LOUIS J. RONSIVALLI, JOHN D. KAYLORPHILIP J. McKAY, and CARMINE GORGA '

The Impact of the Assurance ofHigh Quality of Seafoods at Point of Sale

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Figure I. -Sales rates of fresh fishfillets carrying the U.S. Grade Asticker.

transition occurred, there was an ex­pansion of industry efforts followedby a continuing accelerated growth.By the earl y part of 1980, the enter­prise had grown to an annual volumeof about 11,000,000 pounds worth near­ly $30,000,000 per year (Fig. I). Thefigure includes an additional 1,000,000pounds of product sold annually whichdoes not bear the U.S. Grade A labelbut which employs the same technolog­Ical concepts used in the Government­inspected system. The number of pro­cessors grew from one to eleven, andt~e number of supermarkets grew fromSIX to more than 1,100 located in at least15 states and the District of Columbia(Fig. 2), representing about 40 percentof the total U.S. population. Figure 2shows only the 10 plants that are underinspection. It is estimated that the sizeof the enterprise could be twice as largeexcept for the lack of supply of U.S.Grade A quality fish fillets. The de­mand for assured quality has beenfound to be so persistent that lesspopular species like pollock and whit­ing are receiving a surprising accep­tance by consumers when introducedunder the assured quality program.

Louis J. Ronsivalli, John D. Kaylor, and CarmineGorgaare with the Gloucester Laboratory, North­east Flshenes Center, National Marine FisheriesSerVice, NOAA, Emerson Avenue GloucesterMA 01930. Philip J. McKay is wi;h the NMFSNortheast InsJection Office, Emerson AvenueGloucester, MA 01930. '

NMFS-Industry Effort

In 1975 NMFS technologists fromthe Gloucester Laboratory, NortheastFisheries Center, and NMFS inspectorsundertook a pilot collaborati ve ef­fort with one seafood processor andsix supermarkets from three differentchains to explore the effect of assuredseafood quality on sales. The pilotstudy, which lasted 2 years and cost atotal of $200,000, included a $35,000grant from the New England FisheriesSteering Committee and about $10 000~n in-kind services (use of pro~ess­mg plant, retai I outlets, personnel,advisory services, etc.) from the Em­pire Fish Company of Gloucesterand the supermarket chains of A&P~eMoulas, and Stop & Shop. NMFSmspecto~s, whose role was initially ona fee basIs, eventually also contributedsignificant in-kind services at numer­ous meetings that were devoted tologistics problems. The NMFS inspec­tors also assisted in data collection andmade many important observations thatled to the S;Jccess of the project.

Except for the NMFS inspectors,who by design were to continue in theirrole, Federal involvement ended afterthe 2-year period, and the technologytransfer from Federal laboratory to in­dustry was complete. Even as this

1 Mention of trade names or commercial firmsdoes not. imply endorsement by the NationalManne Flshenes Service, NOAA.

Introduction

The need and the potential of assur­ing the quality of seafoods at point ofsale have been adequately discussed(Nickerson and Ronsivalli, 1979' Ron­sivalli et aI., 1978; and Gorga ~t aI.,1979). Although the high seafood salesdemonstrated for both white-cloth andfast-service restaurants have been at­tributed to the high quality of theseafoods handled by these establ ish­ments, a clear relationship betweenassured qual ity and increased sales hasnot been evident because it has beendifficult to separate the effect of highquality from the effect of the consumernot having to prepare seafoods.

Recent results, however, do showclear and positive effects of assuredquality on sales both in the UnitedStates and in Australia. In the UnitedStates, one effort was conducted collab­oratively between the National MarineFisheries Service (NMFS) and elementsof the U.S. seafood industry with theleadership and the bulk of the fundingcoming from the Government (Gorga eta!., 1979). A second U.S. effort wasconducted by Bashas I, a small westernsupermarket chain (Zwiebach, 1978).In Australia, one effort was conductedby that country's largest supermarketchain, G. J. Coles and Company, Ltd.(Watson, 1979). In all cases, sales wereincreased significantly, going as highas 67 percent in one case.

22 Marine Fisheries Review

Figure 2.-Locations of markets and plants involved in distribution of U.S.Grade A fresh fish fillets.

U.S. Industry Effort

The only other U.S. effort of whichwe are aware was conducted by a 26-

to insurmountable organoleptic disad­vantages of the Austral ian underutilizedspecies that were not encountered in theU .S. effort.

Discussion and Recommendations

The three studies cited above shouldleave no doubt as to the beneficialimpact of assuring the qual ity of sea­foods at the point of sale. To add tothese findings, a very recent New Zea­land study concerned with the potentialfor increasing New Zealand's seafoodexports to Japan concluded that it candepend on a large Japanese market onlyif it improves the quality of its product(Anonymous, 1979). (There is someevidence to show that the growth of theU.S. seafood export volume is alsoimpeded by inferior quality of U.S.seafood products.) In another recentannouncement, the president of theFisheries Association of Newfound­land and Labrador has stated: "Qualityenhancement is a key to the futureof the industry, in both catching andprocessing. Without a major effort onquality, success in terms of the potentialwill not be achieved" (Wells, 1980).

There are two major problems whichwe believe require attention: 1) Lack ofmonitoring of product quality at mostof the retail outlets and 2) inadequacyof supply. Although there was no statedconcern in any of the efforts describedabove regarding the monitoring of qual­ity at the retail outlets, it has been andstill is a major concern of the authors.Even though the U.S. industry hasassimilated the NMFS technology, itdid not accept the entire recommenda­tions. One of the NMFS recommenda­tions was to maintain a monitoringcapabil ity at the retail level, and exceptfor about 200 stores, this importantrecommendation has not been fol­lowed. What impact this laxity willhave in the long run is not certain, butit does have the potential for erodingconsumer confidence which is neces­sary for the program's success.

