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Top Species: Name recognition propels tilapia

Popularity — like price and demand — stays high

By Joanne Friedrick
November 01, 2013

As a high-quality, mild-tasting and “approachable” protein, tilapia has been a consistent hit on the menu at Atlanta-based Boneheads, a quick-service format in the South.

The restaurant chain, which has locations in Georgia, North Carolina, Tennessee and Texas and is in the process of opening three more, goes through about 3,000 pounds of tilapia a month. James Walker, a member of Boneheads’ board of directors, says tilapia resonates with customers. 

“It’s a product they know by name,” he says. “Tilapia has a sweet, approachable flavor that entry-level seafood eaters can enjoy.”

What also makes tilapia successful from a business standpoint is not only its adaptability to various preparations and flavors — Boneheads is known for its spicy piri piri sauce — but also its stability with both price and supply, says Walker. 

“We’ve seen prices go up and down, but the increases are manageable,” notes Walker, who says the shrimp market has been much more volatile. As a result, when looking at adding new products, which Boneheads does biannually, they are more likely to add a tilapia entrée than something with shrimp, he explains.

Boneheads has more than a half-dozen tilapia entrées, including tacos, sandwiches and grilled fish.

Its versatility is also what makes tilapia an attractive choice for High Liner Foods, which markets the finfish to foodservice and retail customers.

“It’s a mild whitefish and works well with most coating systems we use,” says Keith Decker, president and COO at High Liner. Its firmness means it can hold up well under different preparation styles, he adds.

High Liner offers a tortilla-crusted version under its FPI UpperCrust line as well as a Thai Basil Tilapia in its FireRoasters flame-seared product range. And there are breaded and beer-battered versions for foodservice as well. On the retail side, the company’s Sea Cuisine line spans similar roasted, crusted and beer-battered options.

The year without a dip 

The tilapia market is continuing to grow because of factors such as flavor, availability and price, says Don Kelley, procurement manager for Western Edge Seafood in Claysville, Pa., although at a slower clip than before.

“We’re no longer in the gold-rush phase,” he says, but demand remains strong. It’s a fundamental part of most seafood offerings, he notes.

This year has been a more challenging one from an availability standpoint, as several factors have combined to keep the supply tight and prices on the upside, says Kelley.

One factor, he says, has been the reaction to last year’s oversupply, which created a pendulum-type swing toward less supply this year and likely next. Farmers in China are hesitant to restock the ponds at the same level, while banks are also reluctant to support the farmers.

Other unpredictable issues, says Kelley, were the outbreak of swine flu that caused Chinese consumers to turn to tilapia for protein instead of pork and a drought in central China that impacted the carp supply — again creating more domestic demand for tilapia, which is usually just an export item.

Adding to that was a tightening of credit policies that put a squeeze on some of the smaller Chinese processors, adds Kelley.

The bottom line, he says, is a low-inventory market and so the usual dip in prices that the market expects never occurred. 

High Liner’s Decker concurrs that the market remains short and pricing firm as the market heads toward the Chinese New Year.

“In a typical year, we would expect a gradual reduction in pricing with early fall arrivals,” says Decker. But he notes the situation “has gone from bad to worse,” citing heavy rains in August followed by typhoons in September. 

“The typhoon season is in full swing and how the weather will factor into supply, disease and transportation issues is unknown, but at this point, it doesn’t
appear positive.”

Prices are up 20 to 25 percent over last year, says Decker, especially on fillet sizes larger than 4 ounces. And U.S. imports are down 20 percent because of the supply issues. Frozen tilapia fillet imports as of July showed supply was 18 percent below the same period in 2012, according to Department of Commerce numbers.

Prices haven’t been this high since around 2008, says Kelley, with 3-5s selling for $2.60 a pound. 

“The market has some upward tones to it,” Kelley adds, “so I don’t see anything to bring it down anytime soon.”

Still, says Kelley, tilapia buyers aren’t likely to switch to another species just because the price has risen. He says those who are motivated by price have probably already switched to lower-cost swai, or pangasius, long term. And swai, he says, “is only substitutable to a degree” because of long-held ethnic preferences. Some cultures that demand tilapia won’t be swayed by a price increase of 20 or 30 cents a pound, he says.

And the volatility in the shrimp and salmon markets — where prices have been rising dramatically — has helped buyers accept that tilapia is a rising commodity as well, says Kelley.

A view from the inside 

As a tilapia producer, Noam Weinberg-Sehayek, director and founder of Gradient Aquaculture in China and Hong Kong, has seen firsthand the ins and outs of the market. Gradient, which started in China in 2003, also has tight control over farms and processing facilities in Vietnam, Thailand, Taiwan and Costa Rica. The company’s farms in South China produce about 1,000 tons of tilapia each year.

Weinberg-Sehayek says being vertically integrated allows Gradient to better monitor the quality and produce an end product that meets customers’ needs. 

One of those specific needs is producing kosher tilapia. About 80 percent of Gradient’s product is kosher, which Weinberg-Sehayek says offers another layer of quality. The rabbi on site has standards for cleanliness and preparation that don’t allow for shortcuts and compromises that other plants may take to save time or money, he says.

Weinberg-Sehayek sells tilapia in the United States, France, Israel and Chile, nearly all of it in fillet form, but sees potential new markets in Europe and Africa. Europeans used to buy a lot of swai, he says, but are now opting for tilapia because of some negative press that the fish, farmed predominately in Vietnam, has received over the past three years.

“The highest levels of quality standards start in Europe,” he says. Buyers there talk first about the standards used to raise and process the fish before they discuss price, he says. 

Africa is also buying more tilapia, but the focus there is on whole, unprocessed fish that can be purchased more inexpensively. The whole fish is frozen, packed and shipped from China, he says. 

Gradient continues to look for expansion opportunities, Weinberg-Sehayek says, including developing aquaculture projects in new locales in Asia and creating new products. 

For example, he says, until about three years ago, all of the excess from processing tilapia fillets was given to Chinese companies, who would use it to make fish balls or process it for animal feed. Now Gradient is repurposing the trimmings into fish food or gelatin. 

With 65 percent of the global tilapia supply being produced in China, anything that happens there can greatly change the market, he notes. “It’s a huge door to open.” 

Contributing editor Joanne Friedrick lives in Portland, Maine 
  November 2013 - SeaFood Business

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