Out of COVID crisis, seafood industry could be on the cusp of a renaissance
In the early days of the COVID-19 crisis in the United States, the seafood industry faced a bleak outlook.
International supply chains disintegrated as air traffic was curtailed and borders were closed. The foodservice sector, through which two-thirds of seafood is sold in the U.S., looked to be shuttered or severely limited for an indefinite period of time. Seafood companies, which largely operate on credit, began to see their bad debt mount as distributors and restaurants got stuck with product they couldn’t sell – 12 percent of seafood restaurants closed their doors temporarily or permanently over the past year, and those that remained open had difficulty transitioning to selling seafood for take-out or delivery.
And yet, almost two years after COVID-19 began spreading widely throughout the U.S., the country’s seafood industry remains largely intact, due to a combination of penny-pinching, timely government stimulus, innovative thinking, and quick pivots. National COVID-19 vaccination rollout proceeded quicker than expected, prompting some industry insiders to predict a full recovery by 2022.
Anne-Marie Roerink, the principal of food industry data firm 210 Analytics, was bullish on the seafood industry’s potential earlier this year.
“I believe seafood could be one of the few exceptions to see growth in 2021 over 2020,” Roerink told SeafoodSource in April 2021.
The most significant force that has carried the seafood industry through the upheaval of 2020 has been a shift in consumer buying preferences at retail, with sales of all kinds of seafood skyrocketing in grocery stores and through e-commerce channels. In 2020, retail frozen seafood sales soared 35 percent to USD 7 billion (EUR 5.8 billion), fresh sales rose 24.5 percent to USD 6.7 billion (EUR 5.6 billion), and shelf-stable ramped up 20.3 percent to USD 2.9 billion (EUR 2.4 billion), according to Roerink, citing data from IRI Worldwide.
A massive uptick in online grocery sales benefitted the category as well. Seafood e-commerce sales tripled in 2020 to reach USD 1.1 billion (EUR 915.1 million). And direct-to-consumer seafood companies such as Wild Alaskan Company, Sitka Salmon Shares, and Real Oyster Cult also notched rapid, expansive growth as Americans sought out the convenience and safety of having seafood delivered straight to their doors.
Stephanie Pazzaglia, the business development manager at Elkridge, Maryland-based seafood distributor and processor J.J. McDonnell & Co., echoed many executives in the seafood industry in relating her company’s experience dealing with COVID-19. The pandemic forced the company to perform a massive pivot away from foodservice and toward retail, Pazzaglia said.
“It definitely gave us a kick in the butt to face the growing pains, and personally I think it’s a fantastic way that we were able to adapt to this pandemic because it really is an ongoing project and an ever-learning process,” she said. “It was a chance to grow, a chance to change, and a chance to adapt.”
The change was stressful and painful for J.J. McDonnell, Pazzaglia said, but ultimately will position the company for greater success if the consumption shifts that took place during the pandemic stick around long-term.
“As many challenges as the pandemic did present us with, it also provided us with a lot of opportunities, which was fantastic, but definitely a new way of growth for us,” she said.
In Roerink’s opinion, the shopping trends of the past years are here to stay, which she said bodes very well for the seafood sector.
“Now all the strengths of seafood are colliding into sustained high and everyday demand for protein variety, for its health halo and perhaps even for people realizing how easy it really is to prepare seafood,” Roerink said.
Nearly all participants in the U.S. seafood industry stood to benefit, as interest was up across nearly every seafood species and category type earlier this year. Sales of fixed-weight products containing salmon, crab, shrimp, lobster, catfish, tilapia, cod, scallops, tuna, and trout were all up in 2020, collectively recording USD 871 million (EUR 724.5 million) in sales, an increase of 28 percent, according to IRI Worldwide. Random-weight fresh seafood sales – typically sold at the seafood counter – also saw impressive gains, with fresh finfish sales rising 22 percent, shellfish soaring 24.6 percent, and “all other” seafood sales rising 18 percent. In the frozen category, raw shrimp sales surged 48 percent to USD 2 billion (EUR 1.7 billion), and cooked shrimp sales soared 25 percent to USD 1.8 billion (EUR 1.5 billion) in 2020.
Now that the seafood industry has attracted so many new consumers to the sector, Roerink said it faces the new challenge of keeping those shoppers engaged and encouraging them to purchase additional seafood products.
“How can we get them to experiment more and try cooking seafood at home, things they have never cooked before?” she said.
IRI Senior Vice President of Protein Practice Chris DuBois said the industry shouldn’t rest on its laurels in the face of its gains in 2020 and 2021. IRI Worldwide has projected overall consumer product goods (CPG) sales to decline from 2020 by 2.3 percent through June. However, e-commerce sales will likely continue to expand in the future, DuBois said.
“You may see a drop at brick and mortar, but you will still see e-commerce growth,” DuBois said. “Sales were so high in March and April – many weeks saw sales increases of 50 to 90 percent over 2019 – due to stockups and consumer panic, that we likely won’t see that level again. As a result, companies might see comps versus 2020 down a lot even though they are selling a lot of more than in 2019.”
With such significant growth in a short period of time, DuBois questioned whether retailers and food suppliers can keep up with the trend.
Some industry experts have expressed concern that the imminent reopening of foodservice channels as more Americans get vaccinated will cannibalize retail seafood sales. By 2022, foodservice sales volumes are expected to return to where they were prior to the pandemic, according to a forecast from food and beverage industry data firm Datassential. Nearly 80 percent of consumers are craving something new when they go out to eat, and 65 percent said they’re bored with the food they are cooking at home, Datassential found.
Mark DiDimenico, the director of customer success for Datassential, noted overall foodservice sales dropped nearly 30 percent in 2020. But he said overall foodservice sales will rise 7.5 percent in 2021 compared to 2020.
“We are on the road [to recovery],” DiDimenico said. “We are very optimistic about the industry – especially later this year with widespread vaccination. We might see too much demand for some locations.”
Publix Seafood Category Manager Guy Pizzuti said he believes consumers will continue to buy seafood at retail in large numbers, even after foodservice operations carrying their favorite items are back in business.
“[The pandemic was] an unfortunate event, a catastrophic event, but the seafood industry, especially retail, has been handed an opportunity that we’ve never had,” Pizzuti said.
Photo courtesy of Alexander Raths/Shutterstock