Top StoryU.S. per-capita seafood

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Protein prizefightSeafood consumption is down, but as meat prices soar, can fish get back in the ring?

BY JAMES WRIGHT

In this corner, hailing from all around the globe, the healthiest lightweight protein contender in the world — seafood! In the other three corners, the reigning domestic heavyweight champions of chomp, the dinnertime dominators — beef, poultry and pork.

Will seafood ever be a contender? Its record in the protein battle is not terribly impressive, particularly at retail, where only a third of U.S. seafood is purchased. And the knockouts are mounting up: Seafood consumption in the United States — the world’s third-largest seafood market after China and Japan, according to the United

Nations’ Food and Agriculture Organization — keeps falling despite Americans dishing out more dollars overall for fish and the prevailing wisdom (backed by overwhelming scientific evidence) that says seafood is the heart-healthy choice.

Seafood, particularly ome-ga-3 fatty acid-rich fish, has been linked to not only re-duced cardiovascular disease, the No. 1 cause of death in the United States, but also improved brain functioning, stroke prevention and lowered risk of breast cancer, among other medical findings.

Yet for six straight years (2007 to 2012) the average U.S. consumer enjoyed less of the sea’s bounty than the year before. Per-capita sea-food consumption, a key figure in determining the market’s strength, fell to 14.4 pounds in 2012, according to the National Oceanic and Atmospheric Admin-istration’s Fisheries Service (NOAA Fisheries).

That’s down from 15 pounds in 2011, an all-time high of 16.6 pounds in 2004, and far less than what consumers in Japan (121.7 pounds per capita), China (70.2 pounds) and Europe (about 45 pounds) enjoy.

Price is one barrier to in-creasing seafood consump-tion; it’s the most expensive of the four major protein cat-egories, in average price per pound (see chart, page 20). But protein costs are rising across the board, with further increases expected; drought and escalating feed prices are big factors in meat price in-creases that should make sea-food more competitive.

While there are options at the lower end of the price spectrum like pelagics (mackerel, sardines, ancho-vies), whitefish (pangasius, tilapia, pollock) and certain types of shellfish like mus-sels, they simply don’t reso-nate with budget-minded U.S. shoppers.

To one retail expert, it’s no secret why seafood is losing

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Top Storythe battle for the center of the plate. It costs too much for consumers sticking to tight budgets. But worst of all, many people are sim-ply scared about potentially

throwing hard-earned mon-ey into the trash if they fail with the frying pan.

“We think about why [sea-food consumption] hasn’t cat-apulted over the past couple of years,” says Phil Lempert, editor of SupermarketGuru.com, which boasts a con-sumer panel 110,000 strong that provides a steady stream of retail behavior patterns and data to analyze. His data shows the seafood depart-ment is extremely challenged. “They’re afraid,” adds Lem-pert, referring to consum-ers’ apprehension to cooking seafood at home. “The funny thing is, there’s so many ways to make it. It’s illogical.”

Lempert, who also makes frequent appearances on the “Today” show and has studied consumer behavior in the retail landscape for more than a quarter cen-tury, pins the blame on the seafood industry for lacking a coherent message and on retailers for failing to edu-cate their shoppers — along with their own workers.

“And it doesn’t instill a lot of confidence when those little signs say ‘previously frozen’ in the fresh seafood case. Seafood has an enor-mous amount to offer,” he says. “I’m so frustrated.”

He’s got company. When

NOAA Fisheries revealed in late October that seafood consumption fell yet again, the moans could be heard from the Aleutian Islands to Acadia National Park. Is the recession that began in late 2008 still a major factor? What about negative media about seafood, including fears of methylmercury?

Maybe seafood is just not seen as essential.

“We’re our own worst enemy,” says Phil Gibson, senior VP of retail consul-tants Encore Associates in San Ramon, Calif. “We have a relatively pricy protein to start with, and frequent price spikes that make it even less competitive with the other proteins. And since ‘08, you have a poor economy you’re fighting against. You have a consumer who is much more conscious of how far their dollars are going to go and a commodity that is con-stantly increasing in price. [Seafood is] not viewed as a staple — it’s a nice-to-have.”

Shelf unstableFor generations, if there

were anything guaranteed to be found in your average family’s pantry, it would be canned tuna. Affordable, healthful and shelf-stable, it’s been a nutrition main-stay for consumers in all in-come brackets.

But trends are trends, and tuna is tanking: The decline in canned per-capita tuna consumption is, in a word, stunning. Just in the past decade, U.S. per-capita tuna consumption has fallen from 3.4 pounds to 2.4 pounds.

