Thai Union’s Ambient seafood business contributed the largest share

Thai Union Group PLC is a leading producer of seafood-based food products. Starting off as a canned tuna processor and exporter in 1977, Thai Union has scaled up its product range over the years to includes tuna, shrimp, sardines/mackerel, salmon & pet food in shelf-stable, frozen, chilled, PetCare and value-added forms into its repertoire. Today, the company is the world’s largest processor of shelf-stable tuna products with annual sales exceeding US $3.7 Billion and a global workforce of over 46,000 employees. The company operates 12 production facilities across 10 countries and four continents –  France, Ghana, Poland, Portugal, Papua New Guinea, the Seychelles, Scotland, Vietnam, Thailand and the United States. The company’s global brand portfolio includes market-leading international brands such as Chicken of the Sea, John West, Petit Navire, Parmentier, Mareblu, King Oscar, and Rügen Fisch and Thai-leading brands SEALECT, Fisho, Bellotta and Marvo. Thai Union’s products are sold across three channels: branded retail; private label/original equipment manufacturer (OEM); and food services. The company has structured its business into five major product lines-  

 

·      Ambient seafood

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·      Frozen, chilled seafood and related

·      Value-added seafood

·      Marine Ingredients

·      Petcare

 

 

Thai Union posted upsetting numbers for the fiscal year 2017. Thai Union’s Ambient seafood business contributed the largest share to its revenue at 45 percent. Followed closely at its Frozen and chilled seafood business, it’s pet care & value-added divisions made the smallest contributions to annual turnover. With annual revenues of 9M in 2017, Thai Union’s latest financial performance represents a significant downturn from the years before. Net profits and dividends for the company reflect a corresponding decline. Shares traded within a range of $17-$22 in 2017 with a dividend yield of ~3%.

 

Thai Union has executed a series of acquisitions over the years; many of these aimed at increasing footprint in global markets, widening product portfolio and adding to operational capabilities through vertical integration. Most notably, the company’s recent acquisition of Red Lobster, the world’s largest seafood restaurant company, points to a determined effort at diversifying the group’s shrimp sourcing and operational risks by building a direct-to-consumer channel. Through these forward-looking innovations, shared value initiatives, M and emerging market opportunities, the company seeks to achieve a growth of USD 8 billion by 2020.

 

Serious allegations of forced labor, trafficking and human rights violations in Thai Union’s supply chain started to surface in 2015. The accusations revolved around human rights at sea and employee welfare – wage floors, benefits, age, freedom of association, the right to collective bargaining, and non-negotiable frameworks on health and safety. 

 

These preprocessors and suppliers were also found to be working with third-party employment brokers engaging illegal labor practices, sometimes even employing underage children. Most of these workers were runaway migrants from neighboring countries like Cambodia, Laos and Myanmar trafficked into slavery and debt bondage. These ‘slaves’ constituted cheap and free labor for many of the shrimp peeling factories and fishing boats constituting Thai Union’s supply chain. In late 2015, EU conducted a labor risk assessment and threatened to ban seafood imports from Thai Union unless issues of forced labor, environmental abuse and illegal fishing were addressed. The ban threatened to cost the Thai seafood industry a loss of almost $1 bn every year.

 

Many of the boats operated by Thai Union’s suppliers and pre-processors failed to meet basic safety standards and regulations; they had no proper safety equipment, these boats lacked adequate and clean food & drinking water; in many cases, there was no first-aid available and toilet facilities on-board failed to meet even basic sanitation standards.

Thai union was also accused of abusing the environment by perpetuating illegal and unviable fishing practices. Aided by Thailand’s weak fishing regulations, Thai fishing vessels continue to fish unsustainably even today; overfishing is rampant.

 

Pervasive human trafficking has sadly helped Thailand turn into one of the world’s biggest shrimp providers. Despite repeated promises by businesses and the government to clean up the country’s $7 billion seafood export industry, abuse is rampant. Cited complicity between business owners and Thai authorities along with widespread corruption has further exacerbated the situation. Policing of fishing boats continues to remain sporadic. The peeling sheds that supply to major Thai seafood companies are supposed to be certified and inspected, but the stamp of approval does not always seem to prevent abuse.

 

Shrimp from these slavery-tainted Thai supply chains has found its way into the supply chains of major U.S. food stores and retailers such as Wal-Mart, Kroger, Whole Foods, Dollar General and Petco, along with restaurants such as Red Lobster and Olive Garden. It also entered the supply chains of some of America’s best-known seafood brands and pet foods, including Chicken of the Sea and Fancy Feast, which are sold in grocery stores from Safeway and Schnucks to Piggly Wiggly and Albertsons. As with most cases in complex supply chains, buyers at these entities are at a loss as to the origins of the shrimp.

 

References –

 

1.     https://apnews.com/8f64fb25931242a985bc30e3f5a9a0b2/ap-global-supermarkets-selling-shrimp-peeled-slaves

2.     https://www.undercurrentnews.com/2015/08/28/thai-union-named-in-slavery-lawsuit-filed-against-nestle/

3.     http://investor-th.thaiunion.com/home.html

4.     https://www.theguardian.com/global-development/2016/feb/25/slavery-trafficking-thai-fishing-industry-environmental-justice-foundation

5.     http://www.thaiunion.com/en/products-and-brands/our-products

6.     http://www.thaiunion.com/en/about/company/around-the-world

7.     http://www.thaiunion.com/en/products-and-brands/our-brands

8.     http://www.thaiunion.com/en/about/company/subsidiary