Seafood industry powers through the pandemic with ingenuity, flexibility

The COVID-19 pandemic period has been riddled with loss and upheaval, yet the industry has remained resilient, with many seafood suppliers successfully pivoting their business strategies to target retail and e-commerce channels in the face of sudden and severe foodservice constrictions.

Such shifts proved crucial, especially given the dramatic spikes in demand and sales seen at retail for fresh, frozen, and shelf-stable seafood beginning in 2020. That year saw more consumers eating at home and going on pandemic-fueled buying sprees, which drove retail seafood sales to new heights. In 2021, those record sales were eclipsed, according to research firms IRI and 210 Analytics.

Fresh seafood sales hit a record in 2021, rising 4 percent compared to 2020 and 30.8 percent versus 2019, reaching USD 7.1 billion (EUR 6.3 billion). Frozen seafood sales, meanwhile, rose 2.8 percent last year compared to 2020 and 40.8 percent versus 2019, hitting USD 7.2 billion (EUR 6.4 billion).

Ambient seafood sales declined 11.4 percent in 2021, due to inflation and the comparison with the pandemic stock-ups of 2020. However, the category still produced USD 2.5 billion (EUR 2.2 billion) in sales for the year.

“We have to remember that canned seafood was one of the biggest stories early on in the pandemic. March, April, and May of 2020 had such giant peaks that it was simply impossible for canned seafood to come anywhere near those,” 210 Analytics Principal Anne-Marie Roerink said. “Then, demand started to soften a bit in the latter half of 2020, so it also becomes easier for the latter half of 2021 to grow.”

The future is bright for ambient seafood sales because consumers have always viewed canned seafood as a cost-effective, good-to-have-on-hand item, Roerink said.

“In today’s marketplace, where inflation is the highest in 40 years, we see shifting to items that help stretch the dollar and items that are more cost-effective, and canned seafood certainly fits that bill,” she said.

Increased demand and supply-chain challenges haven’t stopped seafood organizations and companies from shining a promotional light on their products, which promises to aid in additional future growth for the industry.

The Eat Seafood America! marketing campaign – which was launched as a rapid response to the COVID-19 public health crisis, with the dual goals of helping Americans stay healthy and boosting the U.S. seafood sector – achieved an 800 percent return on investment, the Seafood Nutrition Partnership (SNP) said in January 2022.

The campaign, introduced by SNP and the Seafood4Health Coalition in 2020, reached four million households and “outperformed benchmark campaigns,” SNP said. Every dollar spent on campaign ads resulted in a USD 9.00 (EUR 7.95) increase in seafood purchases. The digital pilot initiative elevated seafood sales, and consumers reported increased consumption and intention to cook more seafood by three times, SNP said.

Innovation nation

When met with a sudden swell in demand at retail during the early days of the pandemic, seafood vendors dedicated much of their time toward filling existing product orders. It didn’t take long, though, for seafood suppliers to secure their inventories and start innovating new offerings.

Among these pandemic innovators was Brooklyn, New York, U.S.A.-based Acme Smoked Fish Corporation, which released a host of new products over the course of 2020 and 2021, including a line of smoked seafood salads sold under the Spence & Co. product range. The items, launched in March 2021, feature wild-caught fish smoked using native American hardwoods, and come in three varieties: Naturally Smoked Whitefish Salad, Naturally Smoked Salmon Salad, and Naturally Smoked Tuna Salad.

The products cater to the enduring consumer demand for convenience, which became especially potent as the pandemic entered its second year and home-cooking fatigue set in.

“The new smoked seafood salads are a convenient way to snack, prepare a quick lunch, or feed a crowd,” Acme said. “Serving suggestions include enjoying on a salad or bed of lettuce, creating a smoked seafood salad sandwich or wrap, or serving as an appetizer by spreading on crackers, then topping with fresh herbs.

