Strong marketing and weak dollar make for good year on EU shrimp scene.

Some shellfish and surimi producers cut stock keeping units to streamline inventory management and rationalize production costs. Sustainability and traceability loom large as consumer issues. Natural, healthy, savory taste and convenience trends spur new product development. Chilled seafood profits lure retailers, but frozen is still king of the foodservice court.

Boosted by seafood's healthy-eating image and value-for-money pricing for farm-raised shrimp products--thanks in part to the lower cost of dollar-denominated imports into the Euro zone from Asia and Latin America--2006 went down as a good year for marketers of fishery products in the EU. Most importers and further processors in Benelux countries visited by editors of Quick Frozen Foods International (QFFI) in early December were already celebrating the surge in traditional year-end sales even before the arrival of gift-giving Sinterklaas on the scene.

"Business has gone quite well all year. In fact, I would say that 2006 was a very good year," said Ruud van Zuidam of Slothouber Seafoods BV, an importer specializing in value-added shrimp products, seafood snacks and skewers, sushi toppings and surimi items sourced from Asia.

"Volumes have been higher, and we had a lot of interest in our new peeled shrimp offerings," said the Den Haag, Holland-based managing director (Phone: [phone]). "Our clients are doing well, and so is the fish and seafood sector in general."

Chris Meskens of Oostende, Belgium-headquartered Morubel NV (www.morubel.be), which ranks as Europe's largest frozen processor of warmwater shrimp, was also positive about results in 2006. "Seafood consumption is increasing, and so is our value-added business. We continue to invest in it, as success in the future calls for ongoing innovation," she commented.

With a four-person new product development team on the job, Morubel has been able to regularly bring creative cuisine into the marketplace to feed seasonal as well as year-round appetites. Its Coquilles St. Jacques (Scallops in Champagne) in 400-gram boxes proves the point, as does its Deluxe Seafood Cocktail, both of which are distributed under the proprietary Seafood Delicatess label.

Coquilles St. Jacques, launched for the festive Christmas and New Year holidays and carrying a retail price of EUR 9 to 10, is generally taken off the market in January. In Belgium, however, it reappears in May during the time of Holy Communion celebrations.

The 500-gram Seafood Cocktail, on the other hand, is presented as a product that can be eaten cold and enjoyed anytime of the year. It is made primarily from wild-caught tropical shrimp, mussels, squid and surimi bites.

The company was recently fully accredited to import, process, pack and sell organic Peneaus vannamei prawns. They will be introduced to the Belgian market early in 2007 before being distributed elsewhere in Europe later in the year.

Sustainability of fisheries and traceability are issues that Morubel takes very seriously, which is why already in 2003 it implemented an environmentally-friendly procurement statement and supported the Ocean Trust Foundation. In 2005 Aquaculture Certification Council (ACC) requirements were imposed on all suppliers of farm-raised product, and this year Morubel aims to source fully 50% of all cultured shrimp from certified sources.

Morubel's business is primarily based on wild-caught tropical shrimp. Approximately 92% of all raw material processed by the company is harvested from the sea. Wild catches of Penaeus species from different audited sources are procured in Southeast Asia and Latin America.

In terms of customer profile, the main buyers of Morubel products are in the retail, industrial and foodservice sectors throughout Europe.

'Priced to Sell' Shrimp Swells Demand

Ruud van Zuidam said that rising shrimp consumption in Europe, spurred by falling prices over the last few years, is driving the market forward. "In the not too distant past, shrimp was considered to be a luxury item that many people could not afford to buy regularly. Now shrimp is even being offered as 'all you can eat' menu specials in restaurants--featured much the same way as spare ribs."

Home consumption of fishery products was up by 8% in volume and 13% in turnover during the first half of 2006 in The Netherlands, according to Mariette Vermeer, director of the Rijswijk-based Dutch Fish Marketing Board (Phone: [phone]). She credited the increased space allocated to fish and seafood in supermarkets and fish specialty shops, as well as health attributes associated with eating species that are low in cholesterol and high in Omega-3 fatty acids.

