ocean--where you can find 70% of our tuna-fishing resources--as it brings our fleet closer to on-land facilities and to the local markets."
Last year, two European companies took big steps toward conquering the New World. Spain's Jealsa Rianxeira bought an 80% stake in Chilean tuna cannery Robinson Crusoe, while another Spanish group, Calvo, bought an 80% stake in Brazil's Gomes da Costa. Calvo paid $40 million for the stake, making it the biggest fish cannery in South America. "For Calvo, Gomes da Costa was a great opportunity, as it gave us respect and experience in the production of canned goods. In this year alone we rolled out eight new products in Latin America," says Italian-born Matteo Candotto, marketing director at Gomes da Costa in Brazil.
Over the past year Calvo has invested $10 million modernizing and expanding facilities in Brazil and, on top of that, it spent heavily on marketing campaigns. "Brazil, through Gomes da Costa, is a platform to reach other countries, including Argentina, Chile, Paraguay and Uruguay, a market of 250 million potential consumers," says Ramon Calvo, general director at Calvo. "In Brazil, there are close to 180 million people, and tuna demand is clearly expanding, with annual sales rising 15%," Calvo says. Calvo sells more than 900 million cans of product a year in over 40 countries. In Latin America, it runs production facilities in Venezuela, El Salvador and Brazil.
Strategy. Tuna represents 60% of what the Spanish fishing industry sells in cans. Sardines represent 11% and mussels account for 10%. Spain is the second-largest producer of prefrozen, canned tuna in the world, following Thailand. To grow, Calvo says the company's production facility in El Salvador will boost sales by selling to markets within the United States. "Our strategy for the United States is to serve the Latin American communities living along the East Coast," Calvo says. "To cover this market, we've developed a specific line of products that meet the needs of these consumers."
Operating in Venezuela since 1991, Calvo is not a newcomer to Latin America, but it does see room for growth. Conservas Isabel, another Spanish cannery, is upgrading its production facilities. In 1976, Isabel opened up shop in Ecuador to begin an industrial and commercial operation in the Latin American market to supply the European market, says Andres Benincasa, the company's sales director for Ecuador.
Currently, the Ecuadoran operation sells 50% of its product in Latin America, with exports totaling more than 86 million cans. "For the time being, we are running at maximum output levels," Benincasa says. "We are amortizing investments we made on a new plant in 2001 that raised output by 50%."
PRISCILA GUILAYN * MADRID
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|Date:||Dec 1, 2005|
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