Former StarKist Chief Returns As Del Monte Completes Sale To Dongwonff

By Teresa F. Lindeman

When word got out that Del Monte Food Co. was considering selling off its StarKist brand, Donald Binotto heard from two different organizations that thought that since he had run the business in the past he might be interested in doing it again.

The Cranberry resident was. He decided to throw his lot in with South Korean company Dongwon Industries Co. instead of a venture capital group also interested in bidding on the business. That turned out to be a good move.


Donald J. Binotto, president and CEO of StarKist, at the new StarKist headquarters

On Monday, the $359 million deal closed, giving Dongwon entree to the U.S. market and getting a problem off San Francisco-based Del Monte’s hands.

Mr. Binotto, who this summer was named president and chief executive officer of StarKist, told his 35-person staff at the new headquarters on the North Shore that they had received a once-in-a-lifetime opportunity. “We are, as a group, excited,” he said in a telephone interview.

That despite his concession that the packaged tuna business overall had shown a slight decline last year after a couple of flat years. Del Monte officials more than once complained about high fish prices and the struggle to compete in an industry that has consumers trained to look for the cheapest can.

Canned tuna unit sales in the United States dropped more than 7 percent in the 12 months ended Sept. 7, although dollar sales rose about 1 percent, according to Information Resources Inc., a Chicago-based market research firm that tracks data from supermarkets, drugstores and mass market retailers, excluding Wal-Mart.

”We will definitely get this business back on track,” said Mr. Binotto, who was part of the team that put tuna in a pouch under Heinz’s ownership. He’s promising new product introductions within the next six to nine months using ideas borrowed from Europe and from South Korea. “We’re going to steal shamelessly from the globe.”

Charlie the Tuna also may get a higher profile. Plans call for investing a minimum of $15 million to $20 million annually into marketing.

Within two years, the Pittsburgh headquarters could employ as many as 100 people, he said. Annual sales are now in the range of $550 million to $560 million.

The decision to put the business here wasn’t just about being convenient for Mr. Binotto. A number of employees with experience happen to be here as a result of the Heinz and Del Monte connections. Many became available when Del Monte decided to move some functions to San Francisco.

Del Monte announced this week it had transferred to Dongwon or eliminated a total of 33 salaried positions as a result of the transaction. The company still has about 400 employees here.

Another reason to locate in Pittsburgh is that two-thirds of the customer base for StarKist lives east of the Mississippi River, said Mr. Binotto.

The Canonsburg native first got a taste of the tuna business about two decades ago. An Indiana University of Pennsylvania graduate, he was sent to StarKist’s facility in Terminal Island, Calif., to work in finance. He picked up experience in other areas, at one point managing the company’s fleet of eight fishing boats and then working in marketing and sales.

He moved with StarKist administration to Newport, Ky., and in the late 1990s began to lead the business, which was owned by the H.J. Heinz Co. When Heinz Chairman Bill Johnson moved StarKist headquarters to Pittsburgh, Mr. Binotto came home.

The seafood business changed hands six years ago when Heinz sold it along with other businesses to Del Monte. Mr. Binotto continued to lead StarKist until 2005. “It was a difference in philosophy and I respect that,” he said.

Barred from competing in the canned tuna business, he launched a small fresh tuna operation. But now, he’s plunged back into familiar StarKist territory and declares himself thrilled by the entrepreneurial freedom offered under Dongwon’s ownership.

The South Korean company has several subsidiaries and assets that Mr. Binotto believes will help it better understand and weather the volatile fish market. For one thing, Dongwon has a fleet of 36 fishing boats that should help stabilize supply chain issues.

Officials at Dongwon may be better able to cope with the years when prices shoot up 200 percent only to tumble again the next, said Mr. Binotto.

The StarKist sale included manufacturing networks in American Samoa and Ecuador, in addition to the Terminal Island site.

In official statements, Dongwon Enterprise Vice Chairman Ingu Park said the acquisition should provide cost savings and further the company’s globalization strategies. StarKist will be developed as a comprehensive seafood products provider, rather than mainly a canned tuna maker, he said.

The South Korean company noted the 65-year-old brand was a well-known name in American homes. “We will continue to leverage the value this brings as we build upon its 37 percent market share and No. 1 position in the shelf stable tuna category in the United States,” said Mr. Park.

Tuna offerings in the grocery store already have international connections. Thai Union International has been sole owner of Chicken of the Sea since 2000. Bumble Bee is part of the holdings of Toronto-based Connor Bros. Income Fund.

The new StarKist venture launches just as the U.S. economy is in turmoil. Mr. Binotto said that was a concern but that StarKist should be able to present its products as a good value that can offer more nutrition than fast-food items.