Acme's Naturally Smoked Whitefish Salad consists of hot-smoked wild-caught whitefish from the U.S. Great Lakes mixed with dill, chives, black pepper, and mayonnaise, while Naturally Smoked Salmon Salad features hot-smoked wild-caught Alaska salmon combined with mayonnaise, lemon juice, chives, cayenne pepper, paprika, and other spices. Naturally Smoked Tuna Salad is comprised of hot-smoked yellowfin tuna mixed with mayonnaise, lemon juice, onion, black pepper, and other spices.

Salisbury, Maryland, U.S.A.-based shellfish supplier Handy Seafood noticed consumer demand for frozen products was on the rise even before the COVID-19 pandemic hit and accelerated the habit.

Millennials in particular have consistently been willing to explore the frozen aisle in search of convenient, exciting meal options, Handy Director of Product Development Lion Gardner told SeafoodSource in March 2020.

“Millennials are willing to give frozen products a try provided they are high-quality, innovative, and delicious,” Gardner said.

The company’s product launches leading into 2020 did well to attract such consumers. Handy entered the year with new apps and meal items gracing its portfolio, including Salmon Superfoods Bites, Salmon Pastry Bites, and Salmon Dip Flatbread; as well as Domestic Key West Shrimp Bites, Domestic Key West Shrimp Cakes, Shrimp Rolls, and Nashville Hot Shrimp.

Handy continues to target top demographics in 2022 with new product debuts, including offerings developed in partnership with Chesapeake-flavored seasoning producer Old Bay. Old Bay Crab Cake, which features wild-caught blue swimming crab and Old Bay seasoning, and Old Bay Breaded Shrimp, which includes fresh shrimp lightly coated in a crispy Old Bay panko coating, are both available at retailers nationwide, Handy said. According to Todd Conway, the company’s CEO, the products encourage “individuals and families to indulge in restaurant-quality menu items from the comfort of their home.”

In early January 2022, Handy rolled out its first plant-based seafood analog product, plant-based Crabless Cake, to retailers and foodservice distributors nationwide.

Channel surfing

E-commerce has been a boon for the seafood industry throughout the pandemic, as numerous seafood suppliers, distributors, and wholesalers have expanded their online and direct-to-consumer channels after watching their foodservice business suffer significant slashing during the start – and peaks – of coronavirus.

Anchorage, Alaska, U.S.A.-based Copper River Seafoods, for instance, continues to thrive despite the financial pain it has endured – alongside its competitors – due to the COVID-19 pandemic. Copper River Director of Marketing Jim Kostka said the company struggled after its foodservice business disappeared practically overnight in 2020.

“Locally, with restaurants closing down and limited seating, local purchases dropped quite a bit,” Kostka told SeafoodSource. “It was devastating when they first shut down. We had a lot of great product and no customer base.”

With its foodservice channel out of commission, Copper River set out to make sure its retail customers, including Walmart and Costco, were well-supplied, Kostka said.

Additionally, the firm reset its focus on upping sales through its website and by launching a popup market where local customers could place orders online and pick them up via a dedicated drive-thru at a specific date and time.

“We offer wholesale pricing to residents and it [has been] very successful. It makes an economic difference for people who have lost their jobs,” Kostka said, adding that the practice has also allowed Copper River to shift bulk supply of individually-wrapped frozen halibut or salmon for cruise ships and other customers into 10-pound boxes for consumers.

The company also bolstered its online shop, which caters to people in the lower 48 states who have visited Alaska, Kostka said.

Clackamas, Oregon, U.S.A.-based Pacific Seafood, too, launched a direct-to-consumer website in 2020, in an effort to boost direct-to-consumer sales amid foodservice stagnation. The online shop offers a variety of West Coast-caught seafood ranging from Alaskan sablefish to rockfish, Dungeness crab, Columbia River steelhead, and sushi-grade yellowfin tuna. Pacific’s virtual shop is also selling assorted seafood collections such as Seafood Starters, a Premiere Protein Pack, Grillmaster’s Choice, and more.

