Thai Union’s profit tumbles in Q1 2023, despite surprise boost from Red Lobster

Thai Union saw a decline in its total profits in the first quarter of 2023, despite a surprise boost from Red Lobster.

Profits fell mainly due to the lower sales combined with high tuna and salmon prices resulting in softer demand, according to Thai Union’s quarterly report, released 3 May.

Red Lobster, which Thai Union acquired in 2020, contributed a profit of THB 20 million (USD 590,700, EUR 535,120) to Thai Union’s bottom linein Q1 2023, “thanks to [the] seasonality and success of Lobsterfest campaign” compared to its THB 335 million (USD 9.9 million, EUR 8.9 million) loss in Q1 2022. Thai Union is considering an exit from Red Lobster after multiple years of losses, the Bangkok Post reported in March 2023.

In an effort to turn around lagging sales, in February, Red Lobster launched a new frozen line, a core piece of the restaurant chain’s multi-pronged turnaround plan. The launch included packaged retail products now available in 5,200 stores and online in the U.S. Thai Union said the profit earned by Red Lobster proves its turnaround business plan for the seafood restaurant chain has “shown positive progress.”

Red Lobster’s recovery was not enough to save Thai Union from a disappointing quarterly result, however. Its gross profit in the period dropped 22.6 percent year-on-year to THB 4.9 billion (USD 144.7 million, EUR 131 million) due to “lower sales volume across all categories, which results in higher production cost per unit, negative category and product mix, and impact from falling freight prices,” it said. Rising costs for raw materials also impacted Thai Union’s gross profit in the first three months. 

“We expect the first quarter to be the softest period of this year as a result of a high sales baseline from the first quarter of 2022 together with high inventory level at our customers, and logistic normalization,” Thai Union CEO Thiraphong Chansiri said. “However, we remain optimistic about 2023 growth, as we have already seen signs of improvement in the second quarter and expect normalization in the latter half of the year as the trend towards the consumption of seafood and healthier proteins continues to rise globally.”

Moving forward, Thai Union will benefit from a recent decision from the U.S. Department of Commerce not to impose any antidumping duties on Thai Union’s shrimp imports. And Thai Union is counting on a payoff from a bet it has made on alternative proteins through its OMG Meat brand and through vegan tuna analogs sold under its flagship John West brand. According to Thai Union Alternative Protein Managing Director Maarten Gereats, Thai Union’s ambition “is to become a powerhouse in Asian plant-based manufacturing.”

Gereats said the company has learned a lot from its initial foray into the plant-based space.

“The question we need to ask ourselves is: do we mimic what’s out there now or do we create new? I think we should be creating new product formats and not always be comparing these to the conventional [or] existing ones,” he told Green Queen. “In the future, I think we will have a broad spectrum of solutions: real tuna, plant tuna, cultivated tuna, and hybrid tuna on the shelf, a multitude of alternatives will be available to consumers. Each will have its own space – depending on application, use, and price. As an industry, we need to think differently. What matters is that it needs to be a good eating experience, it doesn’t need to be a one-to-one equivalent. And then you get away from always comparing on price, taste, texture, or nutrition.”

Nonetheless, Thai Union quarterly net profit tumbled ... 

Photo courtesy of Red Lobster