Black tiger shrimp
Importers and buyers are extra-cautious this year, even though the market has stabilized
Amid all the uncertainty in the shrimp industry, one thing is for sure - although cautious, U.S. importers of black tiger shrimp are more optimistic than last summer when tiger prices were falling steadily and the U.S. economy was slipping into a recession. This summer, prices are stable and the economy is improving.
Importers are making money again, says Bob Tanskey, president of Key Seafood Imports in Perth Amboy, N.J.
The market stabilized during the first quarter of this year, when retailers and foodservice operators took advantage of low prices and several special occasions like the Super Bowl, Chinese New Year's and Mother's Day to promote shrimp.
"[The first quarter] was a good first quarter for us," says Tanskey.
Once the market stabilized early in 2002, retailers, who were criticized last year for not passing cost savings on to consumers, lowered their tiger prices. It takes longer for retailers to react to price declines, says Tanskey, because they must make sure prices will stay low.
The last thing retailers want to do is raise shrimp prices sharply, which would drive a lot of consumers away from the seafood department's No. 1-selling item, he explains.
"A number of supermarkets and restaurants are featuring shrimp," says Morris. "A lot of supermarkets are buying shrimp because [prices are so low]. Retailers can make a lot of money."
Foodservice operators are taking advantage of low tiger prices and fattening their bottom lines.
The frontrunner is, of course, Red Lobster.
Thanks in part to low tiger prices, Red Lobster posted its 18th consecutive quarter of growth, with sales of $627 million, in the fourth quarter of fiscal 2002, which ended May 26, and led the entire casual-dining industry in same-restaurant sales growth in six of the last 10 months through February.
The seafood chain has run three successful shrimp promotions in the past year, all involving tigers: 12 jumbo shrimp for $12.99, all-you-can-eat shrimp and 30 shrimp for $9.99. The last promotion, 12 jumbo shrimp for $12.99, ended June 30. The promotions were part of Red Lobster's $60 million "Go Overboard" advertising campaign.
Olive Garden, also operated by Darden Restaurants, is adding more shrimp to its menu. Mediterranean Shrimp Scampi is the Italian chain's latest shrimp dish.
Importers are confident U.S. shrimp consumption will rise again this year. Per capita shrimp consumption has increased gradually, from 2.5 pounds in 1996 to 3.2 pounds in 2000. (At press time, 2001 figures were not yet available.)
"If prices stay reasonable, consumption will rise," assures Thomas Jacob, VP and director of North American sales for Choice Canning Co. in Edison, N.J., owned by Indian shrimp-producer Choice Trading Corp.
There's just one factor standing in the way of another increase in shrimp consumption: controversy over chloramphenicol, an antibiotic used in shrimp farming.
Southern and federal food-safety officials stepped up efforts this spring to ensure shrimp products are free of the banned antibiotic. Louisiana, Florida and Alabama have detected traces of chloramphenicol in Asian, mostly Chinese, shrimp and detained product.
Meanwhile, the Food and Drug Administration, which lowered its minimum acceptable level of chloramphenicol from 5 parts per billion to 1 ppb in May, is working on improving its technology to detect 0.3 ppb of chloramphenicol, the level at which Canada and the European Union are testing.
Amid reports that Louisiana's seafood sales have slowed (the state's Department of Agriculture and Forestry was the first government agency to find traces of chloramphenicol in shellfish in April), a rising number of shrimp importers are concerned about consumer reaction to the news.
Therapeutic doses of chloramphenicol can cause aplastic anemia or leukemia. But, say importers, food-safety officials should be careful not to unnecessarily frighten consumers by suggesting that eating shrimp containing minute amounts of chloramphenicol puts humans at risk of developing those diseases.
"Consumers could get scared. It could have a big impact [on the shrimp industry] if the national news media reports on the chloramphenicol issue," says Paul Morris, vice president of imports and trade for H&T Seafood in Los Angeles.
Even though Chinese whites account for most of the shrimp that has tested positive for traces of chloramphenicol in the United States, tiger importers fear demand and prices of Chinese product could fall steeply, which could push down tiger prices.
