SPECIAL REPORT:

Distribution
Seafood distributors are facing consolidation and stagnant profit margins but remain upbeat

By Fiona Robinson
More distributors are optimistic about the state of the seafood-distribution industry these days. Nearly 30 percent of distributors describe the industry as "vibrant," compared to just 18 percent in 1999, the last year SeaFood Business surveyed them.

In addition, 60 percent perceive the industry as holding its own, which is good sign, considering increased fuel prices and other challenges that have plagued distributors over the past year.

More than half say the seafood distribution industry will expand in the next three years, up from the 43 percent of distributors who projected short-term industry expansion in 1999.

One-third of distributors say the industry is at status quo, and only 18 percent say it will shrink in the near future.

But when the numbers are broken down, broadliners are more optimistic about the future than seafood-only distributors: 55 percent of broadliners describe the future as "vibrant" compared to 48 percent of seafood-only distributors.

These results may be due to an increase in the number of broadliners responding to the survey, 45 percent this year, compared to 35 percent in 1999.

Jim Burhop, national senior seafood-category manager for broadline distributor Alliant Foodservice, has reason to be optimistic about the future: Alliant has seen double-digit growth in its seafood sales for almost four years in a row.

Despite the growth, Burhop still has concerns about the future.

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"I’m not as optimistic, because most of our increases are at the expense of other companies. I don’t see a new resource or supply," says Burhop.

The seafood industry still spends too much time competing internally rather than with the other center-of-plate proteins like poultry and beef, he adds.

Meeting challenges

Consolidation within the industry has a lot to do with the distributors’ mood, adds Burhop. In fact, they rank consolidation as the No. 3 challenge facing their industry, up from the fourth spot in 1999.

One distributor that knows first-hand about consolidation is Morey’s Seafood International, which has acquired several distributors over the past few years and will continue acquisitions this year, says company President and CEO Dieter Pape.

Consolidation has allowed Morey’s to distribute its products to large retailers.

"It’s giving us some strength that you don’t have as a single-location distributor," says Pape.

The top-ranked challenge cited by distributors is sourcing/product availability, and the No. 2 challenge is environmental groups. Flat seafood consumption fell from the No. 2 challenge in 1999 to

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No. 4 this year, not surprising since per capita consumption increased to 15.3 pounds per person in 1999.

Rising fuel prices pose an additional hurdle for distributors that was not mentioned in the survey results. An increase in gas prices has been a "major factor" affecting distributors, notes Pape. Morey’s has been afraid to pass surcharges on to its customers to defray increased costs, he adds.

Profit margins stagnant

Despite the challenges, nearly one-third of distributors say their profit margins in 2000 were higher than in 1999. Looking at the two types of distributors, 31 percent of broadliners say their profit margins increased, compared to 26 percent of seafood-only distributors.

But the majority of distributors – 52 percent – say their profit margins were the same. Broadliners’ average profit margin from seafood sales was 15 percent last year, while the average profit margin for seafood-only distributors was 26 percent.

In order to remain profitable, or to become moreso, companies must become more efficient, notes John Pollock, director of seafood merchandising for Sysco Corp., a broadliner whose estimated seafood sales in 2000 were $1.35 billion. The long-term effects (of stagnant profit margins) are what we’re seeing today, more industry consolidation and movement by buyers to get closer to the resources, notes Pollock.

Product mix

The average number of seafood products per distributor is 344, and nearly two-thirds of distributors are carrying more seafood products than they were last year.

This holds true for Plitt Seafood Co., which sells specialty items to retailers and chefs in Chicago.

"We’re carrying things that I wouldn’t imagine us doing before," says Sean O’Scannlain, company president. Those items include European species like branzino, loup de mer and red mullet.

"It doesn’t make the small distributors very happy, but everyone is adding to their mix of products," says Burhop.

Distributors are increasing sales of all products, from fresh to frozen to farmed to imported. But the biggest increase, reported by 60 percent of distributors, is in sales of frozen seafood.

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Frozen products like clams, oysters and mussels have come a long way in terms of improved quality and are helping to fuel the increase in frozen-product sales, Burhop adds.

The customer

Steady growth in the restaurant business has led to more foodservice accounts for 56 percent of distributors. In comparison, 41 percent of distributors have increased their retail accounts, and 27 percent increased sales to other distributors.

While the majority of distributors still rely on foodservice accounts as their customer base, 29

percent of both broadliners and seafood-only distributors look to independent retailers for their seafood sales, up from 22 percent in 1999. Supermarkets account for 42 percent of distributors’ retail seafood sales, and specialty stores garner 29 percent.

Distributors look to independent retailers for two reasons. Profit margins on product sold to independent retailers are higher, and there is a lot of loyalty with the smaller operator, notes Alliant’s Burhop. If you’re doing business with a lot of small retailers, it hurts a lot less if a big chain drops its account, he adds.

Be on the lookout for the results of SeaFood Business’ annual retail survey in the October issue.

You can e-mail Fiona Robinson at frobinson@divcom.com

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SEAFOOD STAR:

OSU Seafood Lab partners with industry
Lab Director Michael Morrissey brings science to the front line

By Linda Skinner
Michael Morrissey, director of the Oregon State University Seafood Laboratory, is not the ivory-tower-style researcher you might expect to find in a venerable institution of scientific study.

Established in 1939, OSU-SFL is one of the oldest university-based seafood labs in the country. But Morrissey’s realm is not academia. He’s out on the front line with the seafood industry, spearheading hands-on research on projects that benefit the bottom line – for both the lab and the industry.

When he talks about his projects at the lab, the words "exciting" and "fun" keep popping up.

