Lucky Star-owner rides food inflation wave

Oceana Group, owner of the Lucky Star brand, expects to post strong results despite a difficult operating environment and some operational changes to increase its in-house manufacturing capacity. 

The company released a voluntary trading update for the 11 months to the end of August 2024 on Monday, revealing strong demand for its core Lucky Star brand and its fish oil in the US. 

Lucky Star sales declined 2% in the period on the back of record volumes sold in the previous 11-month period when the brand saw sales of over 9 million cartons. 

Oceana said Lucky Star continues to benefit from South African consumers hunting for value, with the brand’s affordability driving its strong sales. 

Lucky Star aims to optimise its canned meat and chicken liver investments to leverage its brand and distribution to expand outside of its traditional pilchard business. 

The brand has in recent times driven its expansion into other canned foods, taking on the likes of Koo, with its baked beans and chakalaka products. 

Oceana said Lucky Star’s production volumes were negatively affected by the earlier-than-usual closer of both its West Coast plants to implement factory upgrades. Volumes declined by 26% for the period. 

However, the company said these upgrades have resulted in enhanced efficiencies and improved margins within the pilchards business. 

Its local fishmeal and fish oil business came under pressure as adverse weather affected anchovy landings. This was partially offset by higher prices and a weaker rand. 

Daybrook, Oceana’s US business, also benefitted from a slightly weaker rand over the period. Fish oil production in the US grew strongly and was boosted by record-high prices. 

The main drag on Oceana’s performance was its wild-caught seafood division, with its Desert Diamond vessel being unable to fish for most of the 11-month period due to a major technical failure. 

This resulted in horse mackerel sales volumes in South Africa declining by 84%. This was compounded by a poor performance from the same business in Namibia. 

The company’s results for the year ending 30 September 2024 are expected to be released on or about 25 November 2024.