Persistent food inflation throughout 2023 drove many customers toward value-focused channels in seafood, and the slowing rate of inflation wasn’t enough to reverse a downward sales trend across most categories of seafood.
The latest year-end survey from consumer behavior data firm Circana shows 55 percent of seafood shoppers looked for sales and deals more often throughout 2023 – either by looking to buy more private-label products, clipping coupons, or following in-store promotions – a report by 210 Analytics President Anne-Marie Roerink said.
“The survey found that nearly three in 10 shoppers include more value-focused retailers into their store rotation, 18 percent shop more grocery stores to get the best deals, and another 18 percent have switched stores altogether,” Roerink said. “This has led to substantial channel shifting when comparing the share of refrigerated seafood dollars in 2023 versus the channel share distribution in 2019.”
In 2019 – before the Covid-19 pandemic – traditional grocery stores accounted for 39.9 percent of refrigerated seafood sales; that number dropped to 36.8 percent in 2023. Refrigerated seafood sales at club stores, however, rose from 19.5 percent in 2019 to 21.2 percent in 2023, specialty stores rose from 6.9 percent to 7.1 percent, discount grocery stores rose from 6.3 percent to 7.1 percent, and mass/supercenter sales rose from 4.1 percent to 6.4 percent.
Health and specialty store sales, meanwhile, dropped – falling from 8.1 percent in 2019 to 5.8 percent in 2023.
Inflation has been a persistent concern throughout the seafood industry in 2023. During Seafood Expo North America in April 2023, Category Partners pointed out inflation was changing the way U.S. consumers shop for seafood, with retail prices for frozen seafood increasing 6.6 percent for the 13 weeks ending 4 February 2023.
Though inflation weighed on consumers in 2023, the issue actually stems back to 2022, when food and beverage inflation spiked dramatically. According to Circana data, prices jumped 12.5 percent in 2022, and consumers dealing with price increases then faced 11.4 percent inflation in Q1 2023.
The story that played out in early 2023 continued through most of the summer, and even slowing inflation in the latter half of the year wasn’t enough to alleviate consumer caution.
Survey data showed that slowing inflation is starting to have a small effect, as fewer consumers perceive prices as “much higher” and 19 percent of consumers reported they are in a better financial position than they were last year, compared to just 13 percent of respondents making that claim in 2022.
As overall inflation continues to slow, seafood inflation has dropped even faster compared to other food categories. Fresh seafood pricing dropped 3.5 percent in December 2023 compared to the same month in 2022, and prices for the 52 weeks ending 31 December are down 1.2 percent.
Despite the dropping prices, the average price per pound of seafood remains a persistent barrier to increased sales, Roerink said.
“At an average price per pound of [USD] 9.18 [EUR 8.44], the cost of fresh seafood remained significantly higher than the average price per pound for the three biggest animal proteins of chicken [USD] 2.99 [EUR 2.75], pork [USD] 3.11 [EUR 2.86], and beef [USD] 6.51 [EUR 5.98],” Roerink said.
In December 2023, every category except shelf-stable seafood saw contracting prices compared to the same period of 2022. Circana data indicates fresh finfish saw a 1.2 percent decrease to an average price of USD 10.31 (EUR 9.48) per pound, fresh shellfish saw a drop of 6.8 percent to an average price of USD 8.21 (EUR 7.55) per pound, and frozen seafood dropped 6.8 percent to USD 7.64 (EUR 7.02).
Shelf-stable seafood – the only category that saw an increase – reached a per-unit price of USD 2.35 (EUR 2.16), which is up 2.2 percent.
Nevertheless, most categories continued to lose sales. For the 13-week period ending 31 December, aisle-fresh seafood sales dropped to USD 1.47 billion (EUR 1.35 billion), which is a decrease of 7.5 percent compared to the same period of 2022.
Of that total, fresh finfish sales dropped 5.1 percent to USD 845 million (EUR 777 million), with the largest part of the category – fresh salmon – seeing sales drop 5.6 percent to USD 604 million (EUR 555 million).
Salmon prices, Roerink said, finally started to level off in Q4, with the average price per pound of fresh salmon dropping 0.5 percent to USD 11.30 (EUR 10.39) per pound.
The second-largest part of the fresh seafood category – fresh shellfish – saw its sales drop 11.1 percent by value to USD 550 million (EUR 506 million), with declines across every species barring fresh cockles.
All other fresh seafood – which includes salads, cakes, dips, and more – dropped 6.7 percent to USD 76.8 million (EUR 70.6 million).
Frozen seafood, meanwhile, dropped even further than fresh seafood. Across all categories, aisle-frozen seafood sales value dropped by 10.7 percent to USD 1.58 billion (EUR 1.45 billion). Of that, frozen shellfish sales value dropped 12.2 percent to USD 996 million (EUR 916 million). Frozen shrimp, which makes up the lion’s share of the category, saw its sales value decrease by 12.7 percent to USD 830 million (EUR 763 million).
Like fresh options, those declines in sales came despite of a decline in prices.
The average price per pound of frozen shrimp decreased 8.9 percent in December 2023, and the price per pound of frozen salmon dropped 5.3 percent.
The one species that saw an spike in sales value in the category was frozen salmon, which saw a 0.9 percent increase in sales value to USD 145 million (EUR 133 million).
All other frozen seafood also experienced a decrease, declining 12.4 percent to USD 63.2 million (EUR 58.1 million) in the 13 weeks ending 31 December 2023.
“Despite favorable price conditions, seafood sales continued to struggle in December, continuing the negative downturn that started at the third quarter of the year,” Roerink said. “Both fresh and frozen lost ground over year-ago levels. Additionally, dollars and pounds appear to have lost the engagement momentum experienced in 2020 and 2021.”
As inflation continues to slow, Roerink predicts seafood still has to overcome the cost gap between it and other proteins going into 2024.
“The market typically experiences a delay in consumer demand ticking back up once prices come down,” she said. “Given the duration and depth of inflation and the higher cost of seafood in comparison to some of the meat and poultry proteins, that delay may be longer than normal.”
Photo courtesy of Shine Nucha/Shutterstock
