Resistance to fresh fish price hike sparks new frozen merchandising push.
Make no bones about it, seafood sales are flat in North America. After cresting above 16 pounds in 1987, per capita consumption of fishery products in the USA fell to its lowest level in seven years during 1991, down to 14.9 pounds. Nonetheless, imports rose 4.3% to $9.4 billion. Shrimp purchases from foreign suppliers alone were put at $1.8 billion.
But the tide has surely turned. It was barely five years ago when some in the trade were optimistically predicting that the average American would be eating over 20 pounds of seafood by the year 2000. They wondered where the 5.5 billion pounds of finished weight would come from to satisfy such hunger. Now the chief concern is how to sell the available supply to a price-sensitive market.
Fish producers, retailers, wholesalers, importers, exporters, distributors and brokers met in Seattle, Washington, recently to compare notes on the state of the industry. Those attending the FMI-sponsored Seafood Merchandising Conference underscored three primary reasons for the sales slump: price resistance heightened by economic recession; negative press publicity about seafood safety; lack of an ongoing generic promotion program.
Price was singled out by most as the main stumbling block to stimulating greater demand. "At a time when products in other supermarket departments are being marked down, a customer thinks twice about paying more for fish," Jim Charles, meat director of Charley Brothers Co., told Quick Frozen Foods International. "They can't understand inflated prices at seafood service counters when signs of disinflation and deflation are seen elsewhere in the store."
Larry Daerr, seafood merchandiser of the New Stanton, Pa.-based company, nodded in agreement. "We've seen orange roughy jump from $2 to $4 a pound, and black tiger shrimp has risen by $1 a pound during the past year. At the same time, chicken breasts can be bought for $1.99 a pound and leg quarters on special are being rung up for as little as 29 cents."
Peter Gryska of H.E. Butt Grocery Co. summed up the situation this way: "Seafood is too damn expensive. But the paradox is that we're not making enough money on it. . .Something must change, because prices are too high and profits are too low."
"What's happening is there are just too few fresh species for the global demand that exists. And today's weak dollar internationally guarantees higher prices in the United States," explained Jim Faro, president of Holliston, Mass.-based Sea Star Seafood Corp. "Frozen is needed to keep prices down."
But, like Daerr, Gryska remained optimistic about the fish business, urging retailers to think positively and push the health attributes associated with seafood consumption. "You have to romance the product by creating aura and atmosphere. It's not just a dead piece of fish, but rather special food from faraway places like Norway and New Zealand. Assault the senses of your customer. Promote 'Low Fat Fish' or 'Low Cholesterol Fish of the Month.' Play it up in signage that is as big as the price."
The San Antonio, Texas-based fishmonger noted that his stores place lower-priced cuts in the center of the case rather than high-priced items. He goes out of the way to prominently display at least one $2.99 special at all times. And lobsters are offered at break-even in order to build traffic. "I don't know of anybody who makes money on them anyway," rationalized Gryska.
Shift to Frozen
While properly managed fresh fish departments certainly have colorful eye appeal, the truth is that an increasing number of bottom line-driven retailers are giving up on the loss leader and yanking high overhead refrigerated cases out of their stores. But sales of traditional retail packs of frozen fish have not gained in turn. As a matter of fact, the market for prepared frozen seafood was down 4.6% to $772 million in the USA last year, according to calculations from Information Resources Inc.
Nevertheless, a great deal of emphasis is being given to nontraditional frozen fish fare merchandised in see-through vacuum packs and other formats. "You have to adapt today to survive," said Christopher Darmody, seafood director of Shaw's Supermarkets, East Bridgewater, Mass. "We have built a frozen trade as an extension to our fresh cases. Since club stores have emerged as big competitors, we've taken value packs and placed them in the frozen department."
As supermarket operators increasingly wrap fish in-house to be sold frozen, at least one big name packer of prepared frozen fish for the USA retail market has come up with a new design in fillet packaging to hook consumers who prefer to eat seafood in restaurants. Knowing that eye appeal is "buy appeal," General Mills is now showing customers exactly what they will get if one of the five-item entrees from its new Gorton's Select range is purchased. Transparent Fresh Lock vacuum packaging film is utilized, thus permitting sauced or breaded fish to be clearly seen against an aqua-blue tray holder. Retailing for $3.59 per five-ounce offering are such varieties as: Seafood Stuffed Sole, Country Herb Sole, Lemon Thyme Crumb Cod, Crunchy Breaded Flounder, and Cajun Style Catfish.
"We've giving consumers restaurant-quality seafood with the convenience of dining at home -- and at half the cost," pointed out Mark Lamothe, marketing director.
General Mills has also revamped graphic design and photography for Gorton's products sold in traditional paperboard packaging. Banners now proclaim information such as "90% Fat-Free" on boxes of Natural Cut Breaded Fish fillets and "Value Pack" on bonus portion polybags of Batter Dipped Fish Portions.
