BUSINESS/ECONOMY

Star-Kist’s revival

TOM FENNELL September 28 1987
BUSINESS/ECONOMY

Star-Kist’s revival

TOM FENNELL September 28 1987

Star-Kist’s revival

The media nicknamed the scandal “Tunagate.” In September, 1985, an angry debate erupted in the House of Commons following media reports that then-federal fisheries minister John Fraser had allowed StarKist Canada Inc. of Toronto to market more than one million cans of tuna that government fish inspectors had rejected in 1984 as “unfit for human consumption.” The minister resigned within days, but not before the government had ordered the recall of the allegedly rancid fish. The scandal also forced the company to close the St. Andrews, N.B., plant that had processed the fish. The closure cost 450 people their jobs. But two years later another development in the saga is about to unfold. Next month Star-Kist, a wholly owned subsidiary of U.S. food giant H. J. Heinz Co. of Pittsburgh, Pa., will begin processing tuna at its St. Andrews plant again.

Officials with Star-Kist maintain that the disputed tuna was healthy. And they blamed the debacle in part on personality conflicts between plant management and inspectors from the department of fisheries and oceans (DFO), some of whom, they claimed, simply did not like fish. But industry observers say that whether the trou-

bled plant remains open will depend not only on the results of DFO quality tests but also on how forgiving Canadian consumers are. Meanwhile, the company is fine-tuning its processing line, hiring workers and preparing a multimillion-dollar advertising campaign to reclaim its lost share of the market. Star-Kist vice-president of marketing Ian Glen said that there is no precedent in North American foodmarketing history to match the comeback attempt that Star-Kist is about to launch.

The road back to market leadership will be long and expensive. In 1985 StarKist and its three associated brands accounted for close to 50 per cent of all tuna sales in Canada. Its nearest rival, Cloverleaf, distributed by Vancouverbased British Columbia Packers Ltd., held 30 per cent. But since the disappearance of Star-Kist’s products from the market in January, 1986, Cloverleaf has moved to first place with about 40 per cent of the market, and after just three years Ocean Fisheries Ltd. of Vancouver has won a 14-per-cent share. Smaller brands have carved up the remaining market.

Glen said that before Tunagate, the firm was spending about $1 million annually on advertising, but it now plans

to spend several times that amount. Although Glen would not disclose details of the promotion, he said that the company “has some serious things to say about the quality of our product” and, as a result, it will likely get rid of Charlie the Tuna—the comical cartoon character that had anchored its advertisements in Canada since 1980.

Star-Kist has been buoyed by findings in its own market studies. Groupings of 600 people in various cities across Canada have been polled six times since Star-Kist withdrew from the market 19 months ago, and company officials say that 70 per cent of those questioned replied that they would try Star-Kist again. As a result, Star-Kist president Gerald Clay said that the battle for market share could become intense as consumers shift back to Star-Kist. Indeed, he said that Cloverleaf’s advertisements already make subtle references to Star-Kist’s quality problems, such as its suggestions that quality is not a matter of “luck.”

But Paterson Todd, B.C. Packers senior vice-president of sales and marketing, said that Cloverleaf would continue to stress the high quality of its own product line in the coming ad war with Star-Kist. David Johnston, Ocean’s vice-president of marketing, said that his firm has a secret strategy to fight off Star-Kist’s revival.

As well, Star-Kist’s Clay says that the company has taken steps to improve quality control at the 20-year-old St. Andrews plant. He added that the most important change is a new cutting line that keeps tuna parts bound for fertilizer and pet food clearly separated from tuna that will be packed for human consumption. Meanwhile, Star-Kist is still trying to sell all the tuna that DFO inspectors declared rancid in 1984. A new round of sensory inspections of that tuna, including looking at it, smelling it, feeling it and tasting it, was conducted during the past 12 months. Federal inspectors have found that five million cans of the 20 million that Star-Kist held off the market during the dispute can be sold. The same tests concluded that the tuna in the remaining 15 million tins was “decomposed,” said Clay.

However, his company has disputed that finding and, under an arrangement reached with the federal government last April, the quality of the remaining tuna will be determined by a final and binding chemical test. If it passes that test, which is scheduled to begin later this fall, the tuna will be sold outside Canada—although the company will not say where it will be shipped. In the meantime, Charlie the Tuna will likely remain on the sidelines as the battle for market supremacy rages.

TOM FENNELL

with correspondents’ reports