Chinese officials assured the FDA at a June 5-6 meeting in Washington, D.C., that the country banned the use of chloramphenicol in aquaculture in March and is implementing measures to ensure shrimp is tested for the antibiotic.
If the chloramphenicol issue doesn't get out of hand, shrimp buyers are looking at another year of low prices and increased consumption.
The growth of Asia's aquaculture industry has pushed black-tiger shrimp to the forefront of the shrimp industry.
U.S. shrimp imports from Thailand, India, Vietnam, Indonesia, Bangladesh and Myanmar, which produce the bulk of the world's tiger supply, accounted for 57 percent of total shrimp imports last year, in terms of volume. In 1996, they accounted for 43 percent. After a dismal 2001, U.S. tiger importers, many of whom lost their shirts last year when prices plummeted, are being cautious this year, careful not to build inventories in case prices nosedive. Buyers are wary, too.
"There's going to be a lot of caution in August," says Tanskey, of Key Seafood Imports.
"Importers are being very careful not to take many chances," says Jacob, of Choice Canning Co.
"They are still trying to cover losses from last year."
Buyers won't commit too far in advance of the holidays this year, asserts Jacob.
"Last year, everyone took a beating," adds Morris. "This year, everyone is being cautious - too cautious. Now there's not much product around."
Uncertainty surrounded demand as early as June. Spot shortages were common, and prices were holding firm. Late in the month, new product from Asia's 2002 tiger harvest was just beginning to fill the pipeline.
Production should be on par with last year's, say importers. As a result, prices should decline 5 to 10 percent in July and August, says Tanskey.
There was concern that tiger production would be down this year because some Asian packers called it quits last fall when prices dropped sharply. On average, tiger prices plunged to $2.40 a pound from January to October before they began to rise in November and December.
"Some packers said, 'Hey, this is not for me,' " says Tanskey.
But only around 10 percent of tiger packers closed their doors permanently last fall, says Lloyd Glazer, sales manager of World Wide Food Products in Jamaica, N.Y.
"[Packers] can sit on shrimp for six months and wait for prices to increase if they want to," explains Glazer, "and some did."
U.S. import figures indicate that packers unloaded a lot of tigers in the first four months of 2002, once the market stabilized and prices leveled off. Shrimp imports from Thailand, India, Vietnam, Indonesia, Bangladesh and Myanmar, which totaled 61,219 metric tons through April, were up about 10,000 metric tons from the same period last year, reports the National Marine Fisheries Service.
Vietnam is coming on the strongest. Imports from Vietnam, at 8,367 metric tons, more than doubled last year's four-month total. Imports from India, at 13,052 metric tons, were up 36 percent from 2001.
Imports from Thailand, however, were down through April, from 32,841 metric tons last year to 31,294 metric tons this year. Thailand is by far the top shrimp supplier to the U.S. market, exporting 136,078 metric tons to America last year.
Furthermore, Japanese buying interest is stronger this year, say importers, making the tiger market more competitive.
Japan's ailing economy appears to be rebounding, which could push prices down slightly. Since late February, the yen has increased nearly 12 percent against the dollar, which was trading at 118 yen on July 9. The dollar hasn't traded that low since late September last year.
Japanese shrimp imports, which totaled 66,098 metric tons through April, were up slightly from the same period last year, according to NMFS. In 2001, Japanese shrimp imports amounted to 245,048 metric tons, down from 246,627 metric tons in 2000.
Traditionally, Japanese buyers take positions first, and U.S. and European buyers wait for the market to play out before making their moves. Due to its struggling economy, Japan is not as much of a force these days, says Morris of H&T Seafood.
Whether Japanese buyers will take the lead this year remains to be seen.
This month is perhaps the most critical month of the year for black-tiger buyers as August is when retailers and foodservice operators order tigers for Christmas and New Year's, setting the tone for the rest of the year. By September, all buyers should have a good idea how the remainder of 2002 will play out.
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