Christopher Lischewski, CEO of Bumble Bee Foods in San Diego, says a number of factors have contributed to the regression, led by prices inflated by a general decline in production. Raw material costs for skipjack tuna over the past decade have shot up from

$800 a ton to $2,000. It’s cre-ated “sticker shock” among seafood buyers, he adds.

The product still offers tremendous value and re-mains one of the most af-fordable protein options in any store. Lischewski says the industry needs to do more to meet consumers where they’re at, besides just fitting into their budgets.

“The reality is [canned tuna] is not as convenient as it can be. The deli is seen as more convenient,” he says. “We’ve lost [sales] to other sandwich spreads like peanut

butter, which is a protein. We’ve lost ground to yo-gurt, predominately among the female population. And if you go into offices in the U.S. today, lunch isn’t a sandwich anymore — it’s [a frozen meal] you can toss in the microwave for 2 min-utes. We have health, but not convenience.”

Lischewski dispels any no-tion that methylmercury fears are driving down demand for what was once one of America’s top pantry items.

“You have a consumer who is much more conscious of how far their dollars are going to go. Seafood is not viewed as a staple — it’s a nice-to-have.”

— Phil Gibson, senior VP, Encore Associates

A bigger budget chunk

U.S. per-capita food expenditures

Pricey proteins

Forecast changes in Consumer Price Index

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% change in 2012

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Top Story

“When we talk to con-sumers about what they don’t like, or what they’re concerned with, mercury ranks 12th. It’s not top-of-mind,” he says. “It may

be more so with pregnant women. In general, consum-ers understand the benefits of seafood.”

Freezer is hot Lischewski is skeptical

that any further innovations

can give the shelf-stable sea-food category a huge boost, although canned tuna is the “engine that pulls the train” for his company. As far as mar-keting, the Tuna the Wonder-fish campaign launched by the top three canned-tuna brands (including Chicken of the Sea and StarKist) only lasted one year, not the planned three, after being deemed by the companies to be not worth investing in.

The freezer aisle may pro-vide more growth opportu-nity. Bumble Bee’s Super-Fresh Premium Fresh Frozen product line, which Lisch-ewski says took 18 months of R&D, launched in June, a time when few people are turning on their ovens. But he adds that distribution and repeat-buy rates are meeting expectations. “We’re trying to go after a premium seg-ment,” he says. “I don’t think there really is a middle.”

As with office meals on the run, meal preparation at home for millions of con-sumers consists primarily of opening a microwave door and pushing a few buttons. The frozen foods aisle holds great potential for all food manufacturers, but Gibson of Encore Associates warns of stiff headwinds facing sea-food manufacturers. For one, retailers need to expand the availability of frozen seafood products that are convenient and appeal to younger con-sumers, he says.

And he should know, as he spent 22 years merchan-dising seafood for supermar-ket chain Safeway, where no department was given the leeway to be a loss leader, a tag that’s dogged seafood for years. “If you don’t generate a profit you don’t exist,” he says.

The next wave of consum-ers poses unique challenges. “Millennials don’t know how to cook. They only know how to buy,” says Gibson, who

developed Safeway’s Water-front Bistro private label line into a $100 million annual business. Affordable species like tilapia and swai, he adds, have potential for widespread appeal if positioned carefully in part because costs are rela-tively stable.

“Forget fresh,” agrees Lempert. “Go to the frozen food case. You have IQF fil-lets in bags that are very af-fordable. People tell me they don’t even know [this prod-uct is] available. It’s about ed-ucation: how to buy it, how to cook it, all the variances.”

The case is not Behind the glass is where

a great deal of consumer sea-food education is conducted. Retail analysts say sales op-portunities are being lost there at an alarming rate be-cause counter staff often lack the knowledge to impart con-fidence to shoppers that sea-food is a smart choice.

“Store personnel behind the case don’t know sea-food the way they need to,” says Lempert.

“That’s 80 percent of the

problem on the fresh seafood side — the lack of attention to training people to man-age, control and sell seafood. They’re relying more on visu-als and packaging and less and less on training,” agrees Gibson. “Ultimately, you have a consumer that’s con-fused about what to do with [seafood]. And confusion is a

“What has the restaurant industry

done to put some excitement behind

[seafood]? I can’t remember very much

and I watch it pretty closely.”

— Warren Solocheck, VP-foodservice, NPD Group

At the high end

Average retail price of proteins, year to date

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U.S. per-capita seafood consumption, in pounds

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22 SeaFood Business January 2014 Visit us online at www.seafoodbusiness.com

very much and I watch the industry pretty closely.”

