Top Story: Sizing up seafood against other proteins
Originally published in Seafood Business Magazine
Seafood consumption is down, but as meat prices soar, can fish get back in the ring?
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 omega-3 fatty acid-rich fish, has been linked to not only reduced 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 seafood consumption, a key figure in determining the market’s strength, fell to 14.4 pounds in 2012, according to the National Oceanic and Atmospheric Administration’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 increasing seafood consumption; it’s the most expensive of the four major protein categories, in average price per pound (see charts in digital edition, starting page 19). But protein costs are rising across the board, with further increases expected; drought and escalating feed prices are big factors in meat price increases that should make seafood more competitive.
While there are options at the lower end of the price spectrum like pelagics (mackerel, sardines, anchovies), whitefish (pangasius, tilapia, pollock) and certain types of shellfish like mussels, they simply don’t resonate with budget-minded U.S. shoppers.
To one retail expert, it’s no secret why seafood is losing the battle for the center of the plate. It costs too much for consumers sticking to tight budgets. But worst of all, many people are simply scared about potentially throwing hard-earned money into the trash if they fail with the frying pan.
“We think about why [seafood consumption] hasn’t catapulted over the past couple of years,” says Phil Lempert, editor of SupermarketGuru.com, which boasts a consumer panel 110,000 strong that provides a steady stream of retail behavior patterns and data to analyze. His data shows the seafood department is extremely challenged. “They’re afraid,” adds Lempert, referring to consumers’ 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 century, pins the blame on the seafood industry for lacking a coherent message and on retailers for failing to educate 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 enormous 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 consultants 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 constantly increasing in price. [Seafood is] not viewed as a staple — it’s a nice-to-have.”
For 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 mainstay for consumers in all income 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 created “sticker shock” among seafood buyers, he adds.
The product still offers tremendous value and remains one of the most affordable 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 yogurt, 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 minutes. We have health, but not convenience.”
Lischewski dispels any notion that methylmercury fears are driving down demand for what was once one of America’s top pantry items.
“When we talk to consumers 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, consumers understand the benefits of seafood.”
Freezer is hot
Lischewski is skeptical that any further innovations can give the shelf-stable seafood category a huge boost, although canned tuna is the “engine that pulls the train” for his company. As far as marketing, the Tuna the Wonderfish 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 provide more growth opportunity. Bumble Bee’s SuperFresh Premium Fresh Frozen product line, which Lischewski 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 segment,” 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 consumers 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 seafood manufacturers. For one, retailers need to expand the availability of frozen seafood products that are convenient and appeal to younger consumers, he says.
And he should know, as he spent 22 years merchandising seafood for supermarket 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 consumers poses unique challenges. “Millennials don’t know how to cook. They only know how to buy,” says Gibson, who developed Safeway’s Waterfront 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 relatively stable.
“Forget fresh,” agrees Lempert. “Go to the frozen food case. You have IQF fillets in bags that are very affordable. People tell me they don’t even know [this product is] available. It’s about education: 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 seafood education is conducted. Retail analysts say sales opportunities are being lost there at an alarming rate because counter staff often lack the knowledge to impart confidence to shoppers that seafood is a smart choice.
“Store personnel behind the case don’t know seafood 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 manage, control and sell seafood. They’re relying more on visuals and packaging and less and less on training,” agrees Gibson. “Ultimately, you have a consumer that’s confused about what to do with [seafood]. And confusion is a barrier to purchase.”
Gibson is skeptical that the foodservice-to-retail seafood-consumption pendulum will swing at all without serious educational efforts and increased attention to value-added or prepared seafood 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 commitment. Seafood accounts for only 1 to 2 percent of average grocery store sales. They’re not going to commit the resources they need, because they won’t get the immediate return. It’s a low margin profit base to begin with.”
Seafood isn’t losing out to the other proteins because of perception of value, one restaurant industry expert believes, but he notices that it’s featured in promotions far less often and that a lack of excitement 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 positioning 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 assortment 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 sandwich, 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 customize and be adventurous, there’s more opportunity than the same old fish sandwich with tartar sauce.
“The biggest issue holding seafood back is A, it has limited 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 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, according to beef industry analyst Duane Lenz, general manager of CattleFax in Centennial, Colo., Americans simply 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. Consumers 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 packers 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. “Suppliers are shrinking in numbers, that’s the big story,” says Lenz. “[Ranchers] lost a lot of cattle due to drought and supplies are limited.”
What lessons can the seafood industry draw from land-based proteins? Lenz says he always gets asked that question, and his answer is “consistency.”
“Consumers also want something they’re comfortable cooking. At our house we love seafood but we’re uncomfortable 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 concerned with what the chicken guys are doing. That kind of quick growth is what keeps the cowboys up at night.”
Restlessness is something the seafood industry can relate to. A surge in consumer interest in seafood, says National Fisheries Institute President John Connelly, could potentially come from an industry ally — insurance companies.
Connelly cites the federal government and the American Heart Association that estimated each cardiac arrest and stroke incident costs a health insurance company about $208,000. And Harvard Medical School researchers estimate that 84,000 such deaths are preventable if consumers 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 seafood,” 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 consumption 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 movement 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 driving,” says Connelly. “The U.S. government is saying 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 protein in a crowded ring.
Email Senior Editor James Wright at [email protected]