assessing metro niche market demand for north carolina ... · assess high-value, niche market...

Assessing Metro Niche Market Demand for North Carolina Mariculture Products

Assessing Metro Niche Market Demand for North Carolina Mariculture Products Christopher F. Dumas, Ph.D. Professor of Economics Department of Economics and Finance University of North Carolina Wilmington James D. Wilde Graduate Research Associate Master of Marine Science Program University of North Carolina Wilmington

Black Sea Bass, Centropristis striata

June 15, 2009 Funded by North Carolina Biotechnology Center Regional Development Grant Program Grant No. 2008-RDG-4003. Supplemental funding from North Carolina Sea Grant minigrant program 2008. Cost share support from Center for Business and Economic Services, University of North Carolina Wilmington. In-kind support from Aquaculture Program, Center for Marine Science, University of North Carolina Wilmington.


Page i

ADDITIONAL COPIES OF THIS REPORT

Copies of this report may be obtained from: North Carolina Biotechnology Center 15 T.W. Alexander Dr. PO Box 13547 Research Triangle Park North Carolina 27709-3547 USA PHONE: 910-541-9366

PHOTO CREDITS

Fish illustration on cover by Duane Raver, Jr. from the book Fisherman's Guide--Fishes of the Southeastern United States. 2008. All photos in text: Mr. James Wilde, Graduate Researcher, Center for Marine Science, University of North Carolina Wilmington, Wilmington, NC. 2008-2009.


Page ii

TABLE OF CONTENTS

EXECUTIVE SUMMARY .......................................................................................................................................................... v INTRODUCTION ....................................................................................................................................................................... 1 SIGNIFICANCE TO THE REGION ........................................................................................................................................ 2 STUDY GOALS AND OBJECTIVES ...................................................................................................................................... 2 STUDY METHODOLOGY ........................................................................................................................................................ 3

BSB Fish Sample Production Methods .......................................................................................................... 3 Pre-trial Survey ....................................................................................................................................................... 3 BSB Farvest and Shipping Methods ................................................................................................................ 4 Survey Sample Frame ........................................................................................................................................... 4 Survey ......................................................................................................................................................................... 6 Product Attributes ................................................................................................................................................. 6 Restaurant Characteristics ................................................................................................................................. 7 BSB Prices .................................................................................................................................................................. 7 Regression Analysis .............................................................................................................................................. 7

RESULTS ...................................................................................................................................................................................... 9 Numbers of Seafood/Sushi Restaurants and Survey Sampling Rates .............................................. 9 Percentage of Seafood/Sushi Restaurants in Upscale Niche Market ................................................ 9 Survey Response Rates ........................................................................................................................................ 9 Estimated Numbers of Upscale Niche Market Restaurants by Metro Area ................................... 9 Niche Market Restaurant Characteristics .................................................................................................. 10 Fish Purchasing Preferences and Behavior ............................................................................................... 10 Desirable Fish Product Characteristics ....................................................................................................... 10 Comparable/Substitute Fish Species ........................................................................................................... 11 Product Availability ............................................................................................................................................. 11 Product Form (Live Whole, Fresh Whole, or Frozen Fillet) ............................................................... 11 BSB Product Characteristics and Preferred Preparation Methods ................................................. 12 Product Origin, Production, Promotion and Labeling Characteristics ........................................... 12 Monthly Demand Model for Black Sea Bass in Metro Niche Markets ............................................. 13 Estimates of Metro Niche Market Demand ................................................................................................ 15 An Extended Example for the New York City Niche Market .............................................................. 15

DISCUSSION AND CONCLUSIONS ................................................................................................................................... 16 REFERENCES ........................................................................................................................................................................... 21 APPENDIX 1 -- Survey Instrument..................................................................................................................................79


Page iii

TABLES ...................................................................................................................................................................................... 23 Table 1. Survey Sampling Rates by Metro Area. .............................................................................................. 24 Table 2. Percentage of Seafood/Sushi Restaurants in Niche Market by Metro Area. ....................... 24 Table 3. Survey Response Rates by Metro Area. .............................................................................................. 25 Table 4. Estimated Total Number of Seafood/Sushi Restaurants in Niche Market by Metro Area. ............................................................................................................................................................................................... 25 Table 5. Upscale Niche Seafood/Sushi Restaurant Characteristics, All Four Cities ........................... 26 Table 6. Upscale Niche Seafood/Sushi Restaurant Characteristics, New York City ........................... 27 Table 7. Upscale Niche Seafood/Sushi Restaurant Characteristics, Philadelphia .............................. 27 Table 8. Upscale Niche Seafood/Sushi Restaurant Characteristics, Atlanta ......................................... 28 Table 9. Upscale Niche Seafood/Sushi Restaurant Characteristics, San Francisco ............................ 28 Table 10. Chefs' Assessment of Relative Importance of Black Sea Bass Product Attributes for Consumer Acceptance. ................................................................................................................................................ 29 Table 11. Chefs' Preferred Preparation Methods for Black Sea Bass. ..................................................... 30 Table 12. Descriptive Statistics for Variables Used in Market Demand Regression Analysis--All Metro Areas Combined ................................................................................................................................................ 31 Table 13. Descriptive Statistics for Variables Used in Market Demand Regression Analysis--New York City ............................................................................................................................................................................ 32 Table 14. Descriptive Statistics for Variables Used in Market Demand Regression Analysis--Philadelphia ..................................................................................................................................................................... 33 Table 15. Descriptive Statistics for Variables Used in Market Demand Regression Analysis--Atlanta ................................................................................................................................................................................ 34 Table 16. Descriptive Statistics for Variables Used in Market Demand Regression Analysis--San Francisco ........................................................................................................................................................................... 35 Table 17a. Multiple Regression Model Results. ............................................................................................... 36 Table 17b. Multiple Regression Model Results (continued) ........................................................................ 37 Table 18a. Estimates of mean monthly upscale niche seafood/sushi restaurant demand for farm-raised BSB by metro city and season.1 ...................................................................................................... 38 Table 18b. Estimates of mean annual upscale niche seafood/sushi restaurant demand for farm-raised BSB by metro city.1 .......................................................................................................................................... 38

FIGURES ..................................................................................................................................................................................... 39

Figure 1. Restaurant Seating Capacities Across All Sampled Niche Restaurants in All Four Metro Areas (N=115). ................................................................................................................................................................ 40 Figure 2. Average Entrée Prices Across All Sampled Niche Restaurants in All Four Metro Areas (N=114). ............................................................................................................................................................................ 41 Figure 3. Type of Clientele for All Sampled Niche Restaurants in All Four Metro Areas (N=120) ............................................................................................................................................................................................... 42 Figure 4. Fish Purchasing Frequency for All Sampled Niche Restaurants in All Four Metro Areas (N=120) ............................................................................................................................................................................. 43 Figure 5. Current Black Sea Bass Market Penetration Across All Sampled Niche Restaurants in All Four Metro Areas (N=120) ................................................................................................................................. 44 Figure 6. Importance of Fish Size to Restaurant Chefs in Niche Market (N=97) ................................. 45 Figure 7. Chefs' Preferred Black Sea Bass Fish Size (N=120) ...................................................................... 46 Figure 8. Chefs' Willingness to Purchase Smaller-Sized Black Sea Bass (N=120) .............................. 47 Figure 9. Chefs' Willingness to Purchase Smaller-Sized Black Sea Bass at a Discounted Price (N=120) ............................................................................................................................................................................. 48 Figure 10. Importance of Fillet Yield to Restaurant Chefs in Niche Market (N=97) .......................... 49


Page iv

Figure 11. Chefs' Assessments of Comparable/Substitute Fish Species for Black Sea Bass (N=120) ............................................................................................................................................................................. 50 Figure 12. Importance of Continuous Availability (of fish supply) to Restaurant Chefs in Niche Market (N=98) ................................................................................................................................................................ 51 Figure 13. Percentage of Chefs Reporting Problems with Availability of Comparable/Substitute Fish (N=120) .................................................................................................................................................................... 52 Figure 14. Percentage of Chefs Reporting Problems with (Ocean-caught) Black Sea Bass Availability (N=120) ..................................................................................................................................................... 53 Figure 15. Importance of Live (vs. Fresh/Chilled) Product Form to Restaurant Chefs in Niche Market (N=98) ................................................................................................................................................................ 54 Figure 16. Importance of Fresh/Chilled (vs. Frozen) Product Form to Restaurant Chefs in Niche Market (N=98) ................................................................................................................................................................ 55 Figure 17. Chefs' Preferred Product Forms (N=120) ..................................................................................... 56 Figure 18. Percentage of Chefs Interested in Purchasing Frozen Fillets (N=120) ............................. 57 Figure 19. Importance of Product Taste to Restaurant Chefs in Niche Market (N=97) ................... 58 Figure 20. Importance of Product Freshness to Restaurant Chefs in Niche Market (N=97) .......... 59 Figure 21. Importance of Product Visual Appearance to Restaurant Chefs in Niche Market (N=97) ................................................................................................................................................................................ 60 Figure 22. Importance of Product Skin Color to Restaurant Chefs in Niche Market (N=97) ......... 61 Figure 23. Importance of Product Flesh Color to Restaurant Chefs in Niche Market (N=97) ....... 62 Figure 24. Importance of Product Texture to Restaurant Chefs in Niche Market (N=97) .............. 63 Figure 25. Importance of Product Fat Content to Restaurant Chefs in Niche Market (N=97) ....... 64 Figure 26. Chefs' Preferred Product Fat Content (N=120) ........................................................................... 65 Figure 27. Importance of Number of Bones to Restaurant Chefs in Niche Market (N=97) ............ 66 Figure 28. Importance to Restaurant Chefs in Niche Market of Product Having Empty Digestive Tract When Shipped (N=98) ..................................................................................................................................... 67 Figure 29. Importance of Domestic Product Origin to Restaurant Chefs in Niche Market (N=97) ............................................................................................................................................................................................... 68 Figure 30. Importance of Certification of Product Origin to Restaurant Chefs in Niche Market (N=97) ................................................................................................................................................................................ 69 Figure 31. Importance of Product Traceability to Restaurant Chefs in Niche Market (N=97) ...... 70 Figure 32. Importance of Farm-Raised Production Method to Restaurant Chefs in Niche Market (N=97) ................................................................................................................................................................................ 71 Figure 33. Importance of Ocean-caught Production Methods to Restaurant Chefs in Niche Market (N=97) ................................................................................................................................................................ 72 Figure 34. Chefs' Preferred Production Method (N=120) ............................................................................ 73 Figure 35. Importance of Organic Production Methods to Restaurant Chefs in Niche Market (N=97) ................................................................................................................................................................................ 74 Figure 36. Importance of Product Promotion by Grower/Supplier to Restaurant Chefs in Niche Market (N=97) ................................................................................................................................................................ 75 Figure 37. Importance of Nutritional Labeling to Restaurant Chefs in Niche Market (N=97) ...... 76 Figure 38. Importance of Quality Certification to Restaurant Chefs in Niche Market (N=96) ...... 77 Figure 39. Estimated New York City Niche Market Demand Curve for Farm-Raised Black Sea Bass ...................................................................................................................................................................................... 78


Page v

EXECUTIVE SUMMARY

Consumer demand for seafood products is growing both within the US and overseas, while the supply of seafood is shrinking due to overfishing and restrictions on ocean harvests. Mariculture, farming seafood products on land, is a rapidly growing industry that seeks to exploit this market opportunity. North Carolina (NC) universities are leaders in the development of the biotechnology needed to farm saltwater fish. The Black Sea Bass (BSB), Centropristis striata, is an example of a high-value, high-demand marine finfish under development as a viable candidate for commercial aquaculture. The traditional high-value retail market for BSB is characterized as a "niche" market of upscale, gourmet, white table-cloth seafood and sushi restaurants (Berlinsky et al. 2000, Copeland et al. 2005). In this study, the upscale niche restaurant market for BSB is defined as those seafood-serving, non-buffet restaurants with an average dinner entrée price greater than or equal to $12. A study of the potential niche market for BSB in NC found excellent chef acceptance of the farm-raised BSB product and good demand at prices that would be profitable for NC growers, based on NC production cost studies. The present study builds on the promising results of the NC study to assess high-value, niche market restaurant demand for NC-farmed BSB in four metropolitan areas: New York City, Philadelphia, Atlanta and San Francisco. A random sample of restaurants in the niche market was selected from each city. Restaurants were contacted by telephone and appointments made for each restaurant chef to assess NC farm-raised BSB in the chef’s restaurant kitchen. (Researchers at the University of North Carolina Wilmington grew the BSB used in the study in pilot-scale facilities located in Wrightsville Beach, NC.) The product was delivered via next day air or in person by a graduate research associate in the field (depending on the chef’s wishes) to the restaurant for assessment. The chefs prepared the product as desired and completed a survey. Survey data were assessed to determine the characteristics of restaurants and customers in the niche market, desirable BSB product characteristics, and niche market demand for BSB.