But 10 years ago, the operative word for the OSU Seafood Lab was "challenging." Morrissey became its director in 1990, at the end of a decade of waning financial support for that division of the food science department. To breathe new life into the lab, the Coastal Oregon Marine Experiment Station was created as a stand-alone entity, and Morrissey was the first hire, joining a staff comprising a secretary and a technician. He brought with him a background in food science and experience from the University of Rhode Island’s International Center for Marine Resource development.

Morrissey set three immediate goals: bring in the best possible research faculty, bring in research dollars, and build a national reputation for the lab. While there was some funding for faculty, there was no money for research, which was critical to the lab’s survival.

"That was probably one of the biggest challenges of the first three years, to get the research dollars flowing back into the laboratory," says Morrissey. But, he adds, "It was obvious that you could grow if you did things right."

His strategy was to focus on research that would produce tangible results for the seafood industry, which in turn would generate funding for the lab.

The first major catalyst for the lab’s growth was Pacific whiting. Key industry people were leading a push for research to prove that good-quality surimi could be made by processing whiting in shoreside plants. Funding was obtained from the state, the federal government and the industry, and the project took off.

"A lot of good research was done, and the industry took it and ran with it," says Morrissey. It propelled Oregon’s whiting harvest from 4,000 metric tons in 1990 to 72,000 by 1995 and resulted in construction of four surimi plants. The project generated both interest and capital investment in surimi processing from Pacific whiting.

It also led to creation of the annual OSU Surimi School and funding for ongoing research into surimi seafood production.

After that huge success, the lab’s reputation as a force in seafood research was secured. By 1997, Morrissey was able to move his expanded operation into a new $3.25 million state-of-the-art OSU Seafood Research Center. Adjacent to the lab, the $1.5 million Duncan Law Seafood Consumer Center was completed in 1998 to give the lab an added research venue and help industry and scientists better understand how to meet consumer needs.

Morrissey is also director of this center, where new products can be road-tested by chefs and retailers. As he says, "You have to take that research and get it out on the table. The SCC is a vehicle for doing that."

Value-added product development is a major area of Morrissey’s research. Value-added albacore tuna is being studied. The lab has also worked with the Pacific Northwest oyster industry on high-pressure technology that kills Vibrio bacteria and also shucks the oysters.

"This is like the Holy Grail of the oyster industry – the perfect shucking machine," says Morrissey.

It’s also an example of the altruistic opportunism Morrissey uses to benefit both the lab and the industry. "The projects that are the most successful are the ones that the industry and researchers recognize almost simultaneously," he says.

An offshoot of the oyster research was a value-added product for Nisbet Oyster Co. in Willapa Bay, Wash., which threw financial support to the lab to explore shelf-life extension of oysters through high pressure. Owner Dave Nisbet worked with the lab to develop "Oyster Shooters," sauced, frozen oysters packed in shot glasses.

Since 1991, Morrissey’s efforts have brought in more than $2 million in grant money. His plans for the future include more work in seafood safety and value-added product development through the Seafood Consumer Center. He’d also like to see the lab take a leadership role in disseminating research through the Internet.

And there’s little doubt he’ll achieve those goals. For now, Morrissey can be justly proud of taking the lab from a low spot in 1990 to being recognized as one of the nation’s top seafood-research labs.

Do you know a Seafood Star? E-mail Linda Skinner at lskinner@divcom.com

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TREND WATCH

Food quality and service drive fast-casual concept
Young men in the West are the most likely fast-casual customers

By Fiona Robinson
There’s been a lot of hype over the past few years about fast-casual dining concepts being the up-and-coming growth category for the restaurant industry.

Despite the hoopla, little progress has been made in actually defining the fast-casual concept, except to say that it falls somewhere between fast food and casual dining, with no tipping.

The concept has proven somewhat elusive for industry analysts. "A vast majority of [fast-casual concepts] are very small, entrepreneurial organizations that aren’t easily tracked," notes Dennis Lombardi, executive vice president of Technomic, a Chicago foodservice consulting firm.

As a result, he adds, following and defining the concept has been difficult.

This hasn’t stopped King-Casey, a retail consulting and design firm in South Norwalk, Conn., which estimates that 50 companies are dabbling in the fast-casual concept.

King-Casey recently released a study of fast-casual dining customers titled "Here comes fast casual." It shows that young men in the West are the most likely customers of fast-casual concepts.

Men are the most prevalent patrons of fast-casual concepts, frequenting them an average of 7.4 times in three months, while women visit such concepts only 6.2 times, according to the study. Young consumers are the most frequent customers of fast-casual concepts. Consumers age 18 to 34 visit them 8.7 times during a three-month period; baby boomers (age 50 to 65) visit them 5.7 times.

Geography also plays a role with fast-casual customers, according to the study. Dining frequency is significantly higher in the West, with 9.3 visits, and lower in the East and South, at 5.6 and 5.2 times, respectively.

Dinner is the peak time for fast-casual restaurants, and the mean meal ticket is $11.66 per person.

Almost half those surveyed said "good-quality food" is the reason they dine at fast-casual concepts. Other draws include proximity to home, good value for money, faster service and proximity to work (see table below).

While the market for the concept is still in its infancy, the King-Casey study helps restaurant companies set parameters for comparative and competitive analysis.

The study clearly shows that fast-casual concepts need to offer the elements that consumers rated highly in the survey, says Michael Vizziello, King-Casey’s chief development officer.

"This gives companies a wake-up call: Either change your ways or possibly get left behind," says Vizziello.

Captain D’s has been refining its fast-casual concept since its inception in 1999, and so far customers seem happy with the menu and design changes, says Captain D’s President Ron Walker.

The company introduced its "100% Flavoriety" ad campaign earlier this year to tout new menu offerings that include Cajun catfish and honey-dripped shrimp.