"The more people learn about how good fish is, and how convenient it is to prepare, the more sales will continue to rise in the future," added Merel Leisink. "Dutch fish producers and further processors have a lot of variety to offer--from cod, plaice and sole to mussels, North Sea shrimp and pelagic fish."

The rise in demand is bringing more inquires from supermarket operators for both Slothouber branded Fishermans Choice products and the private labels it supplies. This is happening not only in the company's main customer bases of northern and southern Europe, but also in emerging markets such as Turkey, Romania, Morocco and Hungary.

"Private label buyers like the fact that they don't have to order full container loads from us. We can combine lesser quantities, for example, of one or two tons for them with our shipments from Asia," said the managing director.

Shellfish products--ranging from Butterfly Breaded Shrimp and Dim Sum Shrimpers to deveined tail-on Black Tigers and P&D Freshwater Rosenbergii--are the company's top sellers by far. In the last year, toppings for frozen sushi--including Ebi (cooked Penaeus monodon), Area Ebi (raw pandalus), roasted eel slices and sliced octopus--have come on strong as well.

When asked to make price predictions for 2007, Van Zuidam politely declined. "There are too many factors which can have an impact, not the least of which is bad weather. The freshwater shrimp season is now under way, and at the moment prices are firm," he told QFFI on Dec. 4. "We are advising not to buy more than is needed for the short term. By February the picture should become more clear."

Meanwhile, Slothouber has cut back on the number of stock keeping units (SKUs) in its inventory, after determining that it was simply carrying too many different items. "In preparation for the arrival of new products that are being developed for introduction in 2007, we have eliminated slow-movers. They were mainly products in packaging with single-language text, that were stocked for specific markets where demand does not justify reordering," said the managing director. "Our stock is now at a more manageable level, with an ample variety of retail packs and foodservice sizes available to fulfill customer needs."

Convenience Par Excellence

Staying on top of trends and overseeing the creation and adaptation of recipes that meet demands of the contemporary marketplace keeps Dag Cours ever on the go. The new product development director for Fjord Seafood Pieters NV has identified a number of trends that are shaping the food scene today, of which chief among them are: natural and healthy products; savory tastes; convenience.

"Frozen IQF fish is convenience in itself, since it does not need long cooking times," Cours pointed out. "And certain species of fish--those with Omega-3 fatty acids in addition to multiple vitamin and mineral content--are naturally perceived as healthy food. As for taste, we are offering more products with seasoning, sauces and fillings. Flavors, ranging from ethnic Thai and Chinese seasonings, to Mediterranean and Moroccan, are perceived as added value."

"On the other hand," he continued, "we have to take care not to devaluate fish protein sources to the point where they become thought of as just another vehicle for taste."

Fjord Seafood has seen to that by regularly launching premium-quaiity recipe dishes. Several of them brought out recently are Salmon Tartar, Salmon Carpaccio and Pangasius Delight & Gratino.

Cours, who holds a degree in biochemistry, heads up a six-person team of specialists working at the company's European product development center in Brugge, Belgium. It is a site renown for innovation in value-added products for more than half a century, originally under the flag of Pieters Visbedrijf, which was acquired by Oslo, Norway-headquartered Fjord Seafood ASA six years ago.

Acquisitions have been ongoing, and as of July of 2006 Fjord Seafood ASA became 100% owned by Pan Fish ASA, also of Norway. Today the vertically-integrated unit of Pan Fish employs more than 1,000 people engaged primarily in fish processing, sales and marketing operations that span the Western Hemisphere from Belgium and France to the Netherlands (Fjord Seafood Sterk) and the USA. Turnover of almost EUR 484 million was realized in 2005.

"In product development it's not only what we can make, but what raw material is there to work with," stressed Cours. "Fishing quotas and resource sustainability are of utmost importance. We must start with products we can secure, and then talk about adding value."