A total of 857 seafood/sushi restaurants were identified in New York City, 490 in Philadelphia, 653 in Atlanta, and 714 in San Francisco.

Not all seafood/sushi restaurants met the criteria for being in the "upscale" niche market.

In New York City, 273 (36%) of seafood/sushi restaurants were in the upscale niche market, 87 (19%) in Philadelphia, 85 (13%) in Atlanta, and 294 (41%) in San Francisco.

Thirty completed surveys were obtained from each metro city (subsequent analyses were

adjusted for different sampling rates across cities). Survey response rates varied from 49 to 75 percent across cities.

Average seating capacity per restaurant was 139.6, average dinner entrée price was $24.71,

the percentage of restaurant sales attributable to fish averaged 22.8 percent, and all restaurants in the sample were open year-round (no restaurant in the sample waas open only seasonally).

Most (42%) restaurants in the niche market purchase fish on a daily basis, with the

remainder purchasing fish weekly and daily.


Page vi

Over 60 percent of customers were local city residents, while about 18 percent were local

suburban residents, and about 14 percent were tourists.

About 25 percent of niche restaurants reported that they currently purchase BSB (when available from ocean fisheries). About 81 percent reported that they would purchase farm-raised Black Sea Bass if available at a price similar to that of comparable fish species, while 88 percent reported that they would buy BSB if it were available for a price twenty percent lower than that of comparable fish.

Chefs reported that BSB could be considered a comparable/substitute product for a variety

of fish species, but snapper, grouper and striped bass were the most commonly reported comparable fish.

Over 20 percent of chefs had experienced problems with the availability of fish comparable

to BSB, and over 40 percent had experienced problems with availability of ocean-caught BSB.

Although many chefs currently have a preference for ocean-caught fish, a substantial

percentage (52 percent) either prefer farm-raised fish or are willing to substitute farm-raised fish for ocean-caught.

The vast majority of chefs preferred fresh/chilled fish instead of live fish or frozen fish

fillets. The most-preferred preparation methods were sautéed (37 percent of chefs) and baked (13 percent). Sushi, sashimi, and "other" were the next-most popular methods, with 11 percent of chefs selecting each.

Fish size (whole weight in pounds) was deemed very important by chefs, with the

optimal/preferred fish size being 1.5 to 2.5 lbs. Relatively few chefs were interested in fish 1 lb or less in size, even at a discounted price. Those chefs interested in smaller fish were located in New York City and Philadelphia.

Chefs rated taste and freshness as the most important product characteristics. Visual

appearance of the product was very important, emphasizing the need for careful handling when harvesting, packing and shipping fish. Skin color, flesh color, and texture also received high importance rankings, while fat content and number of bones were of moderate importance. With respect to fat content, most chefs preferred a moderate to high fat content. Chefs' opinions were mixed on the importance of the product having an empty digestive tract, organic production methods, and quality certification. Chefs thought that nutrition labeling and product promotion/advertising by the fish suppliers were relatively unimportant. Domestic origin/production and certification of product origin were of only moderate importance to chefs.

Three statistical regression models were developed to estimate demand for farm-raised

BSB in niche metro markets. BSB price, restaurant seating capacity, and season of the year have statistically significant effects on BSB demand, but average entree price, the percentage of fish sales in overall restaurant sales, and availability problems with substitute species do not.


Page vii

Taking the New York City niche market as an example, the regression model results indicate that an increase in BSB price from $5.39/lb. to $7.00/lb. decreases BSB purchases from 29.63 lbs./month per restaurant to 17.5 lbs./month (assuming the price of substitute fish is $5.39/lb. the average price of substitute fish in the city). Similarly, lowering BSB price to $4.00/lb. increases BSB purchases to 40.75 lbs./month on average per restaurant. At a BSB price of $5.39/lb., for every 100-seat increase in seating capacity in a New York City niche market restaurant, farm-raised BSB purchases increase by 12.5 lbs./month for that restaurant, on average.

Across all metro areas, restaurants purchase significantly more BSB in the summer season

relative to the fall, winter and spring seasons. When factors such as seating capacity and season are the same, the number of pounds of BSB purchased per month per restaurant in any of the three cities is approximately the same. However, the number of restaurants and the average seating capacity of restaurants vary across cities, so aggregate demand for BSB varies across cities.

Assuming that farm-raised BSB are sold whole, fresh/chilled, 1.5-2.5 lb. in size, at prices

equal to the average prices of comparable/substitute fish in each metro area, mean annual estimates of aggregate niche market demand range from 97,066 lbs./year for New York City to 21,972 lbs./year for Atlanta. Estimated annual demand from just these four metro cities totals over 218,000 pounds per year. It is important to emphasize that this is an estimate of niche market demand only; additional demand would also exist through other market channels but probably at lower prices.

In summary, there is significant demand for farm-raised black sea bass in upscale niche metropolitan markets at prices that would be profitable to NC growers based on current estimates of production costs. Continued biotechnology research focused on improving BSB growth rates via diet, nutrition and light/temperature optimization will likely increase production efficiency, leading to lower production costs, and making the product more affordable for consumers and more profitable for growers. Improvements in production, processing, and distribution efficiencies may further reduce costs. Alternative packaging, branding and species-specific value-added processing options may increase the value of the product. Finally, information on market demand for farm-raised BSB in international markets (e.g., Hong Kong) would be valuable to assess potential export demand for farm-raised BSB.


Page 1

INTRODUCTION

Consumer demand for seafood products is growing both within the United States and overseas, while the supply of seafood is shrinking due to overfishing and restrictions on ocean harvests. Mariculture, farming seafood products on land, is a rapidly growing industry that seeks to exploit this market opportunity. Marine fish species, such as flounder and black sea bass, command higher market prices than do freshwater species such as catfish and tilapia, yet saltwater fish have been much harder to produce in a farm environment. North Carolina (NC) universities are leaders in the development of the biotechnology needed to farm saltwater fish. Techniques for spawning adults, raising juvenile fish, and cost-effectively growing adult fish to market size have been developed in NC for both flounder and black sea bass (Berlinsky et al. 2000, Copeland and Watanabe 2006, Copeland et al. 2002, 2003, 2005). Current biotechnology projects focused on the mariculture industry include: (1) the development of genetic techniques to breed female-only populations (females grow faster), (2) the development of the micro-scale equipment necessary to raise and feed microscopic live prey for larval fish, (3) the development of environmentally-friendly water cleaning and regeneration processes involving bio-engineering, and (4) the development of alternative, nutritious, and low-cost fish feeds (including “organic” feeds for the organic foods market) based on NC field crops and by-products. The Black Sea Bass (BSB), Centropristis striata, is an example of a high-value, high-demand marine finfish under development as a viable candidate for commercial aquaculture. The BSB is a historically popular seafood fish that is endemic to continental shelf waters from Massachusetts to Florida (Musick and Mercer 1977, Sedberry 1988). As such, it is an economically important commercial fishing species for many east coast states. In NC, the 2006 commercial landing value for BSB exceeded $1.7 million (NMFS 2006). In recent decades, however, overfishing and more stringent commercial fishing regulations have significantly reduced ocean fishery landings of BSB (NMFS 2007). Moreover, stock status reports for the fishery indicate that although BSB stocks are beginning to recover, landings will be regulated for the indefinite future (NMFS 2007). Limited availability of ocean-caught BSB seafood products, a high market price relative to many other fish species, and evolving buyer preferences for new seafood products (Jensen 2006, Olsen 2004) suggest that a farm-raised BSB industry may have a promising economic outlook in NC. Together, these trends provide reasonable justification for an investigation of the potential demand for farm-raised BSB in large metropolitan markets. NC entrepreneurs are preparing to invest in commercial-scale mariculture facilities, but an assessment of market demand and pricing is needed to optimize scale and growth of this new industry in NC. The traditional high-value retail market for BSB is characterized as a niche market of upscale, gourmet, white table-cloth seafood and sushi restaurants (Berlinsky et al. 2000, Copeland et al. 2005). BSB production costs (Copeland et al. 2005, Dumas et al. 2007a, 2007b) and demand for farm-raised BSB in the NC niche seafood restaurant market have been investigated (Wilde 2008, Wilde et al. 2008). The NC study found excellent chef acceptance of the farm-raised BSB product and good demand at prices that would be profitable for NC growers, based on NC production cost studies (Wilde 2008). The present study builds on the promising results of the NC study to assess high-value, niche market restaurant demand for NC-farmed marine fish in the much larger markets of selected metropolitan cities: New York City, Philadelphia, Atlanta and San Francisco, using restaurant survey/product trial methods developed and tested in NC.


Page 2

SIGNIFICANCE TO THE REGION

Mariculture techniques developed in NC use recirculating technology and innovative waste treatment methods that minimize water requirements, require no water treatment lagoons, and result in near zero water discharge. Although saltwater fish are produced, a coastal location is unnecessary, as water is re-circulated and a continuous supply of saltwater is not needed—therefore, mariculture facilities can be located anywhere in the state, providing a production alternative for NC farmers. The University of North Carolina Wilmington is working with a local entrepreneur to develop a full commercial scale demonstration mariculture facility for black sea bass production to be located on the entrepreneur's land in Wilmington, NC. This facility will develop production protocols for full scale production, transfer technology from the university to fish farmers, and demonstrate production costs to lending institutions. Assessing the high-value niche market demand is critical to NC start-up companies as they make decisions regarding production volume, marketing channels, and product pricing. Study results provide NC fish farmers with estimates of market demand for black sea bass from the high-value, fresh—chilled, metropolitan direct market channel and will determine the impact of product pricing on demand. Study results promote expansion of the mariculture industry in NC by reducing uncertainty surrounding potential market demand and pricing. The study will save fish farmers money by eliminating the need for each farmer to pay for a market demand study; study results will be made available to all potential farmers. Such information is critical for obtaining business loans from banks.

STUDY GOALS AND OBJECTIVES

Restaurant niche market demand for NC-grown fresh BSB was assessed in four metropolitan areas (New York City, Philadelphia, Atlanta and San Francisco) via a field survey of restaurant chefs. Following the methodology developed by Wilde (2008) for assessment of restaurant niche market demand for fish via field surveys (see example survey in Appendix 1), upscale seafood restaurants were identified in each metropolitan area based on restaurant lists obtained from YellowPages.com. A random sample of restaurants was selected from the list developed for each city. Restaurants were contacted by telephone and appointments made for each restaurant chef to assess the new product (maricultured BSB) in the chef’s restaurant kitchen. The product was delivered via next day air or in person by a graduate student researcher in the field (depending on the chef’s wishes) to the restaurant for assessment, together with a survey form. Fresh, maricultured BSB were available from UNC-Wilmington mariculture facilities throughout the summer, fall and winter of 2008-2009. Chefs prepared the product as desired, completed the survey form and returned the form to the investigators. Survey data were assessed using regression analysis to estimate restaurant niche market demand for BSB in metropolitan areas. Results included estimates of pounds of BSB purchased per restaurant per month and the influence of control variables on pounds purchased. Control variables included restaurant seating capacity, average entree price, season of the year, BSB price per pound, etc.


Page 3

STUDY METHODOLOGY

BSB Fish Sample Production Methods

Approximately 500 hatchery-reared BSB were grown in an outdoor, two-tank recirculating aquaculture system (RAS) (see Carroll et al. 2005 for a detailed description of the RAS) to provide fresh, farm-raised BSB product for the study. Individual tank stocking densities were maintained as suggested by Copeland et al. (2003). Water conditions of 19-23° C, neutral pH and 33-34 g/L salinities were maintained to ensure optimal environmental parameters. Multiple daily feedings of commercial marine finfish pellets to apparent 100 percent satiation were administered 6-7 days/week and growth was monitored regularly until a target average market size of greater than or equal to 567 g (1.25 lb) (per whole, individual BSB) was achieved.

Black Sea Bass pilot scale production facility, UNC-Wilmington, Wrightsville Beach, NC.

Pre-Trial Survey

A pre-trial survey of ten local (Wilmington, NC) upscale seafood and sushi restaurants was conducted to help identify appropriate niche markets and the attributes associated with them, such as average dinner entrée price and survey response rates. The pre-trial survey also provided important feedback used to clarify survey question wording, establish sample sizes, and improve sample packing and shipping methods.


Page 4

BSB Harvest and Shipping Methods

BSB were purged of feed 1-7 days prior to harvest and all commercial chemical treatments were withheld from the RAS for the duration of the study. Market-sized BSB (greater than or equal to 567g (1.25 lb)) were harvested from tanks and euthanized using a humane, IACUC-approved (www.iacuc.org) method that utilizes a standard commercial “chill-kill” technique for core-temperature reduction via a dense slurry of ice and fresh seawater. From one to six whole fish were then packaged immediately to be shipped and received by restaurants within 24 hours of harvest. Ultra-fresh BSB shipments were made using priority overnight commercial deliveries with standard seafood shipping materials including corrugated cardboard boxes packed with Styrofoam seafood boxes or inflatable “Coldpack” (www.coldpacksystem.com) systems. Thick, tightly-sealed plastic seafood shipping bags store the BSB products within packages to ensure freshness and prevent fin punctures that could potentially compromise product and shipment quality. Several pre-frozen gel packs were packed with the product to control internal shipping temperatures. (BSB were never shipped on ice based on pre-trial experience indicating a potential for reduced product quality due to pools of freshwater from melted ice.) Shipping boxes were labeled “perishable” on all outward-facing sides and sealed envelopes containing the survey instrument, return envelopes and the appropriate contact information were taped conspicuously to the top of each box alongside pre-printed shipping invoices. Phone calls were made to restaurants following shipments to verify that the product arrived fresh and without incident.