The growth of the Cajun Kitchen concept, a new fast-casual concept in Rolling Meadows, Ill., from Popeyes Chicken & Biscuits of Atlanta, has not been impeded by any competitors in the Chicago area, says Joe Scafido, Popeye’s VP of concept and menu development.

"We’re surprised there hasn’t been more (competition in the area)," notes Scafido. "We’re out there by ourselves."

Two more Cajun locations are scheduled to open in Chicago this year with the help of partner Lettuce Entertain You Enterprises. Future development of the concept outside the Windy City will involve franchising it, adds Scafido.

The concept is committed to promoting seafood, says Scafido, noting that the restaurant held a traditional Louisiana crawfish and shrimp boil one Saturday last month.

The traditional menu includes Southern seafood favorites such as Catfish Po’ Boy, Gulf Shrimp Gumbo and Crawfish Etouffée.

If other companies follow the lead of Captain D’s, Cajun Kitchen and others that are foraying into the fast-casual field with an emphasis on quality food, good value and service, the future is bright for seafood’s presence in the fast-casual trend.

You can e-mail Fiona Robinson at frobinson@divcom.com

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ON THE MENU:

Nuevo Latino cuisine lets chefs have fun with seafood
From boomers to Gen-Xers, everyone loves the excitement of Latin flavors

By Joan M. Lang
Chinese, Italian, Mexican: Been there, done that. As ethnic food moves into the mainstream, these top-three "foreign" cuisines no longer seem quite so exotic.

What’s next, then? Latin cuisine, for one. The Caribbean and Central and South America represent a region ripe for translation into trendy menu concepts. Latin food is flavorful and fun, and consumers perceive it as healthful – think citrus fruits, fresh vegetables, a notable absence of cream and butter, and plenty of fresh seafood.

The National Restaurant Association pegs Latin cuisine as a food trend to watch. And the TrendsAnalytics Group in Washington, D.C., calls it "probably the hottest and most significant [ethnic food] trend" to hit menus.

"And it’s not just because the Latino population is growing," says TrendsAnalytics President David Pursglove. "I have a hunch that highly flavored foods may appeal to baby boomers, who allegedly are losing their taste buds as they get older." NRA research, meanwhile, shows that Generations X and Y also seem to be attracted to flavorful ethnic foods like Nuevo Latino.

"The American appetite for ethnic food is definitely increasing," says Guillermo Pernot, executive chef/owner of Pasion, a 2-year-old pan-Latin restaurant in Philadelphia. "It’s good for you, it’s tasty and fun, and it offers a lot of variety."

Pasion’s menu is chockablock full of Latin-style seafood preparations. Pernot likes to borrow freely from the different South American and Caribbean cultures but puts his own creative spin on things.

Popular specialties include Frituras (Jamaican conch and crabmeat fritters), El Original (Chilean sea bass with a cilantro and sun-dried-tomato crust, served with a wild mushroom-tamarind sauce) and Pescado (crispy whole fish served with fried yucca, mojo criollo and black-bean sauce).

And nearly every table orders the ceviche of the day, says the chef.

"We’re the only place in town that does variations on traditional ceviche," says Pernot, who prepares five to 10 different ceviches a day, ranging from small grilled octopus with tomatoes, cucumbers and olives to Spanish mackerel with capers and herbs.

But just what is Latin food, anyway? According to cookbook author and restaurant-watcher Jessica B. Harris, "This pan-American cuisine leapfrogs our familiar Tex-Mex into the gastronomic soul of Nicaragua, Brazil, Peru, Cuba, Puerto Rico, Venezuela, Costa Rica, Argentina and almost every other country south of our border."

That’s a lot of ground to cover. But restaurant operators and chefs are having some fun with it. Take Bahama Breeze, a pan-Latino concept of Darden Restaurants (parent of Red Lobster and Olive Garden) that’s poised for dramatic growth.

The menu circles the new world with such specialties as Bahamian Conch Chowder, Tostone Tostada con Pescado (grilled tilapia fillet served open-faced on giant fried plantains with mixed greens, tomato salsa, seasoned sour cream and cilantro-lemon vinaigrette), Red Stripe Shrimp (steamed in the Jamaican beer) and Fish in a Bag (mahimahi sealed in parchment and baked with sweet peppers, mushrooms and celery).

At Chez Henri, a bistro in Cambridge, Mass., that serves a French-Cuban-fusion menu, chef-owner Paul O’Connell has been experimenting with more overtly Cuban specialties, including Masa Crisped Softshell Crab with Meyer lemon-caper aioli, Red Snapper with boniato puree and coconut-red curry sauce, and Seared Sea Scallops with beurre rouge and sunchoke gratin.

And in Chicago, John Manion has been so successful with his Mexican-South American restaurant Mas that the chef-owner has seen fit to open a second venue called Otro Mas.

Joan M. Lang is a food writer and menu consultant and can be e-mailed at jlang@divcom.com.

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THE GROCERY STORE:

Cut costs by displaying seafood without ice
Your options range from overwrapped tray-packs to iceless seafood display cases

By Michael F. Bavota
Consumers have certain expectations about the food they buy: White bread should be soft to the touch, oranges should be bright orange, and fresh seafood should be displayed on ice.

While ice in a seafood case may make the consumer feel more comfortable, what really matters is temperature control. Ice is basically an aesthetic element – one that increases case maintenance and cost.

Two iceless options are having some good results on the retail front: the over-wrap, or tray-pack, and the iceless, stainless-steel tray insert.

During the past few years, there has been a trend in retail away from the full-service seafood counter and toward a self-service tray-pack operation. While some retailers have opted to go completely to self-service, others are incorporating self-service into their service counter, offering customers both options.

