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Top Story: Value proposition
The Top 20 North American Seafood Suppliers of 2010 focus on service, convenience
By James Wright
May 05, 2011
Meet ‘em where they’re at. That’s essentially what some of North America’s largest seafood suppliers are doing — making products simple and easy to prepare for both restaurants operating on slim margins and for frugal retail customers trying to stick to a budget while incorporating more seafood into their diets. Value-added offerings and perceived bargains are driving seafood sales in the slowly recovering economy, suppliers and analysts say, to take advantage of the latest trends in seafood consumption, which has hovered around 16 pounds per capita in the United States for many years.
Value-added products may hold the key to increasing consumption, as they remove a fundamental obstacle when consumers think about seafood — how to cook it. Look up and down SeaFood Business’ 2010 Top 20 North American Seafood Suppliers list — a group that accounted for $10.6 billion in sales last year — and you’ll find the leading producers of casual-dining foodservice and retail seafood products that strive to take the fuss of seafood preparation out of the equation. Trident Seafoods, High Liner Seafoods (and its U.S. subsidiary Fishery Products International of Danvers, Mass.), Beaver Street Fisheries and, of course, the “Big Three” canned tuna brands of StarKist, Chicken of the Sea and Bumble Bee — all of those companies are in the top 10.
While sales may be rising for several companies, their increased revenue is partly due to ever-increasing raw material costs. But there is also evidence that the fog of a recession hangover has not yet cleared. Dealing with new baseline prices for the most popular seafood items like shrimp, tuna, salmon and whitefish — all while turning a profit during a tenuous transition from recession to the beginnings of inflation — has been the seafood industry’s greatest challenge as of late.
“On a couple of species, that’s been real tough, particularly on salmon,” says Henry Demone, CEO of Lunenburg, Nova Scotia-based High Liner Foods, which placed No. 7 on this year’s list with $602 million in 2010 sales. “Salmon costs went up a lot. We don’t sell that much farmed salmon; we have a big wild salmon business and we put our retail prices up — not enough when you look at the cost increases but it’s too much for the consumer.”
Sixty percent of High Liner’s sales go to the foodservice segment, but Demone says retailers are aggressively working to close the gap in overall seafood sales both in Canada and the United States (roughly two-thirds of all seafood consumed in the United States is eaten at restaurants). Providing can’t-fail value-added seafood products that save time and effort — like the company’s new line of FireRoasters seafood meals, which the company heavily promoted at this year’s International Boston Seafood Show — is one way to hook consumers when they’re grocery shopping, says Demone.
“Continuity of supply, portion control, traceability, sustainability — you wrap all that around a brand and that’s our value-add,” says Demone.
But price often speaks the loudest, especially in a crowded seafood display case where everything is laid out with price tags featured prominently. One veteran retail expert says a lot of competition happens behind the glass shield.
“The biggest trend we’re seeing at retail is consumers in pursuit of value, looking for ways to maximize their food dollar,” says Steve Lutz, executive VP of the Perishables Group, a Chicago-based retail consulting firm. “Since the recession hit in 2008, we’ve really seen a trend of consumers trading down, moving from higher-priced proteins to more mid- and value-priced proteins as a way to extend their food dollar.”
Lutz notes that it’s not just “stressed consumers” in lower- or middle-income brackets leading the trading-down trend — the down economy has affected nearly all income brackets. But he’s buoyed by the fact that a particular high-end seafood category is showing signs of strength after a protracted spell of slipping sales.
“One of the biggest product categories we saw growth in a year ago was lobster. Lobster is one of the most expensive per-pound items in the grocery store. But because of a plentiful supply the price of lobster went from about $14 a pound [retail] down to about $11 a pound,” adds Lutz. “Consumers who eat lobster recognized that and the sales skyrocketed as a result. But it was really a pursuit of value.”