Graduate researcher James Wilde harvesting farm-raised Black Sea Bass.

Survey Sample Frame

A sample frame (list) of seafood and Japanese/sushi restaurants was developed for each metro area based on restaurant listings obtained from YellowPages.com in the summer of 2008. The YellowPages.com website provided contact information (restaurant name, address, phone number) for all restaurants in a given city, and provided separate lists of restaurants by category, including a list of seafood restaurants, and a list of Japanese/sushi restaurants. The website also featured links


Page 5

to restaurant webpages and, in many cases, pdf files of the full menus of the restaurants. The YellowPages.com website listed 13,232 restaurants in New York City, of which 474 were Japanese/sushi restaurants and 623 were seafood restaurants for a total of 857 seafood/sushi restaurants. Similarly, 490 seafood/sushi restaurants were identified in Philadelphia, 653 in Atlanta, and 714 in San Francisco. For each city, the seafood restaurant and Japanese/sushi restaurant lists were pooled, and duplicate listings were dropped. Each restaurant listing was then screened to ensure (1) the restaurant was not primarily a buffet (low quality fish), and (2) the average dinner entree price was at least $12. These screens eliminated fast food and other restaurants that were outside the high-value niche market.

Niche market seafood restaurant in Philadelphia.

Niche market sushi restaurant in New York City.


Page 6

Survey

Restaurants were drawn at random from the screened sample frame lists, contacted, and asked to participate in the survey. In-person field survey interview appointments are made with the restaurant chef and/or fish buyer. On the appointment day, the survey was conducted at the participating restaurants using fresh black sea bass product samples shipped overnight from the UNC-Wilmington mariculture facilities to the restaurant. A field surveyor explained the study/survey to each survey respondent, and restaurant chefs were allowed to prepare the sample BSB fish prior to survey completion. Additional restaurants were drawn at random from the sample frame lists until at least 30 completed surveys were obtained for each metro area. This resulted in differing sampling rates across cities (however, regression analysis methods were adjusted to account for these differing sampling rates). Although surveyors were prepared to provide Japanese language surveys, these were not needed, as all surveyed chefs either spoke English or had a coworker in the restaurant who could translate the interviewer's questions.

Graduate researcher James Wilde interviewing restaurant chef.

Product Attributes

Characteristics of upscale restaurants and the BSB product were investigated to account for variable market conditions characteristic of seafood and restaurant industries (Engle and Quagrainie 2006). An evaluation of twenty-three BSB product attributes assumed to influence restaurant chef acceptance of seafood products was conducted to help identify the most marketable BSB product form (Wessells 2002). Examples of these BSB attributes include: freshness, fillet yield, flesh color, traceability and taste. Restaurant chefs were asked to rate each BSB attribute on a scale from 1-10, where 1 indicated a BSB attribute deemed unimportant, 5 indicated an attribute of average importance, and 10 indicated an extremely important attribute. Responses for each


Page 7

attribute are summarized in terms of minimum, maximum, mean, standard deviation, and frequency distribution.

Restaurant Characteristics

Restaurant characteristics were evaluated to further investigate important product and market attributes. Examples include clientele type, product purchase frequency (i.e., daily, weekly, monthly), cooking style, preferred product form, size, and fat content. Results are presented using a combination of tables and bar graphs for convenient comparisons. This analysis will help to identify marketable BSB product forms in addition to providing additional insight into niche market factors that have been found to influence demand, commodity value, and industry potential (Zucker and Anderson 1998).

BSB Prices

Farm-raised BSB prices are hypothetical because the product is not yet on the market (ocean-caught BSB are bought and sold, but farm-raised BSB are not yet widely available). Surveyed restaurants were asked to consider three BSB price scenarios: BSB price the same as the price of the most comparable/substitute species (as identified by the chef), BSB price 20 percent higher than the substitute species price, and BSB price 20 percent lower than the substitute species price. Substitute species prices are based on actual prices paid by the restaurants during the time of the survey, as reported by the restaurants or the seafood distributors who supplied the restaurants. Because substitute species prices vary by restaurant due to differences in substitute species type, substitute species availability, and seafood suppliers used by restaurants, hypothetical BSB prices vary as well, allowing the effect of BSB price on quantity of BSB demanded to be identified. The price of the substitute species varies by restaurant, depending on the restaurant’s choice of substitute species, such as grouper or snapper, and the restaurant’s choice of seafood supplier, such as Sysco or Southern Foods. If the seafood supplier for a given restaurant was unknown, substitute price was determined by averaging the prices for the given species over seafood suppliers in the metro area. When common/generic fish names (i.e.: “snapper” rather than “vermilion snapper”) were reported by survey respondents, prices for the most commonly purchased species group, as reported by seafood suppliers, were used.

Regression Analysis

The goals of the regression analysis were to estimate farm-raised BSB niche market demand in metro niche markets and to investigate the influence of market variables such as restaurant seating capacity, BSB cost (price), average entrée price, and season on BSB demand. Multiple regression analysis was used to estimate niche market demand for BSB on a per restaurant basis. Per restaurant demand can be extrapolated to produce estimates of aggregate demand in each metro area using estimates of the numbers of restaurants in each metro niche market.


Page 8

Pre-test survey results provided insight into the market variables that influence demand for BSB in the niche market. Variables included: season, BSB price, comparable/substitute species price, seating capacity, average dinner entrée price, problems experienced with BSB availability and the availability of similar/substitute fish species, and seasonal restaurant closings. The regression equation was specified as:

Equation 1.

The regression model explains the planned purchases of BSB in pounds per month (pounds) by restaurant “i” in season of year “t” under price scenario “s.” Planned purchases depend on seasonal dummy variables (springd, falld, and winterd; summer is the omitted default season), the price of BSB (bsbprice), BSB price squared (bsbprsq), the seating capacity of the restaurant (seatcap), the average price of a dinner entrée (entreepr), entrée price squared (entreeprsq), the percentage of restaurant sales attributed to fish sales (fshintns), a dummy variable indicating whether the restaurant reported problems with the availability of the substitute species (avalprob), and dummy variables indicating the metro location of the restaurant (philly, atlanta, and sanfran; newyork is the omitted default metro area), constant coefficients β0-β13 to be estimated by the regression, and a random error term (e) (The random error term consists of two components in the random effects panel data regression model). Seasons were specified as follows: winter (December-February), spring (March-May), summer (June-August), and fall (September-November). SAS statistical software (SAS Institute Inc. 2002-2003) was used to estimate all regression models. Weighted regression analysis was used to adjust the regression results for differences in sampling rates across metro areas. Random effects panel data regression ("PROC Mixed" procedure in SAS) was used to adjust the regression results for correlation among multiple responses from a given restaurant.

st,i,i13i12i11

i10i9i8i7

i6st,i,5st,i,4

3210st,i,

eanfransβtlantaaβhillypβ

avalprobβfshintnsβentreeprsqβentreeprβ

seatcapβbsbprsqβbsbpriceβ

winterdβfalldβspringdββpounds


Page 9

RESULTS

Numbers of Seafood/Sushi Restaurants and Survey Sampling Rates

Restaurant listings provided by YellowPages.com for the fall 2008-winter 2009 period indicated that there were 857 seafood/sushi restaurants in New York City, 490 in Philadelphia, 653 in Atlanta and 714 in San Francisco (Table 1). Restaurants were selected at random from these lists and contacted until 30 restaurants in the targeted niche market from each city agreed to participate in the survey. To obtain the desired 30 participating niche restaurants per city, 169 restaurants were contacted in New York City, 226 in Philadelphia, 293 in Atlanta and 148 in San Francisco, resulting in a survey sampling rate of 20% of all seafood/sushi restaurants in New York City, 46% in Philadelphia, 45% in Atlanta and 21% in San Francisco. Regression analysis results reported below are adjusted for the different sampling rates across metro areas.

Percentage of Seafood/Sushi Restaurants in Upscale Niche Market

Not all seafood/sushi restaurants met the criteria for being in the "upscale" niche market. In New York City, 36% of seafood/sushi restaurants were in the upscale niche market, in Philadelphia the percentage was 19%, in Atlanta 13%, and in San Francisco 41% (Table 2).

Survey Response Rates

Overall, survey response rates were good but varied somewhat by metro area (Table 3). In New York City, 56% of all contacted/sampled restaurants in the upscale niche agreed to participate in the survey, in Philadelphia survey response was somewhat higher at 75%, in Atlanta 66%, and in San Francisco 49%.

Estimated Numbers of Upscale Niche Market Restaurants by Metro Area

Based on the total number of seafood/sushi restaurants in each metro area, the number of seafood/sushi restaurants contacted, and the number of contacted restaurants in the upscale niche, estimates of the total number of restaurants in the upscale niche market in each metro area can be obtained (Table 4). The estimated number of restaurants in the upscale niche in New York City is 273, in Philadelphia 87, in Atlanta 85, and in San Francisco 294.


Page 10

Niche Market Restaurant Characteristics

Descriptive statistics for several variables used to characterize the upscale niche restaurant market for BSB are presented in Tables 5-9. All restaurants in the sample were open year-round (no restaurants were open only seasonally). Table 5 presents average results for all 120 sampled restaurants in all four metro areas. Average seating capacity per restaurant was 139.6, with a minimum of 30 and a maximum of 425. Figure 1 shows the distribution of restaurant seating capacities across all restaurants from all four metro areas. Most restaurants (71 percent) had seating capacities from 75 to 175, and the most common seating capacity was 125; very few restaurants had capacities above 275. Average dinner entrée price was $24.71, ranging from a minimum of $14 to a maximum of $60. Figure 2 presents the distribution of average entrée prices. The most common entrée prices (69 percent) ranged from $18 to $24; although about 9 percent of entrée prices were above $40. The percentage of restaurant sales attributable to fish averaged 22.8 percent, ranging from 5 to 75 percent. Comparing results for individual cities (Tables 6-9, 25-30 sampled restaurants per city) with average results (Table 5), San Francisco restaurants were smaller (smaller seating capacities) than those in other sampled cities. New York City and Philadelphia had higher than average entrée prices, while entrée prices in Philadelphia and San Francisco were lower. Sales of upscale seafood restaurants in Philadelphia and San Francisco were relatively more "fish-intensive" (fish accounted for 25-27 % of sales) than were sales of similar restaurants in New York City and Atlanta (fish accounted for 18-20 % of sales). Figure 3 presents results on the type of clientele serviced by upscale seafood restaurants in the four metro areas. Over 60 percent of customers were local city residents, while about 18 percent were local suburban residents, and about 14 percent were tourists.

Fish Purchasing Preferences and Behavior

Results presented in Figure 4 show that 42 percent of upscale metro seafood restaurants purchase fish on a daily basis, with 28 percent purchasing weekly, and 25 percent purchasing both on a daily and weekly basis (the remaining 5 percent either reported "other" or did not report their frequency of fish purchases). Twenty-five percent of niche restaurants report that they currently purchase ocean-caught Black Sea Bass (when available) (Figure 5), while seventy percent report that they do not (five percent did not report). Eighty-one percent of restaurants reported that they would purchase Black Sea Bass if it were available at a price similar to that of comparable fish species, while eighty-eight percent reported that they would buy BSB if it were available for a price twenty percent less than that of comparable fish.

Desirable Fish Product Characteristics

Niche market restaurant chefs were asked to assess several product characteristics of the Black Sea Bass product samples. Chefs were asked to assess the relative importance of BSB product characteristics on a scale of 1 to 10 (Table 10), with 1 indicating that the characteristic was not important, 5 indicating average importance, and 10 indicating very important. The chefs were also asked to report their desired amount or optimal level of some characteristics.


Page 11

Fish size (whole weight in pounds) was deemed very important by chefs, receiving an average rating of 9 (Table 10). Figure 6 indicates that over 90 percent of chefs gave a rating of 8 or higher to fish size. The optimal/preferred fish size was from 1.5 to 2.5 lbs. for 78 percent of chefs (Figure 7), with 8 percent of chefs preferring smaller fish, and 10 percent of chefs preferring larger fish. To investigate whether the niche market would be receptive to smaller fish sizes, chefs were asked whether they would purchase whole BSB of 1 lb. (or less) in weight for approximately the same price as larger BSB. Thirteen percent of the chefs said yes, they would purchase the smaller fish, but 82 percent said no (Figure 8). (Some chefs reported that the smaller fish are useful for cooking and serving whole, as is the custom in some Asian dishes, whereas larger fish will not fit on a serving plate when cooked whole.) When asked whether they would consider purchasing the smaller fish if the price were discounted, more (25 percent) of the chefs said yes (Figure 9). One reason for the importance of fish size is fillet yield, which chefs rated 8.49 in importance (Table 10). Over 75 percent of chefs assigned fillet yield an importance rating of 8 or higher (Figure 10).

