Oceana Group, Owner of Lucky Star, Reels in Profits Amid Poultry Sector's Struggle

The tide appears to be turning in the diverse landscape of South Africa's food industry sectors, where one's misfortune becomes another's bounty. While the South African poultry industry is weathering the storm of a catastrophic avian influenza outbreak, Oceana Group – the stalwart in the fishing sector and owner of the renowned Lucky Star brand – has announced a substantial profit increase, signaling a period of robust economic health for the maritime industry.

In an insightful interview with Bruce Whitfield, Neville Brink, the CEO of Oceana, shed light on how this sharp contrast between industries is shaping the company's current market performance and strategic direction. Confronted with an avian flu that upended their conventional competition, Oceana has not only kept afloat but thrived, marking a headline earnings rise of nearly 29% to R980 million for the year ending September 30, 2023.

Fueling Oceana's financial upsurge is its U.S. fishmeal and fish oil division, which saw operating profits climb by a staggering 30%. But it is not just international ventures contributing to these banner results. As Brink elucidates, the predicament in the poultry sector, characterized by escalated prices due to diseased livestock and reduced supply, compels consumers to pivot to alternative protein sources, boosting Oceana's fish product sales.

Brink explains the brand's strategy amidst the turmoil: "Our main competitors are not other pilchards, but the chicken, the eggs, the polonies—the affordable proteins. As they're under pressure and their prices climb, we endeavored to stabilize our prices." This decision to maintain pricing positions Oceana advantageously against protein alternatives, potentially solidifying customer loyalty and expanding their market share.

The company's strategy appears to consider even the inevitable power disruption woes that South Africa grapples with. Brink highlights that load shedding, a prevalent issue in South Africa, significantly affects the perishable goods market. "Township stores are hesitant to stock too much perishable goods due to spoilage risks. That's certainly played into our favor," Brink remarks, indicating that non-perishable goods like canned fish are increasingly becoming a safer and more reliable option for retailers.

It is the balance of keeping prices steady while competitors are forced to raise theirs that has Oceana Group staying the course – for now. "We're not under pressure to relook at prices. We'll take a view in the early part of the new year to see where our competitors are, and then decide," implies a strategic pause and reflection before any future maneuvers.

The CEO's prudent optimism resonates with the group's performance, particularly with the Lucky Star brand's growth. Sales volume of this much-favored canned fish lineup surged by 9% to 9.6 million cartons. What's more, Oceana Group's benevolence cascades to its shareholders, whose dividends grew by 25.7% to 435 cents per share for the year.

With a comprehensive portfolio encompassing the capture, processing, and distribution of a spectrum of marine offerings – from canned fish to lobster and horse mackerel – Oceana Group's commercial seas appear calm and bountiful despite the tempests buffeting related sectors. The company's cautious but evident confidence in the Lucky Star brand signifies not just enduring stability, but also potential growth and success ahead.