The big advantage of a self-service unit is that once the display is filled, customers can shop 24 hours a day. Of course, there is always the argument that over-wrapped fish has less appeal than fish on ice in a service counter. But years ago, when fresh beef was switched from full-service to self-service, customers accepted the change.

To help seafood customers make that transition, seafood retailers need to set high standards and follow them. Here are some rules for a successful over-wrap operation:

• Maintain a high standard of freshness. Buy good-quality fish and set a very rigid sell-by policy for all tray-packed seafood.

• Trayed and wrapped product should be on display only a few days (the optimum is three).

• Keep in mind that eye appeal is buy appeal, so take a little extra time traying the seafood to make it look neat and uniform.

• Use blue or black Styrofoam trays. The best size is the No.13-S or 13-D vs. a No. 10 tray. Since the No. 13 is narrower, you can fill it with one or two pieces of fish, and it still looks full.

• Keep the package at a unit price below $5 for fish and below $9 for shrimp. This gives shoppers a better perception of value.

One of the best selling points of a tray-pack program is that the product is touched just once – when it goes into the package. If the same piece of fish were displayed on ice, it might be handled repeatedly.

Iceless displays

Modern equipment designers are building seafood display cases that eliminate ice and make it easier to clean the units more often. This reduces the potential for odors and also lowers operating expenses.

One iceless design from Display Specialties combines stainless steel risers and trays with templates and pans to accommodate all varieties of fresh seafood. Another, from Stark, offers cases with stainless steel trays that can be arranged straight up and down or at an angle.

Both are designed to display the fish in straight rows on pans that keep the product sufficiently cold without ice.

An iceless system offers several benefits:

• Improved sanitation. Since you don’t have to wait for ice to melt down to perform clean up, the unit can be washed out more often.

• Reduced cost – no need to buy and maintain an ice machine.

• Plan-o-gram capability. With seafood displayed in rows, there’s a more structured, uniform display from store to store. And the simple layout takes less time to set up.

• Durability. Stainless steel resists rusting.

If you fear your customers will resist an iceless display, use a light sprinkling of ice throughout the case to give the appearance of seafood on ice.

Your operational needs and budget will help you determine if an iceless display case or a tray-pack program works best for you. You have more options than ever before when it comes to selling seafood.

Michael Bavota is seafood director for Program Sales & Marketing in Tampa, Fla. He can be e-mailed at mbavota@divcom.com.

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SPECIES FOCUS:

By Peter Redmayne
Roy Enoksen figured tiger shrimp was a perfect fit for a growing seafood company like Eastern Fisheries. The scallop business had rebounded, a new fillet line was running at full speed, and he had steered the company onto a fast-growth track.

The same companies that were buying Eastern’s scallops and cod were also big shrimp buyers. Adding shrimp to the product line would quickly boost the New Bedford company’s sales over $150 million.

"Our objective is to achieve strategic growth in areas that complement our existing scallop business," said Enoksen, Eastern’s president, in a press release last October.

Enoksen hired veteran shrimp buyer Jim Bugbee, opened an office in Seattle and started booking containers of tigers. Unfortunately for Eastern, Enoksen’s timing couldn’t have been worse.

From the time Eastern jumped into the shrimp business until its hasty departure in April, the average price of tiger shrimp plunged more than $1 a pound. In the case of 21/25 shell-on tigers, the price ride has been all downhill, tumbling from $7.40 a pound last fall to just $5.90 this spring, according to Urner Barry’s seafood-price index.

"Anybody who had inventory lost their shirts," Bugbee said this May, as he scrambled to find buyers for 15 loads of tigers that were already on the water.

It wasn’t that long ago that the future of Southeast Asia’s tiger shrimp industry was burning bright. The devastating white-spot outbreak that crippled Ecuador’s industry was a boon for tiger producers, as U.S. importers plugged the supply gap and the red-hot U.S. economy kept demand surging.

Between 1998 and 2000, U.S. shrimp imports from Thailand, almost exclusively tigers, jumped from 92,000 metric tons to 126,000 metric tons a year, an increase of 37 percent. Over the same period, white-shrimp imports from Ecuador declined from 64,500 tons to just 19,000 tons.

The U.S. need for more shrimp imports came at a fortuitous time for the Thai shrimp industry, which has dominated production of black tigers since the late 1980s. In 1999, the European Union revoked Thailand’s special trade status as a developing nation and tripled the EU tariff on Thai shrimp to 14.4 percent on raw product and 20 percent on cooked. With former European colonies like Bangladesh and Madagascar subject to no duties on shrimp, and developing countries like Vietnam and Indonesia subject to duties of only 3.6 percent, Thai shrimp exports to the EU have plummeted more than 60 percent.

With less shrimp going to Europe and demand stagnant in recession-ridden Japan, the fortunes of the Thai shrimp industry are increasingly tied to the U.S. market.

While Thailand exported 126,000 tons of shrimp to the United States in 2000, the No. 2 U.S. supplier, Mexico, shipped just 29,000 tons. With more than half their production going to a single market, it’s not surprising that some Thai shrimp producers, including the huge Charoen Pokphand (CP) Group, the country’s largest shrimp exporter, are considering opening up their own offices in the United States. The Thais, it seems, are worried about their Southeast Asian neighbor, Vietnam.

Vietnam’s growing power

To a certain extent, the Thais have only themselves to blame for the sudden emergence of Vietnam as a powerful tiger shrimp producer. With Thailand’s tiger production stagnant the past few years at between 200,000 and 250,000 tons because of a moratorium on further mangrove destruction and restrictions on freshwater farming, investors have poured money into Vietnam’s booming shrimp industry.