Comparable/Substitute Fish Species

An often important factor in determining demand for a new product such as farm-raised Black Sea Bass is the availability of substitute products, in this case other fish species thought to be similar to BSB in terms of preparation methods and consumer acceptance. Chefs were asked "What other fish would be most comparable to Black Sea Bass in your business? That is, Black Sea Bass would be a reasonable substitute for what fish?" Chefs reported that BSB could be considered a comparable/substitute product for a variety of fish species (Figure 11), but snapper, grouper and striped bass were the most commonly reported substitutes, each being mentioned by thirteen or more chefs (out of 105 chefs reporting). Mahi, tuna and branzino were also thought to be good substitutes by five or more chefs.

Product Availability

Seafood products are sometimes unavailable at any price due to seasonal fisheries or fishing regulations. Chefs assigned an importance rating of 7.45 (Table 10) to the "Continuous Availability" of a seafood product. Indeed, 63 percent of chefs assigned availability an importance rating of 8 or higher (Figure 12). Twenty-two percent of chefs reported problems with product availability for fish species they considered to be comparable/good substitutes for Black Sea Bass (Figure 13). For those chefs currently using Black Sea Bass (ocean-caught / wild-caught), forty-three percent report problems with the availability of BSB (Figure 14).

Product Form (Live Whole, Fresh Whole, or Frozen Fillet)

Fish products can be shipped live or killed. Killed fish can be shipped fresh/chilled or frozen. These various product forms have different processing, storage and transport costs and different end uses / consumer markets. On average, chefs reported a low importance ranking of 2.79 for obtaining live BSB (vs. killed) (Table 10) with only eleven percent of chefs assigning an importance ranking of 8 or higher, and 66 percent assigning the lowest ranking of 1 (Figure 15). However,


Page 12

chefs thought that having access to fresh/chilled product (vs. frozen) was very important, assigning an average importance rating of 8.60 and with over 83 percent of chefs assigning a rating of 8 or higher to this product attribute (Figure 16). Indeed, over 85 percent of chefs indicated that killed fresh/chilled was their preferred product form (Figure 17), with over 83 percent expressing no interest in frozen fillets at a discounted price of 25 percent or more relative to the price of fresh/chilled BSB (Figure 18).

BSB Product Characteristics and Preferred Preparation Methods

Not surprisingly, all chefs assigned the highest importance rating of 10 to the BSB product characteristics "Taste" and "Freshness" (Figures 19 and 20). Aspects of taste and freshness include: visual appearance, skin color, flesh (meat) color, texture, fat content, number of bones and whether the fish are shipped with an empty digestive tract (purged before shipping). Chefs assigned Visual Appearance an importance rating of 9.72, emphasizing the importance of careful handling when harvesting, packing and shipping fish (Table 10 and Figure 21). Skin Color, Flesh Color, and Texture also received high importance rankings, 8.71, 9.52, and 9.97, respectively (Table 10, Figures 22, 23 and 24). Fat Content and Number of Bones were of moderate importance, receiving ratings of 7.72 and 7.47 (Table 10, Figures 25 and 27). With respect to Fat Content, 44 percent of chefs preferred a moderate fat content, 33 percent preferred a high fat content, and only 12 percent preferred a low fat content (Figure 26). The chefs' opinions were mixed on the importance of the product having an empty digestive tract (Figure 28), assigning an average importance rating of 5.09 (Table 10). As part of the study, chefs were given samples of fresh, whole Black Sea Bass to prepare and evaluate in their restaurant kitchens. Chefs were then asked to report their preferred preparation method or methods for Black Sea Bass (Table 11). Chefs were allowed to select more than one preferred method, if desired. The most-preferred preparation methods were sautéed (75 percent of chefs) and baked (26 percent). Sushi, sashimi, and "other" were the next-most popular methods, with 23 percent of chefs selecting each.

Product Origin, Production, Promotion and Labeling Characteristics

Chefs assigned a moderate importance rating of 6.93 to Domestic Origin/Production of the product (Table 10 and Figure 29). Similarly, a Certificate of Origin and product route/shipping Traceability were of moderate importance to chefs, who assigned them average ratings of 5.73 and 6.86 (Table 10 and Figures 30 and 31). These findings indicate that many chefs are willing to use foreign-produced product and that certification of origin is not so important as long as freshness and quality are maintained. This implies that domestic production, per se, is not currently perceived by chefs as an especially important product attribute. However, should imported fish suffer quality or food safety problems (as happened recently with imports of other food products from China), domestic production could become more valuable in the eyes of chefs. With regard to general production methods--farm-raised vs. ocean-caught--chefs' opinions were mixed ("ocean-caught" is also known as "wild-caught"). On average, chefs assigned a higher importance rating to ocean-caught (7.78) as compared to farm-raised (6.24), but a substantial percentage of chefs (39 percent) assigned an importance rating of 8 or higher to farm-raised production methods (Table 10 and Figures 32 and 33). When asked directly which production method they preferred, 43 percent said ocean-caught, 7 percent said farm-raised, and 45 percent


Page 13

said that production method did not matter (the remaining 5 percent of chefs did not answer this question) (Figure 34). This result indicates that although many chefs prefer ocean-caught fish, a substantial percentage (52 percent) either prefer farm-raised fish or are willing to substitute farm-raised fish for ocean-caught. Chefs' opinions were mixed on the importance of organic production methods (average importance rating 5.93), with about 20 percent rating it unimportant, 20 percent rating it very important, and the remainder considering it of moderate importance (Table 10, Figure 35). On the topic of product promotion/advertising, chefs thought that this was relatively unimportant, assigning an average importance rating of 3.79 (Table 10, Figure 36). Similarly, nutritional labeling was thought by chefs to be relatively unimportant (average rating 4.42) (Table 10, Figure 37). However, chefs' opinions were mixed on the importance of quality certification (average rating 6.67), with 21 percent rating it unimportant, 32 percent rating it very important, and the remainder rating it of moderate importance (Table 10, Figure 38).

Monthly Demand Model for Black Sea Bass in Metro Niche Markets

Three statistical regression models were developed to estimate monthly demand for farm-raised Black Sea Bass in the upscale seafood/sushi restaurant market. Each model attempts to explain pounds of farm-raised BSB purchased per month per restaurant (variable "pounds," which is the dependent variable in the model). Twelve observations with all necessary data were available for each of 101 restaurants (not all surveyed restaurants were included in the regression analysis because not all restaurants answered all survey questions necessary for the regression analysis), providing 1212 panel data observations for the regression analyses. (A random effects model, Model 3 below, was used to adjust the analysis for the panel nature of the data.) The twelve observations for a given restaurant differ from one another by season or by fish price. Model 1 is a basic multiple regression model. Model 2 adjusts the results of Model 1 for differing sampling rates across cities (see Table 1 for sampling rates). Model 3 adjusts the results for both differing sampling rates across cities and the panel nature of the data (i.e., multiple observations per restaurant). Descriptive statistics for the variables used in the regression models are presented in Tables 12-16. Table 12 provides descriptive statistics for all four metro areas pooled together, while Tables 13-16 give results for individual cities. Tables 17a and 17b present the results of the statistical regression models. Table 17a gives regression model coefficient estimates and t-values for all three models. Table 17b gives model significance and fit results for the three models. Results of an F-test indicate that Model 1 explains a statistically significant amount of variation in the dependent variable pounds (Table 17b). A likelihood-ratio test confirms this result. The adjusted R-squared statistic indicates that Model 1 explains 33 percent of the variation in the dependent variable pounds. In general the signs of the coefficient estimates are as expected, higher Black Sea Bass price (bsbprice) has a negative and significant impact on pounds purchased. The effect of Black Sea Bass price squared (bsbprsq) is positive and significant, indicating that the effect of BSB price on pounds changes in intensity as BSB price changes. Seating capacity of the restaurant (seatcap) has a positive and significant impact on pounds purchased. The city dummy variables (philly, atlanta, and sanfran) are significant, indicating that pounds purchased in these


Page 14

cities are significantly different from pounds purchased in the default city New York (however, this result loses statistical significance in preferred Model 3 below). Perhaps surprisingly, if the restaurant experiences problems with the availability of substitute fish species from ocean fisheries (avalprob), then the restaurant purchases is significantly less BSB (however, this result changes direction and loses statistical significance in the preferred Model 3 below). The seasonal dummy variables (springd, falld, and winterd) are negative but statistically insignificant (however, these variables become statistically significant in the preferred Model 3 below). The effects of average entrée price (entreepr and entreepsq) and the percentage of fish sales in overall restaurant sales (fishintns) have positive but statistically insignificant effects on pounds purchased. Model 2 corrects the results of Model 1 for the effects of varying sampling rates across cities. An F-test indicates that Model 2 is statistically significant (Table 17b). The adjusted R-squared statistic for Model 2, 0.38, indicates that Model 2 explains only slightly more of the variation in the dependent variable (pounds) than does Model 1. Key coefficient estimates and statistical significance (Table 17a) are similar across Models 1 and 2; correction for variation in sampling rates across cities does not appear to substantially affect regression results. Model 3 corrects Model 1 for both varying sampling rates across regions/strata and the panel nature of the data. The data feature multiple responses from each restaurant, and these "within-restaurant" responses may be correlated. If the responses are correlated, the regression procedure must be adjusted to correct for the correlation. If correlation is present, the unadjusted standard errors of the estimated regression coefficients will be biased downward, leading to false conclusions regarding statistical significance. In Model 3, a random effects panel data regression model (SAS, Proc Mixed, SAS Institute Inc. 2002-2003) is used to test for the presence of correlation among responses from each restaurant and to correct coefficient estimates if correlation is present. The F-test and adjusted R-squared measures of model fit are not appropriate for panel data regressions with random effects, but a likelihood ratio test is appropriate. A likelihood ratio test indicates that Model 3 is statistically significant, and a Wald Z-test indicates that the "within-restaurant" responses are, indeed, correlated, indicating that a panel data regression model such as Model 3 is necessary. Model 3 is the preferred model as it corrects for both varying sampling rates across regions/strata and correlation among responses from each restaurant. In Model 3 the effect of higher BSB prices (bsbprice) on pounds purchased remains large, negative, and statistically significant. Also, higher restaurant seating capacity (seatcap) has a positive and statistically significant impact on farm-raised BSB pounds purchased. With the panel data correction in Model 3, the variable measuring availability problems with substitute species (avalprob) loses statistical significance. Similarly, the three dummy variables measuring differences in BSB purchasing behavior across the metro cities (philly, atlanta, sanfran) loses statistical significance, indicating that when other factors are similar, a restaurant in Philadelphia, Atlanta or San Francisco would purchase about the same number of pounds of BSB per month as would a similar restaurant in New York. Another difference between Model 3 and the Models 1 and 2 is that the effects of the seasonal dummy variables (springd, falld and winterd) become significant in Model 3, indicating that pounds of BSB purchased in fall, winter and spring seasons are lower than pounds purchased in the summer season. Average entree price (entreepr) and the percentage of fish sales in overall restaurant sales (fshintns) do not have statistically significant effects on pounds of farm-raised BSB pounds purchased.


Page 15

Estimates of Metro Niche Market Demand

The preferred regression model (Model 3) provides estimates of mean BSB purchases per restaurant per month by season. These per restaurant estimates may be expanded by the number of restaurants in the niche market to project annual aggregate niche market demand for BSB in a particular metro area. Tables 18a and 18b present estimates of upscale niche seafood/sushi restaurant quantity (pounds) demanded for farm-raised Black Sea Bass by metro city and season. The estimates assume that farm-raised BSB are sold whole, fresh/chilled, 1.5-2.5 lb. in size, at prices equal to the average prices of comparable/substitute fish in each metro area. Model 3 is used to estimate mean monthly demand per restaurant for each metro area by season (Table 18a, columns 2-5). Multiplying the per restaurant BSB demand estimates by the estimated number of niche restaurants in each metro area (Table 18a, column 1) produces estimates of monthly pounds demanded by season by all restaurants in the niche market for each metro area (Table 18a, columns 6-9). In all four metro areas, monthly demands are higher in the summer relative to the other seasons. Monthly demands per restaurant are higher in New York City and Philadelphia and lower in Atlanta and San Francisco. The lowest per restaurant demands in San Francisco are due primarily to smaller restaurant size (smaller seating capacity) per restaurant. Niche market demand for all restaurants in San Francisco is second only to New York City, despite low demand per restaurant in San Francisco, because San Francisco has the highest estimated number of restaurants meeting the niche criteria (higher even than New York City). Multiplying each monthly estimate by three months per season and summing across seasons produces best estimates of annual pounds demanded by all niche restaurants for each metro area. (Table 18b). Mean annual estimates of niche market demand range from 97,066 lbs./year for New York City to 21,972 lbs./year for Atlanta. Table 18b also presents 95 % confidence intervals around the estimated annual means (i.e., it is 95% likely that each interval contains the true mean annual niche market demand for its respective metro city.). Overall, estimated annual demand from just these four metro cities totals over 218,000 pounds per year.