Van de Kamp's has taken a similar approach with its Crisp & Healthy line of fish sticks. Customers' eyes are grabbed by the message: "New 97% Fat Free. . .Baked Not Fried." The Long Beach, Calif-headquartered company also offers a value pack featuring 44 breaded fish sticks.
ConAgra has made a new splash with its Healthy Choice brand. Offered is a 6.4 oz. box of Breaded Fish Sticks that sells for $2.59. Eight pollock-based units come per pack, with each three-stick serving containing just 120 calories, 20mg of cholesterol and 350mg of sodium.
The renewed attention given to the frozen section by processed fish packers is encouraging some retailers to provide more shelf facings. However, non-packaged frozen and previously frozen seafood continues to be where the big money is. By one account, solid frozen and slacked out products respectively represented 20% and 23% of USA retail seafood department sales last year. That amounted to combined receipts of $3.63 billion. And frozen's share of the much larger foodservice fish market was estimated to be over 60% of the $18.26 billion total.
Sea Star's Jim Faro urged supermarket buyers to take advantage of the versatility of frozen fish supplies. "We're promoting IQF Nile perch in 22-pound shatter packs as an alternative to orange roughy, which is now a relatively expensive $4 per pound commodity item. Also, wahoo and mahi-mahi by-catches from long-line vessels can be bought for about $2 a pound and promoted at retail for $3.99."
If shoppers complain that $6 a pound for fresh cod is too dear, then try interesting them in fresh-frozen Pacific cod, suggested an Alaskan factory trawler operator. "We pack them on board and are receiving 70- to 80-cents a pound for our trouble at the moment. So you figure out the handsome profit that everybody except me seems to be getting."
Seattle Does it Right
An inspection of Seattle-area supermarkets shows just how effectively frozen seafood can be merchandised right alongside fresh fare. At Queen Anne Thriftway, for example, previously frozen Shelikov Strait Alaskan weathervane scallops are tray-wrapped and sold next to fresh silver coho salmon fillets. Colorful in-case signage spells out for consumers: "Frozen at sea aboard the fishing boat Provider. No preservatives!"
Elsewhere in the refrigerated case could be found tiger prawns from Asia. Priced at $7.99 a pound for 26/30 counts during late August, they were clearly identified as "been frozen."
"At this time of year seafood accounts for 4 1/2% to 5% of total store sales, and a lot of it is frozen," said Richard Cavanaugh, seafood manager. "I stay away from so-called fresh scallops entirely in favor of pre-frozen. And on Sundays we stock only frozen fish throughout the department rather than run the risk of selling a soggy product."
Cavanaugh explained that in a fish-savvy market such as Seattle customers are typically pre-sold on the reality that frozen products are often fresher than fresh. "They understand just how long fishing boats are out on the water and know that a true fresh fish is one that you've just unhooked," he said. "We sell both, of course. But a premium is exacted for the seafood that is picked up daily at the airport. Frozen offers a much better value and a stable supply."
Commonwealth Development OKs Shrimp Culture Projects
Shrimp aquaculture ventures in three countries are being financed by the Commonwealth Development Corporation of the United Kingdom. The largest line of credit -- some |pounds~5 million -- is going to the Shipping Credit and Investment Co. of India to assist export-oriented shrimp farms.
In Nicaragua, a 318-hectare semi-intensive shrimp farm will be established near Puerto Maraxon thanks to a $1 million loan and equity investment of $400,000. The project is expected to take three years to complete, at which time it is hoped that 585 tons of product will be harvested annually. Most will be exported to the USA.
In Thailand, Mongkolwat Co. will receive additional financing to expand a successful prawn growing operation. As its 62-acre pond site has already exceeded anticipated production levels, an additional 18 ponds will be added to boost output.
Vietnam's Fish Exports Up
Seafood exports earned Vietnam $94.67 million in receipts during the first six months of 1991, according to the Vietnam News Agency. That represented a 15.5% rise over the same period last year. The harvest was put at 260,000 tons, up 3.8%.
Doughnut Hole Fishing To Take Two-Year Break
Industrial fishing for pollack in the international zone of the Bering Sea known as the "Doughnut Hole" will all but cease for a two-year period beginning Jan. 1. Trawler fleets from six major fishing nations -- Japan, South Korea, Russia, Poland, China and the USA -- have agreed to the ban.
Surveys will be carried out during the interim to determine if the resource is being overharvested. American scientists contend that intensive fishing has damaged US pollack stocks that migrate into the zone. While no reliable figures are available, statistics provided by non-US fleets show that Doughnut Hole catches have sky-rocketed form less than 182,000 metric tons in 1984 to upwards of 1.46 million metric tons in 1988.
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|Author:||Saulnier, John M.|
|Publication:||Quick Frozen Foods International|
|Date:||Oct 1, 1992|
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