For another example of value-added seafood’s importance in growing sales, look to the South. Fourth-generation family-owned company Beaver Street Fisheries of Jacksonville, Fla., is also boasting a wider array of retail seafood products to capture consumers’ attention and meet their time-pressed needs. In late March the company, which ranked No. 9 on this year’s list with $443 million in 2010 sales, added nine products to its popular Sea Best product line. Lemon & Pink Peppercorn Tilapia, Thai Chili Salmon, Tuscan Mahi and Coconut Torpedo Shrimp are just a few of the new flavors.
While offering consumers restaurant-quality seafood with convenience so they can be more confident in cooking seafood at home is important to Beaver Street, CEO Jeff Edwards says the company’s sights are set on many moving targets far afield from the busy supermarket freezer aisle where it competes every day.
“Two priorities for Beaver Street Fisheries are food safety and sustainability,” says Edwards, stressing the importance of regular safety audits and quality-control checks on seafood sources worldwide to build consumer trust. Without that, even the fanciest of marketing schemes stands little chance of success.
“Beaver Street values the overall health of the world’s oceans and is committed to ensuring that the next four generations will be able to source and market the same rich and comprehensive variety of seafood species as it does today,” says Edwards. Beaver Street is an “active participant” in World Wildlife Fund, Marine Stewardship Council and Global Aquaculture Alliance projects and, like a growing number of prominent suppliers, retailers and restaurant operators, is committed to sourcing wild and farmed seafood from certified-sustainable sources.
To download the full 2011 Top 20 Seafood Suppliers table, click here.
Ranking seafood suppliers by annual sales is an inexact science, complicated by the fact that there are a wide variety of seafood companies operating on very different business models. To make things as simple as possible, we lump in vertically integrated suppliers with other wholesalers and distributors. It’s a very complex industry: In some cases, the sale of the same fish may be counted more than once, as certain companies that appear on the list are known to do business with each other. For instance, Tri-Marine International of Bellevue, Wash., supplies tuna to the “Big Three” tuna canners, and all four companies are on the list.
The challenge of compiling this year’s roster has never been greater. SeaFood Business asked qualifying company executives to share their total seafood sales and reviewed the annual results of two public companies — Clearwater Seafoods and High Liner Foods, both based in Canada. Most leading U.S. seafood firms are privately or family owned and are not obligated to report sales to the media; their participation is greatly appreciated. Several companies are owned by corporations based in foreign countries like Japan, Thailand and South Korea.
Participants are also offered the option of providing a sales range or an estimate instead of a specific number.
For companies that choose not to participate in a given year, their sales carry over from the previous year, but for only one year; companies that do not participate two consecutive years are removed from the list. Calls were made to nearly 40 companies across the continent, including many who have reported their sales in the past. Trident Seafoods of Seattle ranks No. 1 on the list again this year, but did not return calls or e-mails seeking its 2010 sales.
In addition, there are three noteworthy firms that no longer report annual sales, including Red Chamber of Vernon, Calif., Maruha Nichiro and Pacific Seafood Group of Clackamas, Ore. Red Chamber hasn’t shared its results since 2006, when it posted $1.016 billion in sales; company executives did not return calls seeking last year’s sales. And the last time that Pacific Seafood disclosed its annual sales was in 2005, when it raked in $874 million. After a series of acquisitions in recent years, Pacific’s sales are believed to be in the $1 billion range, but the company chooses to say only that it strives “to be the best, not the biggest.”
Maruha Nichiro Holdings, a Japanese conglomerate with U.S. headquarters in Seattle, also did not return calls; its U.S. holdings include Westward Seafoods and Peter Pan Seafoods of Seattle, Orca Bay Seafoods of Renton, Wash., and Trans Ocean Products of Bellingham, Wash. Globally, Maruha’s sales hit $9.7 billion last year, according to an annual financial statement obtained from its website.
Thus, the list would look considerably different with the inclusion of Red Chamber, Pacific and Maruha and their combined $2.5 billion in additional sales — a conservative estimate. E-mail Associate Editor James Wright at email@example.com