An Extended Example for the New York City Niche Market

Equation 1 can be used with the estimated coefficient values of Model 3 to examine many different scenarios by varying the values inserted for the variables in Equation 1. This example develops and explores estimates of demand for farm-raised Black Sea Bass in the New York City niche market. The coefficient estimates for Model 3 from Table 17a are inserted for the β coefficients in Equation 1. The average price of substitute fish in the New York Market ($5.39/lb.) is used for bsbprice. To generate a demand forecast for an "average" month, values of 0.25 are substituted for each of the quarterly seasonal dummy variable springd, falld and winterd. Other variables are set at their mean values for the New York City metro area (Table 13), with the exceptions that bsbprsq is set equal to bsbprice squared, entreepsq is set equal to entreepr squared, and the variable seasonal is omitted entirely from the regression equation (because variable seasonal was always equal to zero in the sample data). (The values bsbprsq and entreepsq from Table 13 are not used in the regression equation because the averages (means) of squared values as given in Table 13 are less


Page 16

than the squares of average values for non-linear relationships, and it is the square of the average value that is desired for use in the regression equation.) With these values, Equation 1 predicts mean pounds of farm-raised Black Sea Bass purchased per month per restaurant on average across seasons for the New York City metro niche market; this average is 29.63 lbs./month. Multiplying the pounds per restaurant per month by 12 months per year and by the number of restaurants in the New York City niche market (273 restaurants) produces an estimate of the annual aggregate demand for farm-raised BSB in the New York City niche market of 97,066 lbs./year, with a corresponding 95 percent confidence interval of 66,284 lbs./year to 127,762 lbs./year. Equation 1 can be used to estimate changes in demand due to a change in BSB price. Suppose growers decide to sell farm-raised BSB for $7.00/lb. while the price of substitute fish remains at $5.39. Equation 1 predicts that average demand per New York City niche market restaurant would fall to 17.5 lbs./month (57,357 lbs./year for New York City niche market). Figure 39 shows the estimated New York City Niche Market Demand Curve for farm-raised Black Sea Bass (2008-year dollars). This curve shows how the quantity of Black Sea Bass purchased by all New York City niche market restaurants in total depends on the BSB price paid by restaurants to suppliers/wholesalers (all other factors held constant). The horizontal axis gives estimated annual pounds of farm-raised Black Sea Bass demanded (purchased) in total by all New York City restaurants in the niche market. The vertical axis measures wholesale price paid by restaurants to suppliers for whole, chilled/fresh, farm-raised Black Sea Bass 1.5-2.5 lbs. in size. Returning to the scenario of BSB sold for $5.39/lb., the effect of season on New York City niche market demand can be estimated by substituting appropriate values for the seasonal dummy variables springd, falld and winterd in Equation 1. With all three seasonal dummy variable values set to zero, Equation 1 predicts 31.32 pounds of farm-raised Black Sea Bass purchased per month per restaurant on average in the summer season (the default season). Setting the springd seasonal dummy variable to one while holding the values of the other seasonal dummies at zero produces an estimate of 29.47 for mean pounds of farm-raised Black Sea Bass purchased per month per restaurant on average in the summer season in the spring season. Similarly, estimates for mean pounds purchased per month per restaurant in the fall and winter seasons are 29.36 lbs./month and 28.36 lbs./month. The coefficient of 0.125 on the restaurant seating capacity variable (seatcap) for Model 3 (Table 17a) indicates that for every 100-seat increase in seating capacity in a given restaurant, farm-raised BSB purchases increase by 12.5 lbs./month for that restaurant, on average.

DISCUSSION AND CONCLUSIONS

The purpose of this study was to investigate high-value restaurant niche market demand for farm-raised Black Sea Bass (BSB) in several major metropolitan areas. Researchers at North Carolina universities are leaders in developing the biotechnology necessary to grow BSB using state of the art Recirculating Aquaculture Systems (RAS) technology. With recent progress in the development of RAS methods for growing BSB in North Carolina, entrepreneurs are considering the construction of commercial-scale RAS production facilities. The objective of this study was to assist commercialization of the BSB production technology in the state by assessing the potential demand for farm-raised BSB in the high-value market channel of direct sales to restaurants in large metropolitan areas of the United States. A prior study (Wilde 2008) found very good market


Page 17

acceptance of BSB within the state of North Carolina and called for an investigation of large metropolitan markets outside the state. Ocean-caught BSB is a historically premium seafood product with high economic value. The decrease in ocean catches due to overfishing has raised interest in the production of BSB using aquaculture methods. The traditional high-value retail market for BSB is characterized as a niche market of upscale, gourmet, white table-cloth restaurants. In this study, the upscale niche restaurant market for BSB is defined as those seafood-serving, non-buffet restaurants with an average dinner entrée price greater than or equal to $12. Four major metropolitan markets were investigated: New York City, Philadelphia, Atlanta and San Francisco. The first three cities were selected due to their proximity to North Carolina and potentially large markets. San Francisco was selected as a representative West Coast city to ascertain whether there were any significant differences between West Coast and East Coast cities. Differences between the coasts might exist due to differences in seafood types and availability, differences in ethnic populations with different food preferences, etc. A total of 857 seafood/sushi restaurants were identified in New York City. Similarly, 490 seafood/sushi restaurants were identified in Philadelphia, 653 in Atlanta, and 714 in San Francisco. Not all seafood/sushi restaurants met the criteria for being in the "upscale" niche market. In New York City, 273 (36%) of seafood/sushi restaurants were in the upscale niche market, 87 (19%) in Philadelphia, 85 (13%) in Atlanta, and 294 (41%) in San Francisco. Seafood and Japanese/sushi restaurants in the upscale niche market were selected at random and contacted until 30 completed surveys were obtained from each metro city (subsequent analyses were adjusted for different sampling rates across cities). Survey response rates varied from 49 to 75 percent across cities. Restaurant chefs prepared and evaluated fresh, whole, farm-raised BSB and completed a market research survey that collected information on the chefs' impressions, preferences and potential purchase intentions regarding BSB. In terms of general restaurant characteristics in the niche market, the survey found that average seating capacity per restaurant was 139.6, average dinner entrée price was $24.71, the percentage of restaurant sales attributable to fish averaged 22.8 percent, and all restaurants in the sample were open year-round (no restaurants were open only seasonally). Most (42%) restaurants in the niche market purchase fish on a daily basis, with the remainder purchasing weekly and daily. Over 60 percent of customers were local city residents, while about 18 percent were local suburban residents, and about 14 percent were tourists. San Francisco restaurants were smaller (smaller seating capacities) than those in other sampled cities. New York City and Philadelphia had higher than average entrée prices, while entrée prices in Atlanta and San Francisco were lower. Sales of upscale seafood restaurants in Philadelphia and San Francisco were relatively more "fish-intensive" (fish accounted for 25-27 % of sales) than were sales of similar restaurants in New York City and Atlanta (fish accounted for 18-20 % of sales). Twenty-five percent of niche restaurants reported that they currently purchase Black Sea Bass (when available from ocean fisheries). Eighty-one percent of restaurants reported that they would purchase farm-raised Black Sea Bass if it were available at a price similar to that of comparable fish species, while eighty-eight percent reported that they would buy BSB if it were available for a price twenty percent less than that of comparable fish. With regard to general production methods--farm-raised vs. ocean-caught--chefs' opinions were mixed. When asked which production method they preferred, 43 percent said ocean-caught, 7 percent said farm-raised, and 45 percent said that


Page 18

production method did not matter (the remaining 5 percent of chefs did not answer this question) This result indicates that although many chefs currently have a preference for ocean-caught fish, a substantial percentage (52 percent) either prefer farm-raised fish or are willing to substitute farm-raised fish for ocean-caught. With respect to current seafood suppliers, the metro markets of New York City and Philadelphia appear to be more concentrated, with many restaurants obtaining seafood from a few dominant wholesaler/suppliers, whereas restaurants in Atlanta and San Francisco obtained their seafood from a wider variety of suppliers. An often important factor in determining demand for a new product such as farm-raised Black Sea Bass is the availability of substitute products, in this case other fish species thought to be similar to BSB in terms of preparation methods and consumer acceptance. Chefs were asked "What other fish would be most comparable to Black Sea Bass in your business? That is, Black Sea Bass would be a reasonable substitute for what fish?" Chefs reported that BSB could be considered a comparable/substitute product for a variety of fish species, but snapper, grouper and striped bass were the most commonly reported substitutes. Chefs' opinions on striped bass were mixed, New York City and Philadelphia chefs commonly compared BSB to striped bass, but not one Atlanta chef made this comparison. Seafood products are sometimes unavailable at any price due to seasonal fisheries or fishing regulations. Aquaculture production provides a way of ensuring a continuous supply of fish. A majority of chefs thought that continuous availability of seafood projects was important. Over twenty percent have experienced problems with the availability of fish comparable to BSB, and over forty percent have experience problems with the availability of ocean-caught BSB. Niche market restaurant chefs were asked to assess several product characteristics of the Black Sea Bass product samples. In terms of project form, the vast majority of chefs preferred fresh/chilled fish instead of live fish or frozen fish fillets. Chefs were given samples of fresh, whole Black Sea Bass to prepare and evaluate in their restaurant kitchens. The most-preferred preparation methods were sautéed (75 percent of chefs) and baked (26 percent). Sushi, sashimi, and "other" were the next-most popular methods, with 23 percent of chefs selecting each. Fish size (whole weight in pounds) was deemed very important by chefs, with the optimal/preferred fish size being 1.5 to 2.5 lbs. Relatively few chefs were interested in fish 1 lb or less in size, even at a discounted price. Those chefs interested in smaller fish were located in New York City and Philadelphia. One reason for the importance of fish size is fillet yield, which most chefs rated highly important. The importance of fish size provides another advantage to aquaculture--the size of farm-raised fish can be tailored to each chef's preference. Not surprisingly, chefs rated taste and freshness as the most important product characteristics. This is an encouraging result for aquaculture, as farms can typically provide next-day delivery of harvested product, ensuring freshness. Aspects of taste and freshness include: visual appearance, skin color, flesh (meat) color, texture, fat content, number of bones and whether the fish are shipped with an empty digestive tract (purged before shipping). Chefs thought that the visual appearance of the product was very important, emphasizing the need for careful handling when harvesting, packing and shipping fish. Skin color, flesh color, and texture also received high importance rankings, while fat content and number of bones were of moderate importance. With respect to fat content, most chefs preferred a moderate to high fat content. This result is also encouraging for aquaculture, as farms can control the fat content of the product by adjusting feed composition. Chefs' opinions were mixed on the importance of the product having an empty digestive tract, with chefs in the San Francisco market assigning higher importance to this product characteristic. Chefs' opinions were mixed on the importance of organic production methods, with


Page 19

the majority considering it of moderate importance. Chefs thought that nutrition labeling and product promotion/advertising by the fish suppliers were relatively unimportant. However, chefs' opinions were mixed on the importance of quality certification with a third of chefs rating it highly important. Domestic origin/production and certification of product origin were of only moderate importance to chefs. Of the four metro markets, Atlanta chefs indicated greater preference for domestic seafood. These findings indicate that many chefs are willing to use foreign-produced product and that certification of origin is not so important as long as freshness and quality are maintained. This implies that domestic production, per se, is not currently perceived by chefs as an especially important product attribute. However, should imported fish suffer quality or food safety problems (as happened recently with imports of other food products from China), domestic production could become more valuable in the eyes of chefs. Three statistical regression models were developed to estimate demand for farm-raised BSB in niche metro markets. The results of the preferred regression model (Model 3, which corrects for both varying sampling rates across metro cities and the panel nature of the data) indicate that BSB price, restaurant seating capacity, and season of the year have statistically significant effects on BSB demand, but average entree price, the percentage of fish sales in overall restaurant sales, and availability problems with substitute species do not have statistically significant effects. In the New York City niche market, for example, an increase in BSB price from $5.39/lb. to $7.00/lb. decreases BSB purchases from 29.63 lbs./month per restaurant to 17.5 lbs./month (assuming the price of substitute fish is $5.39/lb. the average price of substitute fish in the city). For every 100-seat increase in seating capacity in a niche market restaurant, farm-raised BSB purchases increase by 12.5 lbs./month for that restaurant, on average. Restaurants purchase significantly more BSB in the summer season relative to the fall, winter and spring seasons. Regression results also indicate that when factors such as seating capacity and season are the same, the number of pounds of BSB purchased per month by a restaurant in any of the three cities is approximately the same. The preferred regression model (Model 3) provides estimates of mean BSB purchases per restaurant per month by season. These per restaurant estimates may be expanded by the number of restaurants in the niche market to estimate annual aggregate niche market demand for BSB in a particular metro area. Monthly demands per restaurant are higher in New York City and Philadelphia and lower in Atlanta and San Francisco. The lowest monthly demands in San Francisco are due primarily to smaller restaurant size (smaller seating capacity) per restaurant. Total niche market demand for all restaurants in San Francisco is second only to New York City, despite low demand per restaurant in San Francisco, because San Francisco has the highest estimated number of restaurants meeting the niche criteria (higher even than New York City). Assuming that farm-raised BSB are sold whole, fresh/chilled, 1.5-2.5 lb. in size, at prices equal to the average prices of comparable/substitute fish in each metro area, mean annual estimates of aggregate niche market demand range from 97,066 lbs./year for New York City to 21,972 lbs./year for Atlanta (Table 18b). Overall, estimated annual demand from just these four metro cities totals over 218,000 pounds per year. In summary, there is significant demand for farm-raised black sea bass in upscale niche metropolitan markets at prices that would be profitable to NC growers. Although the regression model demonstrates the effects of included variables on BSB purchases, some additional, highly influential factors affecting BSB demand remain to be investigated. Interest rates, financial lending, gas prices and the real estate market are just a few examples of highly variable aspects of the US economy that can affect seafood/sushi restaurants, their customers, and


