Oceana Group has raised concerns over declining sales of its popular Lucky Star canned pilchards, attributing the downturn primarily to a shortage of fish supply.
The company disclosed the challenges in its trading statement for the 11 months ended 31 August 2026. The announcement comes just weeks after the Competition Commission warned that it may investigate possible price gouging, particularly at the retail level, following findings that certain private-sector pricing practices continue to keep living costs elevated despite easing input costs.
Competition Commission flags high food prices
In its Cost of Living Report 2026, released on September 4, the Competition Commission found that prices of essential goods and services remain at record levels even where producer costs have declined.
The report highlighted a troubling trend in food products commonly consumed by lower-income households. Among these was canned pilchards, a vital source of affordable protein for many South Africans. The retail price of a 400g can rose to R29.15 in June 2026, despite significant reductions in producer prices.
READ: Compcom threatens action as food, data and utility prices hit record highs
Should the commission launch the inquiry, Oceana might be one of those companies which could be called in to testify.
Mixed results for Lucky Star
Oceana said the group’s overall performance was supported by stronger contributions from Lucky Star Foods, Fishmeal and Fish Oil (USA) operations, and its wild-caught seafood business. These gains were partly offset by persistent challenges in the Fishmeal and Fish Oil (Africa) segment, where lower production and sales volumes resulted in a substantial operating loss.
According to the company, Lucky Star delivered a mixed performance during the reporting period, posting a strong first half before slowing considerably in the second half through to the end of August.
“Shortages of frozen fish raw material constrained canned pilchard availability and slowed sales momentum. Total sales volumes declined by 5%, driven by a 9% decrease in canned fish volumes, as limited inventory prevented the business from fully meeting demand,” the company said in a statement published on the Stock Exchange News Service (SENS).
READ: Gauteng health tackles food supply challenges at facilities
Production challenges increase costs
Strong canned meat sales helped soften the impact of weaker pilchard sales. However, shortages of raw materials led to a 60% decline in local canning production volumes.
The reduced production placed upward pressure on per-unit manufacturing costs, as fixed production expenses could not be fully absorbed. Despite these challenges, operating margins benefited from improved realised sales values, lower freight and inventory-holding costs, a stronger sales mix, and increased volumes of locally caught pilchards.
Inventory levels at the end of the period were significantly lower than in the previous year, mainly due to constrained fish supplies.
African fishmeal and fish oil business under pressure
The group’s African fishmeal and fish oil operations experienced a sharp decline during the period.
Production volumes fell by 73%, driven by lower industrial fish landings and reduced pilchard trimmings resulting from lower cannery production. The smaller production base significantly increased unit production costs.
Sales volumes also dropped by 72% because of reduced production and product availability. While average fishmeal and fish oil prices increased by 31% in rand terms, the higher pricing was insufficient to offset the impact of lower volumes. Consequently, the segment’s operating loss widened compared with the interim reporting period.
Stronger performance from US operations
In contrast, Daybrook, Oceana’s US fishmeal and fish oil business, delivered improved results, supported by higher sales volumes and stronger US dollar pricing.
Operational improvements were partially offset by the impact of a stronger rand. Gulf menhaden landings strengthened in recent weeks, lifting cumulative landings to week 21 to 7% above the corresponding period in 2025 and 11% above the five-year average.
Fish oil yields for the 11-month period were marginally lower at 10.7%, reducing some of the benefits from improved landings. The 28-week fishing season is scheduled to close at the end of October 2026.
Sales volumes increased by 16%, aided by stronger landings and higher opening inventory levels. While average fishmeal prices remained largely unchanged in US dollar terms due to the timing of forward-contracted volumes, average fish oil prices rose by 24%, boosted by stronger global prices during the second half of the reporting period.
Closing inventory volumes increased by 6%, largely due to improved landings.
Wild-caught seafood division recovers
The group’s wild-caught seafood segment also reported improved performance, driven mainly by a strong recovery in the horse mackerel business.
The division benefited from fuel-hedging gains, with 70% of forecast fuel requirements for the financial year hedged across most of the fleet.
The hake fleet produced solid results, supported by increased days at sea and improved catch rates. Although higher unhedged fuel costs weighed on profitability, sales volumes increased by 5%.
European demand and pricing for hake remained firm; however, the stronger rand against the euro partially diluted gains.
Horse mackerel strength offsets rising costs
Catch rates for horse mackerel improved significantly, particularly in South African waters, helping absorb higher fuel costs while total fishing days remained stable.
Sales volumes increased by 8%, supported by strong market pricing amid supply shortages, particularly for smaller-sized fish, which remain the segment’s primary profit driver.
The squid business continued to struggle during the reporting period, recording an operating loss due to persistently weak catch rates across the industry
Oceana expects to release its financial results for the year ending 30 September 2026 on or about 26 November 2026 via the Stock Exchange News Service.
The company noted that the financial information and forward-looking statements contained in the trading update have not been reviewed or reported on by the group’s auditors.
- Oceana Group has raised concerns over declining sales of its popular Lucky Star canned pilchards, attributing the downturn primarily to a shortage of fish supply.
- The company disclosed the challenges in its trading statement for the 11 months ended 31 August 2026.
- The announcement comes just weeks after the Competition Commission warned that it may investigate possible price gouging, particularly at the retail level, following findings that certain private-sector pricing practices continue to keep living costs elevated despite easing input costs.
- Competition Commission flags high food prices In its Cost of Living Report 2026, released on September 4, the Competition Commission found that prices of essential goods and services remain at record levels even where producer costs have declined.
- The report highlighted a troubling trend in food products commonly consumed by lower-income households.
