Unprecedented demand for seafood battling inflation headwinds
Inflation is expected to be a major issue impacting the food industry this year, but will hurt the seafood sector less than others, according to executives at Santa Monica Seafood and Steve Connolly Seafood.
A Reuters quarterly survey of more than 500 economists conducted in January, resulted in a general consensus that 2022 will bring with it higher inflation. Economists also reduced their global growth forecasts to 4.3 percent growth in 2022, down from the 4.5 percent predicted in October, in part because of steeper interest rates and higher costs of living.
“While price pressures are still expected to ease in 2023, the inflation outlook is much stickier than three months ago,” Reuters said.
The U.S. Federal Reserve policymakers are finally “acknowledging what everyone else has seen for most of the year and are even acknowledging continuing high inflation through most of 2022,” Santa Monica Seafood President and CEO Roger O’Brien said.
“We definitely see high inflation continuing throughout 2022,” he said.
The spread of the omicron variant of COVID-19 also threatens to worsen shortages of labor and supplies which, in turn, will only drive an increase in consumer-price inflation, including for seafood, O’Brien said.
“And we’ve already learned this year that restaurants, and even grocery retailers, will remove various seafood items from their menus and shelves if the prices get too high,” O’Brien said. "Luckily for seafood, the increase in prices for meats and other proteins is worse than it has been for seafood.”
O’Brien said he expects seafood sales to rise this year increased demand, but that sales will increase more in value than volume.
“We see consumer price inflation continuing into 2022 and we believe it will get worse before it gets better. This will translate into higher sales dollars,” O’Brien said.
Foodservice sales came “roaring back” in 2021 and still haven’t peaked, according to O’Brien.
“But the determining factor on whether seafood sales volume will increase in 2022 will be how restaurants, hotels, and hospitality groups can cope with labor, supply, price inflation, and government restriction issues,” he said.
Boston, Massachusetts-based Steve Connolly Seafood has a positive outlook on foodservice seafood sales in 2022, the company’s chief operating officer, David Coombes, told SeafoodSource.
“I am more optimistic on the supply side than some people are. We are starting to see more fish coming in and also some imported species that haven’t been available are now showing up,” Coombes said.
While it is a slow, gradual trend, “it is going in the right direction,” Coombes said.
“Realistically, it will take a while for the supply to reach the point where it has a significant impact on the prices of some popular species,” he said.
Demand will remain strong and may even increase, according to Coombes. People want to eat out at restaurants and go on vacations and, as time goes on, “this should happen more and more,” Coombes said.
“As restaurants build their kitchen and waitstaffs back up, and as they become more confident in staying open, we will see menu sizes increase, and with [that], the number of seafood items on the menu [will also increase], both in terms of printed menu items and as specials,” he said.
“We are looking forward to operators expanding their menus and getting back into variety," Coombes said. "It’s interesting that people are hesitant to buy and cook less-common species at home but will try them in a restaurant.”
Photo courtesy of Santa Monica Seafood