Page 20

demand for BSB. Similarly, it should be emphasized that this study is designed to estimate current demand. That is, continued efforts toward commercialization of BSB and product promotion will affect future demand in ways not captured by the regression model. Market demand estimates should therefore be updated and reassessed regularly. A number of economic questions related to BSB aquaculture remain to be answered. A more detailed analysis of high-volume aquaculture production, processing, and distribution may provide valuable information. For example, evaluation of alternative packaging, branding and species-specific value-added processing options are needed. Continued biotechnology research focused on improving BSB growth rates via diet, nutrition and light/temperature optimization will likely increase production efficiency, decreasing production costs, and making the product more affordable for consumers and more profitable for producers. In the future, newly emerging consumer preferences will have substantial implications for the US aquaculture industry. Evolving consumer preferences for certain seafood product attributes, such as organic seafood products, will encourage restaurants to look to the aquaculture industry to satisfy these demands (Jensen 2006, Olsen 2004). Aquaculture production will likely grow to meet increasing consumer demands for seafood, and growth will require additional market research to successfully incorporate new farm-raised products such as BSB. Finally, more information regarding potential BSB markets outside the United States (e.g., Hong Kong, London, Paris) is needed to guide the development of a BSB aquaculture industry (Josupeit 1995). Specifically, further investigation into potential international export markets would be valuable to assess the potential scale of consumer demand for farm-raised BSB.


Page 21

REFERENCES

Berlinsky D., M. Watson, G. Nardi, and T. Bradley. 2000. Investigations of selected parameters for growth of larval and juvenile black sea bass Centropristis striata L. Journal of the World Aquaculture Society 31: 426-435. Carroll, P.M., W.O. Watanabe and T.M. Losordo. 2005. Pilot production of hatchery-reared summer flounder in a marine recirculating aquaculture system: the effects of ration level on growth, feed conversion, and survival. Journal of the World Aquaculture Society. 36: 120-128. Copeland, K.A. and W.O. Watanabe. 2006. Light intensity effects on early life stages of black sea bass Centropristis striata (Linnaeus 1758). Aquaculture Research 37: 1458-1463. Copeland, K.A., W.O. Watanabe and P.M. Carroll. 2002. Growth and feed utilization of captive ocean-caught black sea bass Centropristis striata fed practical diets in a recirculating tank system under a semi-controlled temperature regime. Journal of the World Aquaculture Society 33: 97-109. Copeland, K.A., W.O. Watanabe, P.M. Carroll, K.S. Wheatley, and T.M. Losordo. 2003. Growth and feed utilization of captive wild black sea bass Centropristis striata at four different densities in a recirculating tank system. Journal of the World Aquaculture Society 34: 300-307. Copeland, K., W. Watanabe, and C.F. Dumas. 2005. Economic Evaluation of a Small-Scale Recirculating System for Ongrowing of Captive Wild Black Sea Bass Centropristis striata in North Carolina. Journal of the World Aquaculture Society. 36(4):489-497. Dumas, C.F. and S. Horton. 2002. The Potential Impact of Summer Flounder Aquaculture on Regional Flounder Price. Aquaculture Economics and Management. 6(1):39-54. Dumas, Christopher, Wade Watanabe, and Kimberly A. Copeland. 2007a. The Economics of Black Sea Bass Centropristis striata Fingerling Production in Recirculating Systems. Presentation at World Aquaculture Society Conference, San Antonio, TX. March 2, 2007. Dumas, C.F., Wade Watanabe, Harry Daniels, Thomas Losordo, Kevin Yates. 2007b. Southern Flounder Growout Economics. Southern Flounder Aquaculture Workshop. Wallace, NC. September 27, 2007. Engle, C.R. and Quagrainie, K. 2006. Aquaculture Marketing Handbook. Blackwell Publishing. Ames, Iowa, USA. Jensen, H.H. 2006. Changes in seafood consumer preference patterns and associated changes in risk exposure. Marine Pollution Bulletin. 53 (10-12): 591-598. Josupeit, H. 1995. European markets for seabass, seabream and turbot. European Aquaculture. (2): 6-12.


Page 22

Musick, J.A. and Mercer, L.P. 1977. Seasonal distribution of black sea bass, Centropristis striata, in the Mid-Atlantic Bight with comments on ecology and fisheries of the species. Transactions of the American Fisheries Society. 106: 12-25. NMFS. 2006. Annual commercial landings statistics and marine recreational fisheries statistics survey query results. National Marine Fisheries Service. Silver Spring, Maryland, USA. NMFS. 2007. Preliminary North Carolina commercial landings. National Marine Fisheries Service. Silver Spring, Maryland, USA. Olsen, S.O. 2004. Antecedents of seafood consumption behavior: an overview. Journal of Aquatic Food Product Technology. 13 (3): 79-91. SAS Institute Inc. SAS for Windows. Version 9.1 Edition. Cary, NC. SAS Institute Inc. 2002-2003. Sedberry, G.R. 1988. Food and feeding of black sea bass, Centropristis striata, in live bottom habitats in the South Atlantic Bight of the USA. Environmental Biology of Fishes. 11: 241-258. Wessells, C.R. .2002. The Economics of Information: Markets for Seafood Attributes. Marine Resource Economics. 17:153-162. Wilde, James. "Analysis of a niche market for farm-raised black sea bass Centropristis striata in North Carolina." Masters Thesis. Center for Marine Science, University of North Carolina Wilmington. Wilmington, NC. 2008. Wilde, J., C.F. Dumas, and W. Watanabe. 2008. Analysis of the niche restaurant market for farm-raised black sea bass, Centropristis striata, in North Carolina. Presentation at World Aquaculture Society Conference, Orlando, FL. February 12, 2008 Zucker, D.A. and Anderson, J.L. 1998. Implications of choice behaviour and preferences in niche markets. Aquaculture Economics and Management. 2 (2): 61-70.


Page 23

TABLES


Page 24

Table 1. Survey Sampling Rates by Metro Area.

Total Seafood/Sushi Seafood/Sushi Restaurants Metro Restaurants Contacted Sampling Area in City (random sample) Rate NYC 857 169 169/857=20% Philly 490 226 226/490=46% Atlanta 653 293 293/653=45%

San Fran 714 148 148/714=21%

Table 2. Percentage of Seafood/Sushi Restaurants in Niche Market by Metro Area.

Seafood/Sushi Sample Sample Sample Percentage Restaurants Restaurants Restaurants Restaurants Seafood/Sushi Metro Contacted No Longer Inside Outside Restaurants in Area (random sample) in Business Niche Mkt Niche Mkt Niche Mkt NYC 169 18 54 97 54/(54+97)=36% Philly 226 12 40 174 40/(40+174)=19% Atlanta 293 9 38 246 38/(38+246)=13%

San Fran 148 0 61 87 61/(61+87)=41%


Page 25

Table 3. Survey Response Rates by Metro Area.

Sample Restaurants Restaurants Restaurants Restaurants Inside Inside Participating Survey Metro Inside Niche Mkt Niche Mkt But Not Response Area Niche Mkt Refusing Survey Participating Returning Survey Rate NYC 54 24 30 0 30/54=56% Philly 40 10 30 0 30/40=75% Atlanta 38 8 25 5 25/38=66%

San Fran 61 10 30 0 30/61=49%

Table 4. Estimated Total Number of Seafood/Sushi Restaurants in Niche Market by Metro Area.

Total Seafood/Sushi Sample Estimated Seafood/Sushi Restaurants Restaurants Total Metro Restaurants Contacted Inside Restaurants Area in City (random sample) Niche Mkt In Niche Mkt NYC 857 169 54 857*(54/169)=273 Philly 490 226 40 490*(40/226)=87 Atlanta 653 293 38 653*(38/293)=85

San Fran 714 148 61 714*(61/148)=294


Page 26

Table 5. Upscale Niche Seafood/Sushi Restaurant Characteristics, All Four Cities

Variable N Mean Std Dev Minimum Maximum

Seating Capacity Ave. Entree Price ($/entree) Percent Sales Fish

115 114 110

139.600 24.711 22.845

76.320 8.979

14.538

30.000 14.000

5.000

425.000 60.000 75.000

N = number of sample restaurants reporting out of 120.


Page 27

Table 6. Upscale Niche Seafood/Sushi Restaurant Characteristics, New York City



30 30 30

144.733 26.233 19.850

84.874 8.744

17.318

40.000 14.000

5.000

425.000 50.000 75.000


Table 7. Upscale Niche Seafood/Sushi Restaurant Characteristics, Philadelphia



30 30 30

154.600 28.033 27.167

87.646 11.497 14.982

30.000 14.000 12.500

310.000 60.000 75.000



Page 28

Table 8. Upscale Niche Seafood/Sushi Restaurant Characteristics, Atlanta



25 25 21

166.760 21.620 17.857

61.550 8.092 8.742

77.000 14.000

7.500

310.000 44.000 47.500


Table 9. Upscale Niche Seafood/Sushi Restaurant Characteristics, San Francisco



30 29 29

96.833 22.362 25.086

45.701 4.959

13.101

35.000 15.000 10.000

208.000 34.000 57.500



Page 29

Table 10. Chefs' Assessment of Relative Importance of Black Sea Bass Product Attributes for Consumer Acceptance.

(Rating Scale: 1 = not important, 5 = average importance, 10 = very important)

Variable N

Mean Rating

(Scale 1-10) Std Dev

Minimum

Rating

Maximum

Rating

Continuous Availability Live Product (vs. Fresh/Chilled) Fresh/Chilled Product (vs. Frozen) Empty Digestive Tract Freshness Number of Bones Fillet Yield Fish Size (Weight) Skin Color Flesh Color Fat Content Taste Texture Visual Appearance Nutritional Labeling Domestically Produced Certificate of Origin Certificate of Quality Traceability Farm-Raised Ocean-caught Product Promotion Organically Grown

98 98 98 98 97 97 97 97 97 97 97 97 97 97 97 97 97 96 97 97 97 97 97

7.45 2.79 8.60 5.09

10.00 7.47 8.49 9.00 8.71 9.52 7.72

10.00 9.97 9.72 4.42 6.93 5.73 6.67 6.86 6.24 7.78 3.79 5.93

2.71 3.00 1.77 2.95 0.00 2.28 1.99 1.56 2.03 0.83 2.06 0.00 0.17 0.61 2.76 2.55 2.97 3.40 2.52 2.71 2.49 2.98 3.16

1.00 1.00 3.00 1.00

10.00 1.00 1.00 1.00 1.00 7.00 3.00

10.00 9.00 8.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00

N = number of restaurants reporting.


Page 30

Table 11. Chefs' Preferred Preparation Methods for Black Sea Bass.