Lured by the riches of shrimp farming, rice farmers eagerly plowed their paddies into intensive shrimp ponds. If all works as Hanoi plans, Vietnam will eclipse Thailand as the world’s largest black-tiger producer, perhaps in as little as two years, predicts Truong Dinh Hoe, chief of the Vietnam Association of Seafood Exporters and Producers.

Thirsty for a source of hard currency, the Vietnamese government, with the generous help of various European and Japanese aid programs, is doing all it can to develop the world’s largest shrimp-farming industry. Within the next five years, Vietnam plans to open six state-of-the-art hatcheries to alleviate a chronic shortage of tiger-shrimp fry.

By the end of the decade, Vietnam could have more than 600,000 acres of tiger shrimp ponds producing 360,000 tons a year.

At the same time, Vietnam is modernizing its processing sector to compete with the Thais. Over the next five years, an estimated $360 million, much of it courtesy of foreign donors and investors, will be invested in new processing plants that meet U.S. and EU hygiene standards.

While Vietnam producers will no doubt displace the Thais from the European market, they are already having an impact on the U.S. market. Last year, Vietnamese shrimp exports to the United States, almost all tiger shrimp, doubled to nearly 16,000 tons. So far this year, they have almost tripled over last year.

And the Vietnamese are not the only ones cranking out more tiger shrimp for the U.S. market. The shrimp industry in India is increasing harvests, in spite of a ban on shrimp farming within coastal regions and ongoing disease problems. In the huge coastal state of Andrha Pradesh, on India’s southeast coast, farmed-tiger-shrimp production is expected to jump 20 percent this year, to 60,000 tons.

The increased production of tiger shrimp is the main reason India’s shrimp exports to the United States jumped 27 percent, to 28,000 tons, last year.

U.S. imports of tiger shrimp from Indonesia, Southeast Asia’s other big producer, have not increased, although that could change before long. A weaker rupiah, which has lost 55 percent of its value against the U.S. dollar in recent months, could make the U.S. market more attractive than Japan’s, traditionally Indonesia’s primary shrimp market.

Also, some large shrimp farms, including the CP Group’s massive 23,000-hectare farm in southern Sumatra, are ramping up production, some of which will undoubtedly end up in the U.S. market.

The explosion in tiger-shrimp production is causing some pain down on the farm due to the plummeting prices. In Thailand, for example, Thanan Sowanapreecha, president of the Black Tiger Shrimp Farmers Association, has called on Bangkok to give the Thai farmers a hand so they can compete with their Vietnamese counterparts.

Unfortunately for the Thais, though, there is little Bangkok can do if supplies of black tigers keep racing ahead of demand.

Exports to China, once considered a promising new market for the Southeast Asian shrimp industry, are off sharply, as Beijing is enforcing a stiff 40 percent tariff. And even if the tariff is reduced after China joins the World Trade Organization, as is expected later this year, the Chinese are growing a lot more shrimp of their own.

Japan’s appetite for tiger shrimp is not expected to increase any time soon, due to the endless economic recession and the weakening yen.

Prospects are brighter in Europe, due to the beef brouhaha, but the European market still prefers white shrimp, which is being produced in increasing volumes by Brazil.

This leaves the U.S. market to absorb the bulk of the increased tiger production. And that’s got a lot of importers worried, as tiger prices are more likely to head south than north. Considering that U.S. shrimp imports were up 27 percent, to 49,000 tons, the first two months of 2001, their fear is understandable.

"Usually, the market bounces back and we can make back what we lost. With so much shrimp coming now, though, that’s not likely to happen," says one Seattle importer.

Adding to the price pressure is the confusion caused by the emergence on the U.S. market of new players like Vietnam.

Although shrimp importers may not be feeling very sanguine these days, the rising tide of tiger shrimp is a welcome dose of good news to a lot of people in the fish business. Supermarkets are more than happy to see the price of their seafood department’s cash cow hit its lowest level in more than four years.

Foodservice operators like Darden Restaurants, which operates more than 1,000 Red Lobster and Olive Garden Restaurants, are also using lower tiger prices to fatten their bottom lines. Last quarter, Darden posted record earnings due in part to lower shrimp prices.

While the tiger market has been far from tame the past few months, there are signs that things are settling down, say importers; some have convinced their suppliers to share the market risk and send product over on consignment.

All things considered – low (and, with any luck, stable) prices and ample supplies – it may not be a bad time to get back in the shrimp business.

Peter Redmayne can be e-mailed at predmayne@divcom.com.

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SPECIES SPOTLIGHT:

Wolffish
More consistent supplies of ocean catfish are key to meeting demand and stabilizing prices year-round

By Steven Hedlund
For decades, fishermen from New England to Scandinavia have kept wolffish, harvested as a groundfish bycatch, for their own use. And why not?

The bottom-dwelling, coldwater fish has a firm texture and a mild, sweet taste that it gets from its diet of shellfish.

Only in the past 10 years have chefs, primarily in the Northeast, discovered that wolffish lends itself to a variety of preparations.

No matter what it’s called – ocean catfish, Loup de Mer (French for "sea wolf") or Steinbítur (Icelandic for "stone biter") – its popularity is bound to increase. With the proper marketing approach, wolf- fish could develop a devoted following at upscale eateries and fish markets just as Arctic char has done.

"We’ve been working with char for 10 years, and we’ve seen tremendous growth. But it takes a fair amount of marketing on our end," says Tina Dunn, national sales manager for Aquanor Marketing in Boston.

Since capturing the award as best new product at the 2000 International Boston Seafood Show, Aquanor’s sales of Loup de Mer – fresh 16- to 20-ounce skinless, boneless, fully trimmed Icelandic wolf-fish fillets – to white-tablecloth restaurants have been strong, reports Dunn.

