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What's in Store: Wholesale changes

Inside Costco’s sustainable seafood purchasing program

Christine Blank
April 05, 2011

Although Costco Wholesale has been quietly working on a sustainable seafood initiative for the past four years, many aspects of the global retailer’s program are close to fruition. By the end of this year, Costco’s shrimp, tilapia and farmed salmon suppliers will likely be following new sustainability standards.

The Issaquah, Wash.-based chain of 582 stores has developed an aggressive sustainability approach for all of its seafood selections. According to its updated policy, released in February, Costco’s overall aim is to “continually supply sustainable seafood products from either wild fisheries or farmed aquaculture sources that can be managed in ways that meet current needs, without compromising availability of scarce resources for future generations.”

That updated policy includes eliminating 12 seafood species that the retailer has determined to be “at great risk.” The retailer had already eliminated seven species from its offerings: Atlantic cod, Atlantic halibut, Chilean sea bass, orange roughy, shark, swordfish and bluefin tuna.

In February, Costco added monkfish, redfish, Greenland halibut, grouper and all rays and skates to the list.
Costco has replaced them with additional SKUs of top-selling items. For example, in Asia, bluefin tuna is popular but tilapia has “taken on some great traction,” says Jeff Lyons, senior VP of fresh foods. “Let’s expand on those things that the consumer tells us they want. By giving them more room in the case, we will probably sell more and make up for lost sales,” says Lyons.

While some retailers may focus on carrying a wide variety of products, Costco’s business philosophy is “focus on the 20 percent [of SKUs] that generate most of the business,” says Lyons.

Costco also empowers each store’s seafood purchasing manager to test new species of fish, as long as the fish are from sustainable sources. “Let’s say they want to try black cod while it is in season in Alaska. Let’s test it,” says Lyons.

Meanwhile, the wholesale club’s new, specific guidelines on sustainable shrimp, farmed Atlantic salmon, tilapia and canned tuna programs serve as an example to other retailers that are moving toward sustainable seafood sourcing.

Company executives have been doing a lot of legwork in recent months on the retailer’s farmed shrimp standards and purchasing guidelines. Working with the World Wildlife Fund (WWF) helps the company gauge the degree to which its farmed shrimp suppliers from Thailand and elsewhere meet the Shrimp Aquaculture Dialogue’s (ShAD) draft standards for shrimp farming. About 400 shrimp farmers, non-governmental organizations and other stakeholders contributed to the standard-setting process, which will be overseen by the Aquaculture Stewardship Council (ASC), based in the Netherlands.

In assessing shrimp production, Costco and WWF executives recently visited Costco’s shrimp farms in Thailand. “We met with the shrimp farmers and showed them the ShAD audit questions that are being developed. We tried to find out what works and what doesn’t work,” Lyons says.

According to Lyons, the shrimp farmers thought they could comply with most of the audit questions and requirements, but were concerned about a biodiversity environmental assessment that would be required to be conducted at each farm. “The cost of that would be too high, and there is no agency to do the environmental assessment in those areas. WWF is going to spin off an aquaculture sustainability program that would do those [assessments],” says Lyons. Obtaining sustainable sources of farmed salmon is another main priority in Costco’s sustainable seafood program. 

“We already have wild salmon that is sustainable — sustainability is part of Alaska’s constitution. We need farmed salmon to keep moving along that dialogue,” says Lyons. 

To that end, Costco is working with its suppliers to implement standards from the WWF’s Salmon Aquaculture Dialogue. Salmon standards are expected to be finalized by year’s end.

One of Costco’s primary suppliers, Norway-based Marine Harvest, is also dedicated to “improving practices concerning salmon farming around the world,” according to the retailer’s sustainability policy.

Farmed salmon is an important product to focus on, because it is high in omega-3s fatty acids and can feed a large number of people, says Lyons. “As the population increases around the world, we need to increase those resources, but not deplete our oceans. We have to make sure farming is part of that,” says Lyons.

Meanwhile, Costco’s major canned tuna suppliers all participate in the International Seafood Sustainability Foundation (ISSF), which is focused on worldwide tuna fishery management and conservation. “We are seeking to transition our procedures for purchases of fresh and frozen tuna to conform to ISSF guidelines,” states Costco’s sustainability policy.

As a leading retailer, Costco’s various sustainability initiatives are laudable. In 2011, Costco is more forthcoming about the changes it is making in the realm of seafood sustainability — and has set some near-term deadlines for making those philosophies a reality. In addition, Costco’s sustainability goals are being implemented at all of its stores globally, even though those stores’ buyers and consumers may have different views on sustainability than those in the United States.

“From a consumer standpoint, they expect us to do the right thing. And we haven’t had any consumer complaints about sustainability,” says Lyons. 

Contributing Editor Christine Blank lives in Lake Mary, Fla.

April 2011 - SeaFood Business

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