The problem of inadequate supplycan be solved in a number of ways.Since high-quality products commanda higher price, one solution is to pro­vide for an economic incenti ve forfishermen. If fishermen are paid to

store supermarket chain (Bashas) inArizona (Zwiebach, 1978). This chainrecognized the need to gain consumerconfidence regarding qual ity. The high­quality, fresh seafoods created an im­petus that spread to frozen seafoods,and the sales of seafood in the chainincreased by about 67 percent. Thebiggest problem encountered by thechain was the limited supply availablefrom the coastal producers from whomthe product was received by air freight.Bashas found that the consumers werewilling to pay a higher price for high­quality seafoods.

Australian Industry Effort

Approximately 2 years after the startof the NMFS-industry effort, an Aus­tralian firm, G. J. Coles and Company,Ltd., began a similar pilot effort inMelbourne. In less than 3 years, itspread throughout most of Australia,requiring the building of six process­ing plants to supply the demand thatwas subsequently generated (Watson,1979). The Australian effort eventuallywas limited by the inadequacy of sup­ply as were both U.S. efforts. How­ever, unlike the large U.S. effort, theAustralians were unable to introducetheir underutilized species on the coat­tails of their high-qual ity conventionalproducts. This appears to ha ve been due

~ STATES WHERE MARKETS ARE LOC ED• LOCATIONS OF PLANTS

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If a benefits-to-cost (B/C) analysisof this effort is based on the value ofcumulative sales volume and govern­ment costs, we estimate its ratio to bemore than 150:1. Since the governmentcost is a constant, the B/C ratio willcontinue to increase. In fact, as long asthe sales rate is in an exponentialgrowth trend, the B/C ratio will grow toexceptional levels in a short time. Thisanalysis does not take into accountmultiple and other relevant economicfactors which would increase the B/Cratio to a much higher level; nor doesit reflect the intangible benefits thataccrue to the consumer such as assuredquality, opportunity to use more sea­foods, improved dietary selections,etc.; nor the improved image that ac­crues to the seafood industry fromgaining the confidence of consumers.Also, there are the indirect benefits thatwill have a favorable impact for theUnited States which experiences anannual seafood trade deficit of about $2billion. If the domestic seafood indus­try can establ ish an image associatedwith high quality, there is the potentialfor capturing a larger share of thedomestic market.

Feb. /98/,43(2) 23

bring in more high-quality fish, theywill do it. Quality maintenance aboardvessels requires adequate refrigeration(usually more ice) and undoubtedlymore time-consuming handling. It isnot in the financial interest of fisher­men to increase their expenses withouta higher return.

A second solution lies in the intro­duction of underutilized species. Thisis not difficult when the underutilizedspecies meet certain selection criteria.For example, whiting fillets and pol­lock fillets, considered underutilizednot too long ago, have enough desirableorganoleptic qualities to have beenaccepted by many U.S. consumers. Incases where organoleptic characteris­tics are unfamiliar, the solution is ob­viously more complicated but by nomeans insoluble.

A third solution to the problem is todevelop concepts for new productswhich can be made from underutilizedspecies which do not appear to havemarketing potential, and from the by­products of conventional species. Forexample, small fish, like sand lance,which are too small to process eco-

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nomically, and the "frames" fromgroundfish, which are a by-product ofthe process for producing fish fillets,can be deboned and used to produce avariety of new, precooked, ready-to­serve products.

Summary

The success of the three effortsdescribed in this paper attests to theaccuracy of the identification of amajor problem common to the bulkof seafoods available to consumersin supermarkets and to the foresightand commitment of the managementand personnel of the few companiescited above. The success of the NMFS­industry effort in particular is evidentfrom the high benefits-to-cost ratio thathas been achieved and from the fact that5 years after its start, its growth is stillin an exponential trend. All of thismeans that the potential for the domes­tic seafood industry is indeed verylarge. The smooth transfer of technol­ogy in that study was due to industry'sclear understanding of its role from thevery beginning and its agreement that

the NMFS guidance held a high prom­ise for success.

The extraordinary expansion of theidea of guaranteed U.S. Grade A qual­ity is believed to be due to the NMFSstipulation that quality has to be assuredthroughout the chain of distribution upto and including the moment that it ispurchased by the consumer.

Literature Cited

Anonymous. 1979. Higher quality is key tosuccess in big Japanese market. World Fish­ing 28( 12):5-6.

Gorga, c., 1. D. Kaylor, J. Carver, 1. Mendel­sohn, and L. Ronsivalli. 1979. The economicfeasibility of assuring U.S. Grade A qualityof fresh seafoods to the consumer. Mar. Fish.Rev. 41(7):20-27.

Nickerson, J. T. R., and L. J. Ronsivalli. 1979.High quality frozen seafoods: The need andthe potential in the United States. Mar. Fish.Rev. 41(4):1-7.

Ronsivalli, L. 1., C. Gorga, J D. Kaylor, and1. H. Carver. 1978. A concept for assuring thequality of seafoods to consumers. Mar. Fish.Rev. 40(1):1-4.

Watson, I. 1979. Supermarketing fish: Fortunesfavor the bold. Aust. Fish. 38(10):37-42.

Wells, W. E. 1980. Newfoundland fisheriesoverview. The Sou'wester 12(8):2.

Zwiebach. E. 1978. Bashas' flying fish planfreshens section's sales. Supermarket News27(18):54.

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