Aquanor distributes promotional kits, which include recipes and nutritional information, to potential customers. Dunn is now working with a few supermarket chains to promote Loup de Mer as a grill-friendly fish.

With its directed wolffish fishery, Iceland is the only reliable year-round source of quality product. Other countries, including Norway, Canada and the United States, harvest wolffish as groundfish bycatch.

Wolffish isn’t as abundant in U.S. waters as it was years ago. Domestic landings, which peaked at about 2.6 million pounds in 1983, regularly topped 1 million pounds in the 80s and early- to mid-90s but haven’t hit the 1-million-pound mark since 1995. In 1999, landings totaled 567,848 pounds worth $242,376. Catch rates pick up in the spring and crest in the summer before subsiding in the fall and winter.

Still, wolffish is "readily available," asserts Kim Marden of Captain Marden’s Seafoods, a wholesale and retail outlet in Wellesley, Mass. And, "with Iceland contributing so much, we never have a shortage."

Although "it’s never going to attain the status of cod, flounder or sole," wolffish is an attractive buy for $2 less than many groundfish and flatfish, admits Marden, who wholesales fillets for $3.75 to $5.95 a pound and retails them for $6.99.

"Once people get a taste of wolf-fish, they always come back for more. We have it in our display case whenever we can get it," adds Alan Wulf of Wulf’s Fish Market in Brookline, Mass., who retails fillets for $5.98 a pound. Regardless, he notes, "Wolffish isn’t a big seller. It’s something you have to sell."

Possibly the biggest challenge retailers face in selling wolffish is name recognition. Only seafood-savvy consumers are familiar with the species. Others might be willing to try something new but are afraid of cooking the fish incorrectly.

Restaurateurs find it much easier than retailers to sell wolffish because "it’s a novelty," says Patrick Bazin, executive chef of The Occidental in Washington, D.C., the closest restaurant to the White House.

Bazin, who goes through 15 to 75 pounds per week roughly six months a year, sautés 6-ounce fillets in brown butter over a low heat and serves them with a lobster ginger sauce, gnocchi and Brussels sprouts for $26.

Even though most Southern diners have never heard of wolffish, it’s the top seller at Atlantis in Nashville, Tenn., says Executive Chef and co-owner Josh Weekley.

Weekley, who buys New England whole fish for $2.50 to $3.20 a pound, sells around 75 wolffish portions a week, prepared in a mustard-herb crust and served with a lemon basil vinaigrette and lobster mashed potatoes for $22 to $24.

On some menus European sea bass is labeled Loup de Mer, which confuses diners. But most chefs, including Bazin and Weekley, menu wolffish by its own name.

"It’s a somewhat delicate fish. You have to cook it just right," cautions Christopher Bussell, executive chef and owner of Butterfish in Cambridge, Mass. Bussell sears 8-ounce fillets and serves them with ginger mussels, caramelized oyster mushrooms and sugar snap peas for $22.

Bussell has little difficulty getting 1- to 1 1/2-pound fillets from the local fish exchange for $4 to $5 a pound in the spring and summer but pays as much as $7.50 in the fall and winter.

"It sells very well," says Bussell. But domestic wolffish "can be hard to find."

Only high-end chefs pay more than $4 a pound for wolffish fillets, explains Michael Byrnes of Michael Byrnes Seafood in Boston.

Middle-of-the-road restaurants often look to Canada for frozen wolffish fillets in the high-$1 to low-$2 range. But most wolffish distributors carry only limited amounts.

"If the market gets flooded, the price will drop quickly, because it’s not a well recognized product," says one Nova Scotia dealer.

Two years ago, Michael Leviton, executive chef of Lumiere in Newton, Mass., paid $2 a pound for domestic wolffish fillets. Now he dishes out at least $4 a pound for the 60 to 90 pounds he buys per week in the spring and summer.

"People love wolffish. It’s definitely becoming more popular," says Leviton, who usually sautés but occasionally fries 6-ounce fillets for $23. "It’s not as tough as monkfish and it’s not as delicate as sole."

At Aquitain Bis outside Boston, the wolffish bouillabaisse "is the star," proclaims Executive Chef Gabriel Frasca, who every Friday sells around thirty $21 orders, each providing him with a 25 percent profit margin.

European chefs have prized wolffish for years, adds Tore Arildsen, U.S. marketing and operations director for the Norwegian Seafood Export Council. "My impression is that wolffish is becoming more intriguing in the States," he says.

Wolffish is just beginning to penetrate markets beyond the Northeast, and few doubt that the species will continue to gain notoriety at upscale eateries and fish markets. But more reliable supplies are necessary for wolffish to secure a presence at everyday restaurants and supermarkets.

Steven Hedlund can be e-mailed at shedlund@divcom.com

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EQUIPMENT:

Software
New programs enhance accuracy and speed at each stage of buying, selling and distributing seafood

By Michael Crowley
If you buy, sell or deliver seafood, you have to keep track of a highly perishable product from the time it enters the processing plant until it’s trucked to your customer’s door. Efficiency and accuracy are critical to your profit margin. These elements are also easy to achieve with new seafood-specific software programs that use electronic technology to streamline shipping, receiving and sales work and reduce labor costs.

Let’s say you’ve given extra hours to three employees to take handwritten catch weights off receipts and keystroke them into a computer.

With Point of Scale software from Astra Information Systems, that kind of work is eliminated. "You don’t have to write on boxes, don’t have to write on labels and then feed them into a computer system," says Astra President Alan Kleinman.

Weights are automatically integrated into Astra’s FDX accounting and inventory-control system software, eliminating the need for manual entry.

