Scallop sales following seafood trend: Big drop in foodservice, but surge in retail

Published on
May 13, 2020

The scallop market in the U.S. has largely mirrored the trends seen in virtually every other seafood category, according to information shared by Bristol Seafood.

The information came via an industry webinar the company hosted in order to provide an update on how scallops have been impacted by the COVID-19 pandemic. Bristol regularly releases a “factbook” covering what to expect in the coming year, but the pandemic had understandably rendered a portion of that information obsolete.

On the supply side, the volume of scallops that the U.S. fishery is expected to catch in 2020 is expected to come in at roughly 10 million pounds lower than it was in 2019 – down from 62 million pounds to 52 million pounds – largely due to changes in how many trips are being allowed into closed fishing areas. That change in landings is no surprise, as the New England Fishery Management Council approved Framework Adjustment 32 in December 2019 and predicted that number then.

The real surprises in 2020 are coming due to complications related to rapid downturns in foodservice buying caused by COVID-19.

“It would be probably an understatement that the foodservice world stopped with the onset of COVID-19,” Michael Lodato, vice president of sales at Bristol Seafood, said during the webinar.

The closure of restaurants understandably resulted in a sudden drop in demand for scallops from foodservice channels.

“Really, in a matter of days, we saw the overall demand of scallops in the foodservice sector drop by 90 to 100 percent. It was like running into a brick wall,” Lodato said.

Scallops have been hit particularly hard by bans on in-service dining, as customers seem less likely to purchase scallops for take-out options, Lodato said.

“Even restaurants that stayed open with pick-up options just simply weren’t selling meals that included scallops in any significant numbers,” Lodato said. “When you think of a pick-up meal, you don’t necessarily think of a nice entrée with scallops. It hit the demand side very very hard.”

That initial heavy drop, however, is starting to ease slightly as certain states are using new guidelines for restaurants.

“We’re starting to see just an ever-so-slight crack in the foodservice figure,” Lodato said. The initial near-complete drop has started to ease off from the 90 to 100 percent decline, he said. “What we’re seeing now is 75 to 80 percent down. We’re starting to see, dare I say, a recovery, but a very slow crawl out of what we hit.”

Lodato said that while they anticipate that the foodservice side will eventually make a complete recovery, it may take a long time. Even if states across the U.S. allow restaurants to completely reopen, consumer behavior won’t necessarily bounce back to what it was prior to the pandemic.

“The economic model that worked for so many years for so many restaurants simply doesn’t work in a post-COVID world,” Lodato said.

Institutional demand, as well, is hard to predict, with school closures and other institutional closures negatively impacting scallop demand.

Despite the negatives, Lodato said he’s “relatively bullish” on a recovery.

“I just think that recovery is over a fairly long-term horizon, and we will see demand slowly grow as a return to normalcy starts to happen,” Lodato said.

In contrast, the retail market has been buoyed heavily by increased grocery sales and initial panic buying.

“Frozen seafood was a sector that was just going through the roof,” Lodato said. “Scallops really benefitted from that.”

Some markets were up 25 to 30 percent, he added, with greater emphasis on grab-and-go meals.

“As things were starting to come back online, we’re starting to see a different type of need in the retail industry. People are telling us that the convenience of something like a grab-and-go, ready-to-cook, ready-to-eat type of scallop is of really good interest,” Lodato said.

That could be part of why Bristol’s My Fish Dish, which already saw positive customer reception prior to the pandemic, has been doing well.

“Our sales of My Fish Dish have been growing,” Bristol Seafood President and CEO Peter Handy told SeafoodSource. “We’re fortunate to be seeing an increase in rate of sale at existing retailers, and significant interest from additional retail partners.”

In addition, Mother’s Day saw a spike in sales of scallops.

“A perennial favorite for Mother’s Day is scallops, and a lot of people take their moms out for dinner,” Lodato said. With restaurants closed, taking mom out for dinner wasn’t an option. What we saw out in the market, and what we’re hearing, is that many retailers really sold a lot of scallops."

Overall, Lodato said, is that reduced demand will “continue to be the driving story.”

On the supply side, things have become a “tale of two markets” in the domestic supply. According to  Handy, the price differential between high- and low-quality scallops is larger than normal. Quality has always differed based on catch area, but this year the differences are more pronounced.

“What we’re seeing in terms of the product itself, and what we’re seeing in terms of the price differences between different areas, is telling us that this year the difference between high quality and low quality is bigger than it has been historically,” Handy said. “That’s going to be a theme in terms of what pricing does.”

Handy said that he predicts that if companies compare purchases prices to the average price, it won’t tell the full story.

“It will either look like you’re getting a big steal, or you’re way overpaying, because we’re starting to get almost a tale of two markets,” he said. “And it will be interesting to see how that progresses throughout the season.”

Sizes of scallops available has also varied. Larger scallops, like U10s, are in shorter supply than in the past, while smaller scallops are in higher supply. That may be offset by shifts in demand, as the larger scallops are typically bought up by the foodservice industry.

“There’s a question as to what that’s going to mean in terms of pricing,” Handy said.

Supplies are also being hit by a reduction in imports of scallops, which often make up at least half of what the U.S. consumes. While that is being partially offset by a 14 percent decrease in exports, it likely won’t be enough to completely offset supply constraints.

“The big question for figuring out how that impacts pricing is, we know supply is down, so if demand wasn’t changing, all else equal, you would see prices go up,” Handy said. “But the big uncertainty is what is going to happen on the demand side.” 

Photo courtesy of SosnaRadosna/Shutterstock

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