The United States is a hamburger haven. Even with beef retail prices up 80 percent since 2000, accord-ing to beef industry analyst Duane Lenz, general man-ager of CattleFax in Centen-nial, Colo., Americans sim-ply won’t be rebuffed when it comes to getting their burger on.

“We’ve been treated very well by consumers. There’s been record spending on the beef side, $85 billion last year,” says Lenz. Con-sumers have accepted higher prices, he says, and U.S. per-capita beef consumption was a healthy 57.5 pounds in 2011, according to the U.S. Department of Agriculture (pork was 45.1 pounds and poultry was 83.3 pounds).

Feed yards and meat pack-ers are struggling to turn a profit, however, as Lenz notes that the U.S. beef industry infrastructure is designed for 10 million more cattle than is currently available. “Sup-pliers are shrinking in num-bers, that’s the big story,” says Lenz. “[Ranchers] lost a lot of cattle due to drought and supplies are limited.”

What lessons can the sea-food industry draw from land-based proteins? Lenz says he always gets asked that question, and his an-swer is “consistency.”

“Consumers also want something they’re comfort-able cooking. At our house we love seafood but we’re un-comfortable with it because we don’t know [to cook it],” he says.

Does the beef industry even really consider seafood as part of the competition? Not really, says Lenz.

“Beef guys are more con-cerned with what the chicken guys are doing. That kind of quick growth is what keeps the cowboys up at night.”

barrier to purchase.” Gibson is skeptical that

the foodservice-to-retail sea-food-consumption pendu-lum will swing at all without serious educational efforts and increased attention to value-added or prepared sea-food products.

Retail, which accounts for only one-third of all U.S. seafood purchases in dollars, might never close the gap with foodservice, Gibson says.

“You just don’t see the com-mitment. Seafood accounts for only 1 to 2 percent of aver-age grocery store sales. They’re not going to commit the re-sources they need, because they won’t get the immediate return. It’s a low margin profit base to begin with.”

Check, pleaseSeafood isn’t losing out to

the other proteins because of perception of value, one res-taurant industry expert be-lieves, but he notices that it’s featured in promotions far less often and that a lack of excite-ment driven by new products for on-the-go consumers is

holding the industry back. Warren Solocheck, VP-

foodservice of global market research firm NPD Group in Chicago, says seafood needs to consider its market po-sitioning carefully, and opt for the high end or the low end. He likes what Nashville, Tenn., QSR chain Captain D’s has done with its menu, going with a smart assort-ment of low-cost options paired with generous sides, prepared quickly.

“If you give the average consumer the opportunity to get a burger or a chicken sandwich vs. a fried fish sand-wich, the fish will always be No. 3,” says Solocheck. “Why? Well, how is it served? What are the condiments? Burgers are so versatile. For millennials, who love to cus-tomize and be adventurous, there’s more opportunity than the same old fish sand-wich with tartar sauce.

“The biggest issue holding seafood back is A, it has lim-ited distribution as to how it’s menued; and B, what has the restaurant industry done to put some excitement behind it? I can’t remember

Health assurance Restlessness is something

the seafood industry can relate to. A surge in consumer inter-est in seafood, says National Fisheries Institute President John Connelly, could poten-tially come from an industry ally — insurance companies.

Connelly cites the federal government and the Ameri-can Heart Association that estimated each cardiac arrest and stroke incident costs a health insurance company about $208,000. And Har-vard Medical School research-ers estimate that 84,000 such deaths are preventable if con-sumers got the full benefits of omega-3 fatty acids found in many types of seafood.

“So, insurers and others interested in public health could save up to $17 billion if Americans ate more sea-food,” says Connelly. “That is a wallop of a return on their investment by getting behind something like the Seafood Nutrition Partnership,” an organization dedicated to increasing seafood consump-tion in the United States.

While catchy slogans have worked wonders for beef (“It’s what’s for dinner”) and pork (“The other white meat”), a nationwide move-ment for seafood could look more like a public service campaign, he adds.

“It’s like a buckle-up your children campaign, or the efforts to reduce drunk driv-ing,” says Connelly. “The U.S. government is say-ing seafood is essential, the World Health Organization says it’s essential and leading researchers and nutritionists are saying it.”

Until consumers hear it, and put a premium on fitness over frugality, seafood will remain the fourth-place pro-tein in a crowded ring.

Email Senior Editor James Wright at jwright@divcom.com

Top Story

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Billions of restaurant servings by meal category, 52 weeks ending September 2013

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