Point of Scale software, introduced at the International Boston Seafood Show this past March, interfaces with any scale that has digital output capability. Put a box of snapper on a scale, use the Point of Scale scanner on the bar-coded label, then press the print button. The recorded information then goes directly into the computer.

At the Point of Scale workstation, a label can also be printed out for each weighed package. A bar code identifies the order, which helps warehouse personnel keep track of the package as it moves through the processing and distribution systems. When the product is shipped, the bar code can be scanned again to make sure it goes on the right truck.

Point of Scale also displays sales-order lines for products that have to be packed, noting the amount of product needed for each order.

The program has made filling orders a quicker and more accurate process for Lombardi Seafoods in Orlando, Fla.

"The salesman used to take the orders and print out a manual pick sheet for 20 pounds of grouper," says Lombardi Seafoods’ Operations Manager Michael Lombardi.

"Then the fish would be cut, and it might end up at 21.5 pounds. Someone would write that down and then take it to another person, who would enter it into the computer."

With Point of Scale, the order at Lombardi Seafoods comes out on a monitor. The cut fish is put on a scale and if it’s 21.5 pounds instead of 20 pounds, the higher weight goes back into the computer and is also reflected via bar code on a label that’s printed out.

Now, the person who used to write out the information has more time to see that the product is cut correctly, says Lombardi.

He says the company’s next step will be scanning the bar codes when the packed order goes through the staging room to ensure it’s on the right truck.

Another company capturing scale-generated data electronically is Gemini Data Systems. Gemini developed scale and bar-coding systems for the meat and poultry industries and recently targeted the needs of the seafood industry.

"A lot of seafood companies aren’t using bar-code scanning. They have the scales but haven’t put the intelligence on it to capture the data into their computers," says Mitch Greenberg, Gemini Data Systems’ vice president. "With beef companies, it’s almost a ‘gimme.’ They have to have that information to track properly. "

Greenberg says some seafood companies are capturing the data and printing production reports but are missing the boat by not interfacing with the accounting package.

Gemini Data Systems’ FBA (food business automation) software comes in modular forms. You can order an accounting, inventory and distribution package; software that interfaces with digital scales; and software that works with Gemini Data Systems’ Symbol RF (radio frequency) scanners.

The scanners are handheld terminals that can keep track of inventory, make adjustments in the shipping records if an order is different from what the original purchase order required and lock items into an order.

Off-site data transfer

There are also software systems to meet seafood companies’ off-site needs for information transfer. For a fish buyer at an auction or a sales rep traveling to restaurants and retail outlets, there’s a gap between the time a sale is made and when the information reaches the company by phone or fax for input into the accounting and inventory files. There’s also potential for error.

Some product developers are solving that problem with a wireless product tied into a Web site that redirects sales information to a computer at the home office.

This fall, when Advanced Food Systems releases its enhanced software package, a buyer will be able to use a handheld personal digital assistant (PDA) that runs on the Palm operating system to input a purchase order in his company’s computer system before the truck arrives at the warehouse.

"Otherwise," says Warren Love, Advanced Food Systems’s vice president of sales and marketing, "the guy at the receiving end doesn’t know what the guy at the dock bought and has to accept the shipment blind. He doesn’t know if it’s what was ordered or at what price."

If a change takes place because of a return or refusal on a delivery, a new invoice can be printed. The corrected information is then sent to the distributor’s accounting software.

The wireless software works with Advanced Food Systems’ current distribution and processing software, Food Distribute, and a program called Velocity, which will be introduced this fall.

Velocity is a menu-driven system with a Windows look, featuring drop-down menus and tabs. It will run off Microsoft, Oracle or IBM platforms. It will also offer an upgraded purchasing module.

Interactive Management Systems also wants to see seafood merchandisers carrying PDAs when they are away from their desks.

Company President Merle von Gruben says, "We try to take the place of paper and pencil in the salesmen’s hands in remote locations."

Von Gruben favors a PDA over a laptop because, he says, with a handheld device, "you can wander around a restaurant taking orders. And because it’s an interactive device, you can bring up the customer’s history. Then you can tell him he usually orders 35 pounds of salmon a week but hasn’t ordered any yet and needs to."

Interactive Management Systems’ software, called Mobile Worker Productivity, can be used with a regular PDA or a PC with a wireless modem.

The seafood order goes from the PDA to a wireless provider and then to the seafood company’s Web site. From there, it’s redirected to the computer at company headquarters. Interactive Management Systems technology matches up with whatever programs a seafood company is using.

"If you have any piece of software running, we can back into it. It just has to support ODBC [open data base connectivity]"says von Gruben. (ODBC makes it possible to share data captured in different computer languages and from different platforms.)

The company also manufactures wireless devices for on-site work, such as warehouse-inventory control. These can be programmed to read any bar codes and the information they contain for a particular package.

"The accuracy of receiving jumps up. You’re no longer a slave to what it says on the bill of lading," says von Gruben. As with mobile devices, this system can be interfaced with the host system’s software.

The ODBC advantage

Other companies are also working to take advantage of ODBC capability. Say your company needs to generate a sales-analysis report on customers in California and Texas that have bought more than $50,000 worth of blue crab in the past 12 months.

If you don’t have software capable of developing that report, you go to a computer programming company and pay a one-time fee to get it. Two months later, if you want to make a modification to the report, you have to pay another fee and spend the extra time. With software that’s ODBC compatible, you don’t need an outside programmer.

One program that offers

this capability is Seasoft from Computer Associates.

"This is a real-time system that ties operations in with our accounting and finances minute by minute. The books are constantly updated," says Peter Ramsden, a representative of Foley Fish Co., one of the first processors to use Seasoft.

But those aren’t the main reasons Foley has Seasoft.