Chef's Preferred

Preparation Number

Methods of Chefs1 Percent

sauteed 85 0.75

baked 30 0.26

sushi 26 0.23

sashimi 26 0.23

other 26 0.23

deep-fried 18 0.16

broiled 13 0.11

steamed 4 0.04

(missing) 6 -----

1 Out of 114 chefs reporting. Chefs could select more than one preferred preparation method.


Page 31

Table 12. Descriptive Statistics for Variables Used in Market Demand Regression Analysis--All Metro Areas Combined


pounds springd falld winterd bsbprice bsbprsq seatcap entreepr entreepsq fshintns avalprob seasonal

101 120 120 120 120 120 115 114 114 110 120 120

27.231 0.250 0.250 0.250 5.291

30.521 139.488

24.713 690.615

22.895 0.232 0.000

28.735 0.433 0.433 0.433 1.590

23.548 75.877

8.940 579.578

14.438 0.422 0.000

0.000 0.000 0.000 0.000 2.360 5.570

30.000 14.000

196.000 5.000 0.000 0.000

200.000 1.000 1.000 1.000

14.400 207.360 425.000

60.000 3600.000

75.000 1.000 0.000


Page 32

Table 13. Descriptive Statistics for Variables Used in Market Demand Regression Analysis--New York City



26 30 30 30 30 30 30 30 30 30 30 30

29.742 0.250 0.250 0.250 5.385

31.802 144.733

26.233 762.100

20.033 0.397 0.000

34.640 0.434 0.434 0.434 1.675

26.056 83.564

8.609 542.616

16.957 0.490 0.000

0.000 0.000 0.000 0.000 3.200

10.240 40.000 14.000

196.000 5.000 0.000 0.000

200.000 1.000 1.000 1.000

14.400 207.360 425.000

50.000 2500.000

75.000 1.000 0.000


Page 33

Table 14. Descriptive Statistics for Variables Used in Market Demand Regression Analysis--Philadelphia



30 30 30 30 30 30 30 30 30 30 30 30

38.143 0.250 0.250 0.250 5.582

35.579 154.600

28.033 913.633

27.167 0.297 0.000

31.687 0.434 0.434 0.434 2.106

34.170 86.292 11.319

805.097 14.750

0.458 0.000

0.000 0.000 0.000 0.000 2.360 5.570

30.000 14.000

196.000 12.500

0.000 0.000

150.000 1.000 1.000 1.000

14.340 205.636 310.000

60.000 3600.000

75.000 1.000 0.000


Page 34

Table 15. Descriptive Statistics for Variables Used in Market Demand Regression Analysis--Atlanta



21 30 30 30 30 30 25 25 25 21 30 30

22.560 0.250 0.250 0.250 4.828

24.404 166.243

21.633 530.717

17.857 0.233 0.000

20.055 0.434 0.434 0.434 1.048

10.585 59.838

7.933 466.974

8.549 0.424 0.000

0.000 0.000 0.000 0.000 2.800 7.840

77.000 14.000

196.000 7.500 0.000 0.000

100.000 1.000 1.000 1.000 8.340

69.556 310.000

44.000 1936.000

47.500 1.000 0.000


Page 35

Table 16. Descriptive Statistics for Variables Used in Market Demand Regression Analysis--San Francisco



24 30 30 30 30 30 30 29 29 29 30 30

14.957 0.250 0.250 0.250 5.369

30.299 96.833 22.362

523.802 25.086

0.000 0.000

15.794 0.434 0.434 0.434 1.214

14.113 44.996

4.879 230.839

12.892 0.000 0.000

0.000 0.000 0.000 0.000 3.360

11.290 35.000 15.000

225.000 10.000

0.000 0.000

75.000 1.000 1.000 1.000 8.952

80.138 208.000

34.000 1156.000

57.500 0.000 0.000


Page 36

Table 17a. Multiple Regression Model Results.

Model 1 Basic multiple regression

Model 2 Regression weighted for differing sampling rates by city

Model 3 (preferred model) Regression weighted for differing sampling rates by city, with panel data corrections

Coef.

Coef.

Coef.

Variable Estimate t-value Estimate t-value Estimate t-value

Intercept β0 = 24.68809 2.96 β0 = 33.19130 3.91 β0 = 33.5748 1.56

springd β1 = -1.84152 -0.97 β1 = -1.85070 -1.01 β1 = -1.8528 -2.29 *

falld β2 = -1.90568 -1.00 β2 = -1.98647 -1.08 β2 = -1.9669 -2.43 *

winterd β3 = -3.03973 -1.59 β3 = -2.98039 -1.62 β3 = -2.9599 -3.65 *

bsbprice β4 = -8.17358 -5.21 * β4 = -10.53419 -6.77 * β4 = -9.5475 -10.58 *

bsbprsq β5 = 0.44750 4.33 * β5 = 0.59732 5.75 * β5 = 0.1636 2.43 *

seatcap β6 = 0.13132 13.47 * β6 = 0.17938 18.72 * β6 = 0.1250 4.07 *

entreepr β7 = 0.55924 1.47 β7 = 0.22755 0.58 β7 = 1.0524 0.82

entreepsq β8 = 0.00495 0.85 β8 = 0.00571 0.92 β8 = -0.00228 -0.12

fshintns β9 = 0.00606 0.12 β9 = 0.05671 1.24 β9 = -0.09307 -0.57

avalprob β10 = -5.57383 -3.12 * β10 = -6.79105 -3.67 * β10 = 5.4882 1.18

philly β11 = 5.83828 3.14 * β11 = 5.35152 2.80 * β11 = 7.8870 1.25

atlanta β12 = -7.87916 -3.73 * β12 = -10.45135 -4.73 * β12 = -10.1539 -1.43

sanfran β13 = -5.39146 -2.58 * β13 = -4.57799 -2.57 * β13 = -2.2933 -0.33

* Indicates variable is statistically significant at α=0.05.


Page 37

Table 17b. Multiple Regression Model Results (continued)

Model Test Statistic Model 1 Basic Multiple Regression

Model 2 Weighted for differing sampling rates by city

Model 3 (preferred model) Weighted for differing sampling rates by city with panel data corrections

N (12 obs. on each of 101 restaurants)1 1212 1212 1212

R2adj 0.33 0.38 n/a

F 47.402 58.06

2 n/a

-2∙LLnull

11578.6 11578.6 11578.6

-2∙LLmodel

11075.6 11084.0 9526.8

LR test stat = (-2∙LLnull

)-(-2∙LLmodel

) 503 3 494.6 3 2051.8 3

df 13 13 14

χ2

df, α=0.05 22.36 22.36 23.68

Wald Z-test value of random effects n/a n/a 23.514

1 101 restaurants of 120 surveyed provided full information required for regression analysis. 2 Indicates value is significant at α=0.05 3 If LR test stat > χ2

df, α=0.05 , then model is significant at α=0.05 4 Wald Z-test value > Zone-sided, α=0.05 = 1.65 indicates random effects are significant at α=0.05


Page 38

Table 18a. Estimates of mean monthly upscale niche seafood/sushi restaurant demand for farm-raised BSB by metro city and season.1

Estimated Demand per Restaurant in Niche Demand All Niche Restaurants in Metro Area

Restaurants Summer Spring Fall Winter Summer Spring Fall Winter

Metro Area in Niche lb/month lb/month lb/month lb/month lb/month lb/month lb/month lb/month

New York City 273 31.32 29.47 29.36 28.36 8,552 8,046 8,015 7,743

Philadelphia 87 39.40 37.55 37.44 36.44 3,428 3,267 3,257 3,170

Atlanta 85 23.24 21.38 21.27 20.28 1,975 1,818 1,808 1,723

San Francisco 294 19.08 17.23 17.11 16.12 5,609 5,064 5,031 4,739

1 Assumes restaurants purchase whole, 1.5-2.5 lb., fresh/chilled, farm-raised BSB at average price of comparable/substitute fish in each metro area: New York City--$5.39/lb., Philadelphia--$5.58/lb., Atlanta--$4.83, and San Francisco--$5.37.

Table 18b. Estimates of mean annual upscale niche seafood/sushi restaurant demand for farm-raised BSB by metro city.1

Estimated Mean Annual

95% Confidence Intervals lb/year

Metro Market Demand2

Metro Area lb/year

New York City 97,066 66,284 127,762

Philadelphia 39,366 29,246 49,486

Atlanta 21,972 11,503 32,440

San Francisco 61,330 26,102 96,558 1 Assumes restaurants purchase whole, 1.5-2.5 lb., fresh/chilled, farm-raised BSB at average price of comparable/substitute fish in each metro area: New York City--$5.39/lb., Philadelphia--$5.58/lb., Atlanta--$4.83, and San Francisco--$5.37. 2 Monthly values are multiplied by 3 months per season and summed to calculate mean annual totals.


Page 39

FIGURES


Page 40

Figure 1. Restaurant Seating Capacities Across All Sampled Niche Restaurants in All Four Metro Areas (N=115).

7.83%

24.35%

28.70%

18.26%

12.17%

1.74%

5.22%

0.87% 0.87%

PERCENT

0

10

20

30

Seating Capacity

25 75 125 175 225 275 325 375 425


Page 41

Figure 2. Average Entrée Prices Across All Sampled Niche Restaurants in All Four Metro Areas (N=114).

3.51%

37.72%

31.58%

11.40%

7.02%

4.39%

2.63%

0.88% 0.88%

PERCENT

0

10

20

30

40

Ave. Entree Price ($/entree)

12 18 24 30 36 42 48 54 60


Page 42

Figure 3. Type of Clientele for All Sampled Niche Restaurants in All Four Metro Areas (N=120)

4.17%

63.33%

17.50%

0.83%

8.33%

0.83%

5.00%

PERCENT

0

10

20

30

40

50

60

70

Primary Clientele

(missing) city suburban suburban/city tourist tourist/city tourist/suburban/city


Page 43

Figure 4. Fish Purchasing Frequency for All Sampled Niche Restaurants in All Four Metro Areas (N=120)

4.17%

41.67%

25.00%

0.83% 0.83%

27.50%

PERCENT

0

10

20

30

40

50

Fish Purchase Freq

daily weekly daily/weekly daily/weekly/monthly other (missing)


Page 44

Figure 5. Current Black Sea Bass Market Penetration Across All Sampled Niche Restaurants in All Four Metro Areas (N=120)

5%

70%

25%

PERCENT

0

10

20

30

40

50

60

70

Currently Buy BSB

(missing) no yes


Page 45

Figure 6. Importance of Fish Size to Restaurant Chefs in Niche Market (N=97)

(scale: 1 = not important, 10 = very important)

2.06%1.03%

5.15%

20.62%19.59%

51.55%

PERCENT

0

10

20

30

40

50

60

Fish Size (Weight)

1 2 3 4 5 6 7 8 9 10


Page 46

Figure 7. Chefs' Preferred Black Sea Bass Fish Size (N=120)

5.83%

8.33%

41.67%

34.17%

9.17%

0.83%

PERCENT

0

10

20

30

40

50

Preferred BSB Whole Wgt (lbs)

(missing) 1.0-1.5 1.5-2.0 2.0-2.5 2.5-3.0 >3.0


Page 47

Figure 8. Chefs' Willingness to Purchase Smaller-Sized Black Sea Bass (N=120)

5.00%

81.67%

13.33%

PERCENT

0

10

20

30

40

50

60

70

80

90

Buy <=1lb BSB at Same Price?

(missing) no yes


Page 48

Figure 9. Chefs' Willingness to Purchase Smaller-Sized Black Sea Bass at a Discounted Price (N=120)

5%

70%

25%

PERCENT

0

10

20

30

40

50

60

70

Buy <=1lb BSB at Lower Price?

(missing) no yes


Page 49

Figure 10. Importance of Fillet Yield to Restaurant Chefs in Niche Market (N=97)


2.06%

11.34%

1.03%

10.31%9.28%

21.65%

44.33%

PERCENT

0

10

20

30

40

50

Fillet Yield

1 2 3 4 5 6 7 8 9 10


Page 50

Figure 11. Chefs' Assessments of Comparable/Substitute Fish Species for Black Sea Bass (N=120)

FREQ.

15

2

5

1

1

1

2

13

4

8

1

34

1

19

1

1

7

3

1

Comparable/Substitute Fish

wreckfish

trigger

swordfish

sole

salmon

escolar

dory

corvina

fluke

barramundi

wahoo

halibut

branzino

tuna

mahi

grouper

(missing)

striped bass

snapper

FREQUENCY

0 10 20 30 40


Page 51

Figure 12. Importance of Continuous Availability (of fish supply) to Restaurant Chefs in Niche Market (N=98)


7.14%

3.06%2.04%

15.31%

2.04%

7.14%

22.45%

6.12%

34.69%

PERCENT

0

10

20

30

40

Continuous Availab ility

1 2 3 4 5 6 7 8 9 10


Page 52

Figure 13. Percentage of Chefs Reporting Problems with Availability of Comparable/Substitute Fish (N=120)

4.17%

73.33%

22.50%

PERCENT

0

10

20

30

40

50

60

70

80

Availab ility Problems w. Substitute Fish

(missing) no yes


Page 53

Figure 14. Percentage of Chefs Reporting Problems with (Ocean-caught) Black Sea Bass Availability (N=120)

10.64%

46.81%

42.55%

PERCENT

0

10

20

30

40

50

BSB Availab ility Problems

(missing) no yes


Page 54

Figure 15. Importance of Live (vs. Fresh/Chilled) Product Form to Restaurant Chefs in Niche Market (N=98)


66.33%

7.14%

1.02%

13.27%

1.02%

11.22%

PERCENT

0

10

20

30

40

50

60

70

Live Product (vs. Fresh/Chilled)

1 2 3 4 5 6 7 8 9 10


Page 55

Figure 16. Importance of Fresh/Chilled (vs. Frozen) Product Form to Restaurant Chefs in Niche Market (N=98)


2.04%

11.22%

2.04%

21.43%20.41%

42.86%

PERCENT

0

10

20

30

40

50

Fresh/Chilled Product (vs. Frozen)

1 2 3 4 5 6 7 8 9 10


Page 56

Figure 17. Chefs' Preferred Product Forms (N=120)

