Pandemic pushes North American seafood suppliers to explore local supply, B2C revenue streams
Almost exactly a year ago, the COVID-19 pandemic forced the North American seafood industry to confront an ultimatum: adapt or risk perishing. By and large, seafood suppliers on the continent chose the former, opting to transform their businesses to succeed in a drastically changed market, according to a panel of industry insiders, speaking at this week’s Seafood Expo North America Reconnect.
Ocean Wise Conservation Association Fisheries and Seafood Director Sophika Kostyniuk, who moderated the panel session “Prioritizing Responsible Seafood in Uncertain Times,” said the industry had to act reflexively as COVID-19 and its new social order riddled supply chains with “challenges, uncertainties, and unknowns.”
“Practically overnight, the entire industry was turned upside down. Everyone was scrambling to figure out how to adapt and literally how to survive in this new environment,” Kostyniuk said. “No one was prepared for the scale of disruption, and no one really knew what the path forward looked like.”
For Vaughan, Ontario, Canada-headquartered Seacore Seafood Inc., such disruption was acutely observed in the realm of logistics, according to the company’s product director, Joseph Chiaravalloti.
“Seacore is in a market where we’re 12 hours away from the closest ocean, so we’re heavily reliant on a near seamless logistic path, and that didn’t seem to prove possible during these times,” Chiaravalloti said. “Our customers are used to air-delivered fresh product coming out of the water and being in their hands within 36 to 48 hours. We’ve been able, over the years, to create a chain that allowed for that, but we saw much disruption during this time, especially with air shipments.”
Chiaravalloti recalled being confronted by limited flight availability to and from certain areas, as well as increased delays as the pandemic wore on. He said the rising costs associated with overseas container deliveries, and less access to the containers themselves, also proved nettlesome. Even locally, he said, new difficulties began cropping up.
“Local deliveries weren’t even exempt from this; They were just as impacted. It took more time and essentially more dollars to get product to our customers, even when we take our local deliveries into account,” Chiaravalloti said, adding that “tons of new regulations, drivers needing to follow brand new protocols, customers implementing these protocols and not even understanding them fully” served to complicate matters at home.
The emphasis on staying local, however, eventually became a boon for Seacore, Chiaravalloti said.
“I do feel that this chaos brought on a transition – stay as local as possible,” he said. “[The pandemic] gave everybody the opportunity to give your heads a good shake and see that maybe we should be changing the ideas of where we’re getting our product. With everything that happened with this global pandemic, locality is key for certain people.”
Chiaravalloti believes local sourcing will have sustainable staying power for Seacore moving forward.
“People need to find as much as they can locally because that’s is the product that we can keep our eyes on. We can know what’s happening, if you look at it in a sustainability scope – it’s a little closer to home, with a little more control to it. I think that will stick around as time goes on,” he said.
Seacore observed an uptick in demand for lake fish, including its lake-raised trout, and freshwater fish as more customers looked local during the pandemic, Chiaravalloti said.
“In those species, we saw a huge amount of people wanting something from as close to home as possible,” he said.
Boston, Massachusetts, U.S.A.-based company Stavis Seafoods also reported increased demand for its local catch in the last 12 months.
“Our local fisheries, whether it be striped bass, whether it be black bass, or tuna, they all saw a dramatic increase in terms of desirability for the marketplace,” Stavis Seafoods President David Lancaster said.
Further down the East Coast, Atlanta, Georgia’s Inland Seafood found its local connections strengthening and expanding, too, Mary Smith, director of sustainability for the firm, said.
“Local connections were really key, and an important part of the process for us. Helping out local fishermen and farmers move product quickly, especially during those first uncertain weeks of the pandemic. As the summer wore on, and it stabilized a little bit, helping them find new opportunities in retail was important not just for us, but all of our suppliers,” Smith said. “It was those deep relationships with retailers across the country that allowed us to move that product successfully.”
When “the bottom just completely dropped out” last year due to the pandemic, Lancaster said Stavis was faced with new constraints on product availability.
“It was a matter of [whether] you could even get product, and if it was available,” he said. “It really was eye-opening to see what we were able to do. It allowed us to say no to certain things, it allowed to be creative in terms of pivoting to find out where the pockets of product were available and where the pockets of sales were as well.”
The company turned to species like crab, which saw “prices going through the roof” as consumers tried to recreate classic restaurant dining experiences at home, Lancaster said. Stavis also leaned into its frozen retail business while keeping tabs on the direct-to-consumer market and searching for available product alternatives.
“Being able to source the product and finding new alternatives for products that you could not get, it really showed us that nothing was off the table. We were willing to explore – and had to explore – alternative products that could be sustainably sourced, that met all of our criteria. We basically did not take anything off the table. We looked at everything,” Lancaster said.
When shrimp supply from other areas ran dry, Stavis saw its Argentine red shrimp product pick up steam, according to Lancaster.
“Our Argentinian red shrimp became very popular,” he said. “We’re vertically integrated in that particular product, and so when we couldn’t get shrimp out of other areas, we were in a very good place to be able to get that further into the marketplace. It’s in vogue right now – we’re seeing a lot more people accept alternatives. That’s probably the biggest thing that we saw.”
Lancaster said his firm expects that some of these shifts are here for the long haul - an opinion shared by others in the industry at a separate SENA Reconnect panel.
“From Stavis’ standpoint, what we’ve seen explode is a direct-to-consumer approach with retailers and home delivery. The shopping dynamic has tremendously changed, and I think that’s going to stick around,” he said.
U.S. West Coast supplier Santa Monica Seafood is banking on the direct-to-consumer model sticking around, after taking “the opportunity to establish [its] B2C-type revenue streams” over the last year, Santa Monica Seafood Senior Vice President of Sales and Procurement Shevis Shima said.
“There’s a lot of opportunity for all of us to grow within that category,” Shima said, as well as in e-commerce channels. He noted that what COVID-19 has taught Santa Monica Seafood is that new opportunities always await the industry, even in troubling times.
“In the case of Santa Monica Seafood, we pursued a lot of unchartered grounds,” he said. “We started doing things a little differently, we started looking at new opportunities. While we were pursuing new opportunities, we still remained extremely intimate with our brand promise through quality, integrity, service, reliability, and obviously continuous sustainability efforts.”
Kostyniuk, Chiaravalloti, and Lancaster agreed that along with increased sales, consumers are asking more questions about the sustainable credentials of the seafood they're buying.
“We have received an extraordinary amount of questions around sustainability and sustainability rankings. One of the lasting pieces from COVID is that nobody can argue that we are not inextricably linked from the environment around us, we are all interconnected with the health of the planet,” Kostyniuk said.
Chiaravalloti said Seacore began noticing a signficant shift in consumer sentiment about six months into the pandemic.
“It kind of flipped for us about six months in,” he said. “It seemed that consumers were getting a bit more comfortable with what was going on, getting into the swing of things with all of these new regulations being imposed and our new reality. It seemed like they were being a bit more conscious of what was taking place and why it was happening. We just saw a complete shift to demand for sustainable product, for sustainably-ranked product.”
In the first quarter of 2020, Seacore was down 11 percent in sustainable seafood purchases, he said, and in the second quarter, it was down 32 percent. By the fourth quarter, however, “we were up over 20 percent in sustainable seafood sales,” he said.
Lancaster said Stavis saw interest in sustainability pervade home delivery and consumer-direct models over the past year.
“Consumers still had the desire to know where their fish came from, and so the sustainability component of it didn’t go away just because you were selling it directly to them,” he said.
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