Farmed seafood becoming first choice of retailers in Japan

Published on
October 24, 2016

Farmed seafood is slowly gaining preeminence in the Japanese retail sector, driven by the changing preferences of the country’s national supermarket chains.

Japanese marine aquaculture production volume in 2015 was 1.06 million metric tons, up eight percent from 2014. (The total is still lower than it was in 2013, when aquaculture production was 1.11 million metric tons). Aquaculture accounted for 22.8 percent of total Japanese fish and shellfish production, with wild-caught making up the remainder, according to the Statistical Handbook of Japan 2016, published by the Statistics Bureau.

The production increase is just one piece of evidence indicating a shift in preferences – retail now prefers farmed seafood. This change has been driven by the rise of national supermarket chains that wish to plan large-scale promotions in advance. Farmed items are now the centerpieces of the seafood section.

Those in the foodservice industry have long preferred farmed seafood because prices and supply were more stable, allowing fixed menus and prices, while retail was better able to change prices and offer specials. Now, retailers also want that stability.

While many lower-priced species, such as sardines, mackerel, horse mackerel and saury are typically held frozen in storage, holding large stocks both ties up cash and represents a market risk in case price fluctuations render the stocks less valuable than when they are purchased. There is a new trend for retailers and restaurant chains to hold less stock, for example reducing the amount from 10 to 20 percent of the annual requirement to just five percent.

Some notable products suffering as a result of this trend were oysters, which declined from 184,000 to 164,000 metric tons (MT) and wakame seaweed, declining from 52,000 to 45,000 MT.

However, in defiance of the trend, retailers registered higher volumes of kelp, rising from 276,000 to 298,000 MT and yellowtail, which rose from 135,000 to 140,000 MT.

Yellowtail reached a high of 160,000 MT in 2010, but prices fell as a result of oversupply, and the business has become less profitable, leading fish farmers to cut back, with some going out of business. Businesses that are doing well have integrated feed supply with processing and sales, while contracting out the actual farming to local fishery cooperatives or their members. Feed makes up the major expense for yellowtail aquaculture, so control of feed costs is the key to profitability. Meanwhile, under Japanese fisheries law, the fisheries cooperatives have first rights, ahead of corporations, to aquaculture sites.

There has also been a trend to replace amberjack culture with the more profitable bluefin tuna, though imported Mexican tuna still has a price advantage in the market.

While Japanese seafood consumption is declining, both with the declining population and the adoption of Western diets, the sushi boom has boosted yellowtail exports, notably to North America. The export volume of frozen yellowtail fillets in 2015 was 6,569 MT, up 60 percent in the last three years. Overall seafood exports, including scallops, the top aquaculture export by value, were up 18 percent to JPY 275.7 billion (USD 2.65 billion, EUR 2.43 billion).

Another boost to yellowtail has been the proliferation of odor-free brands. Several companies are attempting to differentiate their brands with claims that their feed ingredients – including tea leaf, lemon grass and herbs, or citrus peel – eliminate fishy smells.

Contributing Editor reporting from Osaka, Japan

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