As the Group is the world's largest producer of farm-raised salmon, it is no surprise that salmon is a key ingredient in many of Fjord Seafood's offerings. Whitefish is also an important component for recipe dishes, and the raw material is supplied from reliable sources in Iceland, Norway, France, Holland and elsewhere.

"In the foodservice sector frozen is big, particularly when it comes to elaborated meal components and breaded, pre-fried fish," said Cours. "However, fresh fish is driving the retail business as the success of aquaculture has enabled us to make salmon readily available in all its different forms, which are gaining in popularity."

In fact, the non-frozen side of the business is outpacing frozen sales. "Our volumes are now more than 60% with fresh fish, and the gap only gets bigger in value," said Cours. "Retailers like the higher margins earned with fresh fish. They realize that shelf life is the mortgage and thus merchandise the products with vigor. You either pay the mortgage or you lose it."

Yichiunai Reduces SKUs, Emphasizes Private Label

Another company that is has decided to reduce its SKUs is Vichiunai Europe NV, the Brugge, Belgium-based sales and marketing arm of the Kaunas, Lithuania-headquartered Viciunai Group. This is quite a change for the producer of value added surimi and other seafood products, which has been particularly prolific in new product introductions during the past five years.

"We used to say, 'Whatever the customer wants, we can do it!' But this became quite a headache for our factory, which sometimes had to change production specifications every few hours," said Peter Lammertyn (Phone: [phone]), sales and marketing director. "Now we have learned to say 'no' to some requests."

It had reached the point where, in Western Europe alone, Vichiunai was offering over 150 recipes and more than 30 different packaging styles. "You just can't be efficient that way," stated Lammertyn. His sales team is now linking its thinking directly to production consequences before passing on complicated specifications for short-order runs to the plant.

Lammertyn made it clear that Vichiunai will continue to provide customers with a wide variety of products to choose from, not to mention boost output by as much as 20% to approximately 80,000 metric tons in 2007. "We will optimize production and in doing so improve service to create a win-win-win situation for the retailer, the customer and ourselves," he said.

The other big news from Vichiunai is that it will no longer concentrate on brand building in Western Europe, but instead aims to redouble efforts in the private label sector.

"While our brands are strong in Central and Eastern Europe as well as the Baltic states, we have not reached the level of success hoped for in the EU," frankly stated the sales and marketing director.

Lammertyn cited fierce competition in the frozen segment of the surimi business as the reason higher-margin chilled products have not forged ahead in price-sensitive markets.

"Cheap imports from Korea and China are sometimes offered for $1 per kilo, which is totally unrealistic in terms of cost production economics," he said. "When this kind of low-quality product floods into supermarkets and is retailed for perhaps five euros, while in the same stores chilled surimi sourced from within Europe is selling for 12 euros per kilo, it is no surprise why many consumers opt for the Asian imports."

The Vichiunai sales and marketing director said that more work has to be done to educate shoppers about the importance of taking food origin into account before they make purchase decisions.

"Traceability and sustainability of fishery resources have to be more than just words," he insisted. "Our plant in Lithuania has been BRC-approved for three years now, and this year a higher level BRC 4 accreditation has been achieved. We can use Marine Stewardship Council-certified Alaska pollock to make surimi on customers' requirements, while many of our Asian competitors cannot because they use local fish."

A From-the-Field Report

By JOHN M. SAULNIER

QFFI Chief Editor & Publisher

RELATED ARTICLE: Icelandic shutting plant in US.

Icelandic USA plans to close its seafood plant in Cambridge, Maryland, by the end of 2007, and shift production and distribution from there to another plant in Newport News, Virginia, where a distribution center has just been completed.

The Cambridge facility has operated on Maryland's Eastern Shore since 1968 and employs approximately 400 people. Production will continue at current levels at least through the first quarter. The closure will be phased in throughout the year. A subsidiary of Iceland's Icelandic Group, Icelandic USA, has operated in the United States since 1953.

"In looking to the future, the closure is expected to provide critical production and distribution efficiencies resulting in an improved cost structure for Icelandic," said Aevar Agnarsson, president and ceo of Icelandic USA.