“Some absolutely beautiful, beautiful products that we pack here ship directly to your doorstep and you can put directly in your fridge or freezer,” Tyson Yeck, the company’s vice president of domestic sales, said in 2020.

According to Pacific’s website, the company harvests, processes, and packs its products for home delivery to the U.S. states of Washington, Oregon, California, Idaho, Montana, Arizona, Colorado, Utah, and Nevada. It offers 10 percent off for first-time orders.

Restless restaurants

While retail demand soared due to Americans cooking at home more, restaurants have faced closures and dining restrictions from 2020 onward. As a result, seafood purveyors’ customer bases are forever changed. More than 90,000 restaurants and bars have closed since the start of the pandemic, the Independent Restaurant Coalition said. Unfortunately, independent operations have closed at the highest rate of any type of restaurant since the start of the pandemic, Datassential Director Kelley Fechner said at the National Fisheries Institute’s Global Seafood Market Conference (GSMC) in January 2022.

“The thing that’s most concerning from a seafood perspective [is that] 98 percent of all fine-dining restaurants have some form of seafood,” Fechner said.

Higher prices are also spooking restaurant-goers, according to Fechner. More than half of American restaurants have raised their menu prices for various reasons, including supply shortages, food inflation, and higher labor costs, she noted.

“Americans will pull back on restaurant visits as prices remain high. Forty-two percent of consumers say, ‘I’m going to pull back on those restaurant visits,’” Fechner said.

Due to soaring food costs, menu prices rose 4.5 percent last year, the highest rate since 2008, according to B. Hudson Riehle, senior vice president of the National Restaurant Association (NRA) Research and Knowledge Group.

Protein costs have risen from 20 to 30 percent or more over the past year, Riehle said. And input costs are not expected to change until well into the second half of 2022, he added.

In the seafood industry’s favor, beef prices have risen the most of any commodity, making seafood prices look more attractive in comparison, Fechner said.

Since August 2021, restaurant employment has been sagging, Riehle said, noting that the overall U.S. economy is down 3.6 million jobs compared to pre-pandemic levels, as of December 2021. In a December 2021 NRA survey, 61 percent of restaurant operators said recruiting employees was their biggest challenge, followed by the cost of food (20 percent). Only 6 percent said coronavirus was their top challenge.

A bright spot, however, does exist for the foodservice sector: There is significant pent-up demand for on-premises dining.

“The one salvation is that users want to use the industry,” Riehle said.

NRA’s consumer poll found that 51 percent of Americans said they are not using on-premises dining as much as they would like, and 37 percent said they are not using takeout or delivery as much as they would like. And while on-premises dining dropped 19 percent from February 2020 to November 2021, off-promises dining soared 20 percent.

“The reason off-premises can flourish in this environment has to do with a fundamental difference now that wasn’t available to the industry five years ago, and that is new technological solutions,” Riehle said. “Digital capability has dramatically increased the ability for consumers to have on-demand meal solutions."

Riehle said the seafood industry has an opportunity to grow its share on restaurant operators’ menus this year, however, the NRA survey found the category faces numerous challenges. Per the survey, the primary reasons consumers don’t order seafood at restaurants is because they do not eat it (32 percent), they think it’s “too expensive” (27 percent), they prefer to prepare it at home (21 percent), and “there is a lack of appealing seafood on the menu” (8 percent).

When it comes to key consumer considerations for ordering seafood, NRA’s survey found price to be the top factor (47 percent), followed by harvest method (23 percent), origin (19 percent), and sustainability certifications (12 percent).

“Their most-important consideration in the end does remain price,” Riehle said.

Despite the bevy of difficulties buffeting the U.S. restaurant industry, Americans retain a positive view of it, Riehle said, and many recognize the inherent benefits that seafood brings to the menu. Seventy-three percent of Americans said they order seafood dishes at restaurants because of its taste, while 35 percent say health benefits are important, and 30 percent order seafood because they are dining at a seafood-specific restaurant, the NRA survey found.

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