"The biggest drive for our moving in this direction is that it’s Windows-based and ODBC," says Ramsden. "All data can easily be accessed through common Microsoft applications."

Disc Design and Data in Northfield, Ill., which markets Fishmonger software, is also focused on ODBC compatibility.

"You’ll be able to go into a Fishmonger database with any ODBC-compatible application, mine the data and create your own reports with Microsoft Excel, Lotus, Oracle, whatever. You can go in and get it yourself with out hiring me as a programmer to create a new report," says David Bradshaw, Disc Design and Data’s president.

To further reduce reliance on pen and paper, fax and phone, Disc Design and Data is about to release a Web-enabled order-entry system.

With this ordering system, seafood subscribers put their list of customers, along with product prices for each, on a common Disc Design and Data Web site. Buyers log on to the site and place orders. The order goes to a Fishmonger data file at the seller’s location, where it’s automatically entered as a purchase order.

"With this system, you can avoid the phone and fax problems," says Bradshaw.

Using the Internet to bring fish sellers and buyers together is also part of a new program called Remora, which LAN Infosystems will release in July. Remora is part of a larger software package: Shark, due to be released at IBSS 2002.

Remora handles the buying, selling and price list part of the package. The Shark part of the program will deal with inventory, accounting and processed manufacturing. As soon as a company gets its seafood inventory in, Remora can start pushing out prices.

"Remora allows you to blast out price lists with e-mail or fax," says LAN President Mark Bennie.

Of course, prices may vary due to freight charges, rebates, etc. But Bennie says Remora is able to take these variables into account and set prices for each customer. The customer is then e-mailed his own price list. The customer responds with an e-mail, listing the desired quantities, which in effect becomes a purchase order.

Even with all the electronic programs developed specifically for the seafood industry, many processors are reluctant to abandon the pencil-and-paper approach to tracking product.

But, says Interactive Management Systems’ von Gruben, "If the industry really wants to focus on margins and improve productivity, it needs to focus on how to use this technology."

Michael Crowley, a freelance writer specializing in commercial fishing, can be e-mailed at mcrowley@divcom.com

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ENVIRONMENT:

Processors may face new wastewater limits
Waterway-specific pollution limits promise cleaner water, which will benefit fisheries

Thirty years after passage of the Clean Water Act, the U.S. government’s effort to im-prove water quality is shifting from the obvious – toxic chemicals pouring from a pipe – to the not-so-obvious – runoff and too many nutrients sapping oxygen from marine environments.

The act, implemented by the Environmental Protection Agency, requires each state to list waterways that fall below state water-quality standards, determine the pollutants and set limits for each.

The limits, called Total Maximum Daily Loads (TMDL), are annual or seasonal. All pollutants cannot collectively discharge more than the threshold.

In theory, the long-term payoff –cleaner water – should be good news for the seafood industry.

But as the TMDL process unfolds, it could be bad news for seafood processors that have to make expensive upgrades to waste-treatment systems to reduce pollutants.

"With the TMDL situation, you literally get into negotiations with some of the biggest players on the water system," says Rod Moore, executive director of the West Coast Seafood Processors Association.

"I would hate to be a small fish operation trying to go up against the Port of Portland [Ore.] at the Department of Environmental Quality to prove I shouldn’t have any of my pollutant levels reduced while the Port of Portland has to reduce theirs."

Oregon’s lower Columbia River, where TMDL limits are being set, could become a battleground for seafood processors. A half-dozen plants operate in the Lower Columbia River watershed downstream from municipal sewage-treatment plants, says Ken Hilderbrand, seafood-processing specialist at Oregon State University.

"If you ask any processor in Oregon, ‘What is the problem?’ they’d say, ‘It’s those people up the river polluting the river. All we’ve got is fish juice that needs to go back into the ocean where it came from.’"

Since the effects of the TMDL process will vary from company to company, wise ones will find out how they may be affected and avoid being caught off-guard.

To find out the status of local waterways and pollutants under the TMDL program, go to http://www.epa.gov/owow/tmdl. Each state on the map links to its list of troubled waterways and relevant pollutants. The list also shows whether the state has developed annual limits for each waterway.

For seafood companies, the TMDL issue is apt to come up as part of renewing their National Pollutant Discharge Elimination System (NPDES) permits.

The biggest problem for seafood processors is discharging nutrient-rich fishy water, says Richard Wenning, senior scientist with the Weinberg Group, a San Francisco environmental consulting firm.

"The better understanding you have of what’s coming out of your own pipe, the better off you’re going to be when regulatory authorities tap you on the shoulder," says Wenning. Processors with outdated waste-management systems should think about upgrading, he adds.

"Food waste is a huge issue when it comes to waste disposal in this country, and the smellier and the more organic it is, the worse. What’s worse than fish guts?"

In New England, nutrient overload is a big problem linked with oxygen depletion and toxic algae, says Alison Simcox, EPA’s New England TMDL coordinator.

In California, state water officials are already strict about what can go into the water. "I don’t think there will be a huge impact on [seafood processors] because they’re probably already tightly regulated on discharges the TMDL would address," says Stefan Lorenzato, TMDL coordinator for California’s State Water Resources Control Board.

He says TMDLs may benefit shellfish producers in Northern California’s Tomales Bay, who now endure shutdowns because of algal and bacterial blooms due to nearby dairies and cattle ranches.

EPA estimates that only 40 percent of the nation’s water bodies have been assessed, says Simcox.

TMDLs may be a weighty task for the EPA, but they are a reminder for seafood processors that they need to monitor not just what they’re taking out of the ocean, but what they may be putting back into it.

You can e-mail Lisa Duchene at lduchene@divcom.com.

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