09Mar2011
SEAFOOD RISES, BUT SO DO COSTS
Supermarket sales of frozen fish/seafood climbed 6.7% to $247.5 million in the 12 weeks ended Jan. 23, while shrimp fell 1.6% to $314.1 million, according to SymphonyIRI Group, the Chicagobased market research firm.
Private label, the leader in both fish and shrimp, posted higher prices per unit and per pound than the average for their respective sub-categories. (See chart.)
Consumer interest in healthy eating and sustainability, along with the recession-induced shift from restaurant sales to in-home dining, have contributed to the strength of higher-end, value-added products as well as the category as a whole.
15.8 POUNDS
The most recent data from the U.S. Department of Agriculture, from 2008, puts Americans’ per capita annual seafood consumption at 16.0 pounds, versus 73.3 pounds for poultry and 110.6 pounds for red meat. The National Fisheries Institute (www.aboutseafood. com) says per capita consumption dropped to 15.8 pounds in 2009. It adds that total consumption rose by 45 million pounds, but population increases lowered the per capita figure. Some 88% of consumption is accounted for by the top 10 varieties: shrimp, canned tuna, salmon, alaska Pollock, tilapia, catfish, crab, cod, clams and pangasius, respectively.
Some observers believe that sales, impacted by slow economic recovery, may shift from higher-priced seafood like lobster to less expensive farmed products. (In the most recent 12 weeks, shrimp’s unit price averaged $8.66, versus $5.55 for fish/seafood, according to SymphonyIRI Group.)
“The primary challenge in seafood is that it is not inexpensive and the unit costs are higher than any other protein out there,” says Steve Lutz, exec vp, The Perishables Group (www. perishablesgroup.com), Chicago.
“Additionally, the seafood industry doesn’t have the same value-priced options that are readily available in beef and chicken.”
“One of the big debates on the supply side is how much the market will bear in terms of price,” notes James Berger, director of sales and marketing, Beaver Street Fisheries (www. beaverfish.com), Jacksonville, Fla. His company has invested heavily in sustainability initiatives, acquiring plant certification from theAquaculture Certification Council.
Sustainability is increasingly important to both consumers and retailers. The Food Marketing Institute’s Sustainable Seafood Working Group has supported certification programs, and some retailers have taken steps of their own. For example, Safeway has removed “red list” species such as Bluefin tuna from its inventory and Whole Foods’ has partnered with the Marine Stewardship Council. Whole Foods has also helped develop and implement a color-coded rating program that provides shoppers with sustainability information for wild-caught seafood not certified by the MSC.
SUPPLY CRUNCH
“Supply is a real issue as the world moves toward aquacultured products like shrimp and tilapia. “Farmers are finding it difficult to make money due to exchange rates or other factors and have gone to other crops or raised prices substantially” according to Berger. To compound the problem, China virtually shuts down for three weeks just before Lent. “So the highest demand period coincides with the lowest supply period. We see more price increases coming,” Berger says, noting that lower prices might not appear before summer after farmers reseed the ponds and start to pull full-size fish. “The question is how much consumers are willing to pay,” he says.
Lutz agrees that price will be a challenge. “But recently we’ve seen value defined in different ways. In
the teeth of a deep recession in the first half of 2010, items like lobster and crab had spectacular sales results. Consumers were responding to some of the lowest prices they had seen in some time. They weren’t low priced — but were a value.”
Low prices alone won’t bring higher seafood consumption, according to Lutz. “A consumer who doesn’t eat much seafood is not going to become a convert just because of lower prices. There needs to be more interaction between retailers and consumers in this category and more effort by processors and associations to put out messages about how quick, easy and healthy seafood is to fix.”
SKITTISH HOME COOKERS
Consumers have always been skittish about preparing seafood at home. Morever, brand loyalty has not been particularly strong, so Beaver Street Fisheries has launched its own consumer website, www. seabest.com, to promote its Sea Best line. “We want to do what Tyson did with chicken — become a household name,” says Berger.
SeaPak promotes its products as restaurant-quality meals that can be prepared easily and within consumers’ budgets, notes Scott Corey, senior brand manager, SeaPak Shrimp Co. (www.seapak.com), St. Simons Island, Ga. Last fall, SeaPak introduced bite-sized Popcorn Shrimp in 22-ounce bags with about 50 pieces and a suggested retail of $6.49.
For Yukon Delta Fisheries Development Association (www.ydfda. org), consumer education seems to be less of an issue, according to Ruth Carter, marketing and sales manager, for Anchorage, Alaska-based Kwik’pak Fisheries (www.kwikpakfisheries. com). “Our fish is so unique that people look forward to it, so we can have a hard time keeping the stores stocked,” she says. The prized Yukon River salmon is being shipped now in fillets, and headed and gutted. “We’ve also started a new smoked program which is beginning to get some traction. It’s shipped frozen then sold out of the refrigerated case in six-ounce packages.”
Private label is an increasingly important segment for Newport International (www.newportintl. com), St. Petersburg, Fla. Retailers have been calling about crabmeat, as well as tilapia, pollock and mahi, says Alex Malaguti, vp of marketing. However, the company’s own Jack’s Catch label is doing well and Newport is ready to launch a line of fish and surimi in one-pound bags. The company is also developing ready-to-eat dinners in containers that include seafood, vegetables and sauces.
Vendors agree that some buyers perceive seafood as simply a commodity. As Malaguti puts it, “They want to feel they are buying the right product with all the certifications from the right people. But beyond that, they sometimes feel that fish is fish.”
There are nuances here. “With crabmeat. retailers want big lumps, but also sustainability and lowest price. They could buy more effectively, abate price spikes, and offer more sustainable products if they bought a mix of larger and smaller lump SKUs,” says Malaguti. “Since everyone wants Jumbo Lump but the crab does not yield a lot of it, grades like Lump and Special, although just as delicious, become harder to sell. That creates an inventory and logistical bottleneck for suppliers.”