4.17%

85.83%

4.17%

0.83%

5.00%

PERCENT

0

10

20

30

40

50

60

70

80

90

Preferred Product Form

live/fresh fresh fresh/frozen fresh/other (missing)


Page 57

Figure 18. Percentage of Chefs Interested in Purchasing Frozen Fillets (N=120)

4.17%

83.33%

12.50%

PERCENT

0

10

20

30

40

50

60

70

80

90

Interested in Frozen Fillets

(missing) no yes


Page 58

Figure 19. Importance of Product Taste to Restaurant Chefs in Niche Market (N=97)


100%

PERCENT

0

10

20

30

40

50

60

70

80

90

100

Taste

1 2 3 4 5 6 7 8 9 10


Page 59

Figure 20. Importance of Product Freshness to Restaurant Chefs in Niche Market (N=97)


100%

PERCENT

0

10

20

30

40

50

60

70

80

90

100

Freshness

1 2 3 4 5 6 7 8 9 10


Page 60

Figure 21. Importance of Product Visual Appearance to Restaurant Chefs in Niche Market (N=97)


8.25%11.34%

80.41%

PERCENT

0

10

20

30

40

50

60

70

80

90

Visual Appearance

1 2 3 4 5 6 7 8 9 10


Page 61

Figure 22. Importance of Product Skin Color to Restaurant Chefs in Niche Market (N=97)


2.06%3.09%

6.19%

3.09%2.06%

15.46%

11.34%

56.70%

PERCENT

0

10

20

30

40

50

60

Skin Color

1 2 3 4 5 6 7 8 9 10


Page 62

Figure 23. Importance of Product Flesh Color to Restaurant Chefs in Niche Market (N=97)


4.12%

9.28%

17.53%

69.07%

PERCENT

0

10

20

30

40

50

60

70

Flesh Color

1 2 3 4 5 6 7 8 9 10


Page 63

Figure 24. Importance of Product Texture to Restaurant Chefs in Niche Market (N=97)


3.09%

96.91%

PERCENT

0

10

20

30

40

50

60

70

80

90

100

Texture

1 2 3 4 5 6 7 8 9 10


Page 64

Figure 25. Importance of Product Fat Content to Restaurant Chefs in Niche Market (N=97)


2.06%1.03%

20.62%

6.19%

13.40% 13.40%12.37%

30.93%

PERCENT

0

10

20

30

40

Fat Content

1 2 3 4 5 6 7 8 9 10


Page 65

Figure 26. Chefs' Preferred Product Fat Content (N=120)

5.00%5.00%

33.33%

11.67%

0.83%

44.17%

PERCENT

0

10

20

30

40

50

Preferred BSB Fat Content

low moderate mod/high high does not matter (missing)


Page 66

Figure 27. Importance of Number of Bones to Restaurant Chefs in Niche Market (N=97)


1.03%

4.12%5.15%

16.49%

6.19%

9.28%

18.56%

11.34%

27.84%

PERCENT

0

10

20

30

Number of Bones

1 2 3 4 5 6 7 8 9 10


Page 67

Figure 28. Importance to Restaurant Chefs in Niche Market of Product Having Empty Digestive Tract When Shipped (N=98)


21.43%

12.24%

1.02%

30.61%

1.02%

7.14%

13.27%

1.02%

12.24%

PERCENT

0

10

20

30

40

Empty Digestive Tract

1 2 3 4 5 6 7 8 9 10


Page 68

Figure 29. Importance of Domestic Product Origin to Restaurant Chefs in Niche Market (N=97)


8.25%

1.03%

2.06%

16.49%

7.22%

18.56% 18.56%

8.25%

19.59%

PERCENT

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Domestically Produced

1 2 3 4 5 6 7 8 9 10


Page 69

Figure 30. Importance of Certification of Product Origin to Restaurant Chefs in Niche Market (N=97)


13.40%

3.09%

7.22%

5.15%

28.87%

3.09%

8.25%

3.09%

12.37%

15.46%

PERCENT

0

10

20

30

Certificate of Origin

1 2 3 4 5 6 7 8 9 10


Page 70

Figure 31. Importance of Product Traceability to Restaurant Chefs in Niche Market (N=97)


7.22%

1.03%

22.68%

14.43%15.46%

9.28%

6.19%

23.71%

PERCENT

0

10

20

30

Traceability

1 2 3 4 5 6 7 8 9 10


Page 71

Figure 32. Importance of Farm-Raised Production Method to Restaurant Chefs in Niche Market (N=97)


10.31%

6.19%

28.87%

10.31%

6.19%

13.40%

9.28%

15.46%

PERCENT

0

10

20

30

Farm-Raised

1 2 3 4 5 6 7 8 9 10


Page 72

Figure 33. Importance of Ocean-caught Production Methods to Restaurant Chefs in Niche Market (N=97)


4.12%

2.06%

20.62%

2.06%

6.19%

13.40% 13.40%

38.14%

PERCENT

0

10

20

30

40

Wild-Caught

1 2 3 4 5 6 7 8 9 10


Page 73

Figure 34. Chefs' Preferred Production Method (N=120)

5.00%

45.00%

6.67%

43.33%

PERCENT

0

10

20

30

40

50

Preferred Production Method

(missing) does not matter farm-raised wild-caught


Page 74

Figure 35. Importance of Organic Production Methods to Restaurant Chefs in Niche Market (N=97)


22.68%

1.03% 1.03%

16.49%

4.12%

22.68%

9.28%

4.12%

18.56%

PERCENT

0

10

20

30

Organically Grown

1 2 3 4 5 6 7 8 9 10


Page 75

Figure 36. Importance of Product Promotion by Grower/Supplier to Restaurant Chefs in Niche Market (N=97)


43.30%

3.09%4.12%

3.09%

25.77%

1.03% 1.03%

10.31%

2.06%

6.19%

PERCENT

0

10

20

30

40

50

Product Promotion

1 2 3 4 5 6 7 8 9 10


Page 76

Figure 37. Importance of Nutritional Labeling to Restaurant Chefs in Niche Market (N=97)


27.84%

1.03%

11.34%

1.03%

30.93%

5.15%

8.25%

5.15%

3.09%

6.19%

PERCENT

0

10

20

30

40

Nutritional Labeling

1 2 3 4 5 6 7 8 9 10


Page 77

Figure 38. Importance of Quality Certification to Restaurant Chefs in Niche Market (N=96)


20.83%

16.67%

11.46%

9.38% 9.38%

32.29%

PERCENT

0

10

20

30

40

Certificate of Quality

1 2 3 4 5 6 7 8 9 10


Page 78

Figure 39. Estimated New York City Niche Market Demand Curve for Farm-Raised Black Sea Bass (2008-year dollars). (Price is wholesale price paid by restaurants to supplier for whole, chilled/fresh, farm-raised Black Sea Bass 1.5-2.5 lbs. in size.)


Page 79

APPENDIX 1 -- SURVEY INSTRUMENT


Page 80

FARMED BLACK SEA BASS MARKET RESEARCH PROJECT

Restaurant Chef/Manager Survey

We invite you to participate in a research study regarding market demand for a new seafood

product: farm-raised Black Sea Bass grown in North Carolina. Dr. Chris Dumas of the University

of North Carolina Wilmington is conducting the study. Dr. Dumas is a member of the Economics

and Finance faculty at the university and is trying to evaluate market demand for farm-raised

Black Sea Bass. Dr. Dumas does not stand to benefit financially from this study.

If you agree to participate in this research project, you will be asked questions about your

restaurant's habits and preferences regarding fish purchases and preparation in general, and Black

Sea Bass in particular. We ask that you provide us only with the name of the city where your

restaurant is located and your job position/title so that you and your restaurant can remain

anonymous. The survey will take approximately thirty minutes of your time. You may stop the

survey at any time or refuse to answer any question. You will not be treated differently or

penalized in any way if you choose not to participate or if you choose to end the visit early.

For questions about the research project, please call Dr. Chris Dumas at 910-962-4026. For

questions about your rights as a research subject, please call the Chairperson of UNC Wilmington's

Institutional Review Board, Dr. Candice Gauthier at 910-962-3558.

City: ___________________________________ Date:_________________________

1.1. What is the seating capacity of this restaurant? __________

1.2. Are you closed any months during the year? __________

If yes, which months? ________________________

1.3. What is the average entrée price at this restaurant? ___________

1.4. What is your primary clientele?

a) tourist b) local/suburban c) professional/city d) other ___________

1.5. What fish product form do you prefer to purchase?

a) live b) fresh/chilled c) frozen fillet d) other ___________

1.6. How often do you purchase fish?

a) monthly b) weekly c) daily d) other __________

1.7. Approximately what % of total sales per month is fish? __________

1.8. Who currently provides your fish? ___________________________

1.9. Do you currently purchase black sea bass? a) yes b) no

1.10. What is (would be) your preferred method of preparing black sea bass?

a) sushi b) sashimi c) steamed d) broiled e) sautéed

f) deep-fried g) baked h) other __________


Page 81

1.11. What level of fat do you prefer for your method of black sea bass preparation?

a) low b) moderate c) high d) does not matter

1.12. What size (whole weight) black sea bass do (would) you prefer to purchase?

a) 1.0-1.5 lb b) 1.5-2.0 lb c) 2.0-2.5 lb d) 2.5-3.0 lb e) >3.0 lb

1.13. Do you experience problems with the availability of black sea bass during the year?

a) yes b) no

If yes, which month(s): __________________________

1.14. Do (would) you prefer farm-raised or ocean-caught black sea bass?

a) farm-raised b)ocean-caught c)does not matter

1.15. Would you purchase whole black sea bass that are 1.0 lb or less for the same price

as the larger fish? a) yes b) no

1.16. What about if the 1.0 lb or less black sea bass were cheaper?

a) yes b) no

How important are the following attributes of BLACK SEA BASS for customer acceptance in your

business? Circle one. (1 = not important, 5 = average importance, 10 = very important)

2.1.Continuous availability 1 2 3 4 5 6 7 8 9 10

2.2. Live product 1 2 3 4 5 6 7 8 9 10

2.3. Chilled product 1 2 3 4 5 6 7 8 9 10

2.4. Empty digestive tract 1 2 3 4 5 6 7 8 9 10

2.5. Freshness 1 2 3 4 5 6 7 8 9 10

2.6. Number of bones 1 2 3 4 5 6 7 8 9 10

2.7. Fillet yield 1 2 3 4 5 6 7 8 9 10

2.8. Size 1 2 3 4 5 6 7 8 9 10

2.9. Skin color 1 2 3 4 5 6 7 8 9 10

2.10. Flesh color 1 2 3 4 5 6 7 8 9 10

2.11. Fat content 1 2 3 4 5 6 7 8 9 10

2.12. Taste 1 2 3 4 5 6 7 8 9 10

2.13. Texture 1 2 3 4 5 6 7 8 9 10

2.14. Visual appearance 1 2 3 4 5 6 7 8 9 10

2.15. Nutritional labeling 1 2 3 4 5 6 7 8 9 10

2.16. Domestic product 1 2 3 4 5 6 7 8 9 10

2.17. Certificate of origin 1 2 3 4 5 6 7 8 9 10

2.18. Certificate of quality 1 2 3 4 5 6 7 8 9 10

2.19. Traceability 1 2 3 4 5 6 7 8 9 10

2.20. Farm-raised 1 2 3 4 5 6 7 8 9 10

2.21. Ocean-caught 1 2 3 4 5 6 7 8 9 10

2.22. Promotion 1 2 3 4 5 6 7 8 9 10

2.23. Organically grown 1 2 3 4 5 6 7 8 9 10


Page 82

3.1. What other fish would be most comparable to black sea bass in your business?

That is, black sea bass would be a reasonable substitute for what fish?

_______________________________

3.2. Do you experience problems with the availability of the

comparable/substitute fish during the year?

a) yes b) no

If yes, which month(s): _________________________

3.3. If fresh/chilled black sea bass of similar quality to those of the sample fish provided were

available at the same price per pound as the comparable/substitute fish you listed, how

much black sea bass would you likely purchase per month in each of the following

seasons?

WINTER - (Jan-Mar) __________ lbs. black sea bass per month

SPRING - (Apr-Jun) __________ lbs. black sea bass per month

SUMMER - (Jul-Sep) __________ lbs. black sea bass per month

FALL – (Oct-Dec) __________ lbs. black sea bass per month

3.4. What if the price per pound of black sea bass were 20% more than the price of

the comparable/substitute fish?





3.5. What if the price per pound of black sea bass were 20% less than the price of

the comparable/substitute fish?





3.6. Would you consider purchasing a frozen fillet black sea bass product if the price

were discounted relative to the price of the fresh/chilled whole sea bass?

a) yes b) no


Page 83

4.1. In the space below, please share any problems you foresee with restaurant sales

or marketing of black sea bass:

4.2. In the space below, please provide any questions/comments/concerns you may have

regarding this survey including any improvements that can be made:

assessing metro niche market demand for north carolina ... · assess high-value, niche market...

Documents