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Species Focus: Surimi Seafood

Along with challenges, manufacturers see opportunities to grow the market for analog products

Shining Ocean scored a hit with its Shrimp Combo, incorporating real shrimp and crabmeat plus added omega-3 - Shining Ocean
Rick Ramseyer
September 01, 2005

Louis Shaheen, vice president of sales and marketing for Trans-Ocean Products in Bellingham, Wash., figures 80 percent of U.S. consumers don’t even know what surimi seafood is. And Shaheen, like most executives in the imitation-shellfish business, sees that as a challenge — and an opportunity.

“There’s good growth potential,” Shaheen says. “But it’s going to require a lot of marketing.”

Trans-Ocean and other surimi-seafood providers, in fact, are striving to raise awareness of analog products and spur sales with amplified promotional efforts, new items and sizes and — in some instances — “healthy” additives such as omega-3s and calcium.

Moreover, several companies are incorporating bilingual labeling to reach Hispanic consumers, while the Alaska Seafood Marketing Institute is ratcheting up domestic promotion.

Trans-Ocean, which derives 90-plus percent of its retail business from simulated shellfish and processes more than 20 million pounds annually, is doing its part with advertising and in-store demonstrations that highlight the versatility of faux crab and lobster, which consumers can use in everything from salads and sandwiches to soups, dips and casseroles.

The work appears to be paying off. For the 52-week period ending July 10, unit sales of Trans-Ocean refrigerated surimi-based products in U.S. supermarkets and other mass merchandisers jumped 29 percent, while its frozen fare climbed 22 percent, according to Information Resources Inc. (IRI) in Chicago. (Trans-Ocean’s No. 1 seller is the flake-style Crab Classic, which is now in an 8-ounce size for $2.99.)

And private-label sales, representing around 15 percent of retail revenue, are up “in double digits,” says Shaheen.

Shining Ocean, a surimi-seafood maker in Sumner, Wash., is seeing strong growth in its retail portfolio as well, especially in its flagship Kanimi and Kanimi Deluxe brands, which are up 30 percent over last year, says Michael Faris, president.

The company, whose products are carried by grocery chains like Albertsons, Kroger, Roundy’s and SuperValu, also has a hit with its new Shrimp Combo, made with a formula that includes real crab and shrimp, plus shots of omega-3 and calcium. Sales of the 12-ounce package, typically priced from $3.99 to $4.39, rose 15 percent for the most recent quarter.

“It’s the most successful launch for anything that we’ve had, perhaps with the exception of the original Kanimi brand,” Faris says.

Up next for Shining Ocean is a “heart-healthy” snack item that will soon be market tested, he adds.

Segment leader Louis Kemp Seafood in Downers Grove, Ill., meanwhile, has seen its surimi-seafood retail revenue plummet of late. For the 52 weeks ending July 10, unit sales of refrigerated packages of Louis Kemp Crab Delights, for example, fell 25.5 percent, while dollar sales dropped more than 28 percent, according to IRI.

Executives from ConAgra Foods, which acquired Louis Kemp in 2000, were not available for an interview, and several competitors declined to speculate on the record about the reasons for the drop.

A ConAgra representative said via e-mail, however, that Louis Kemp has about a 25 percent share of the U.S. retail-surimi market, and that there “continues to be a significant opportunity…to introduce consumers to surimi and increase consumption by current users by educating them about its benefit as a protein and its various uses for meal occasions and within recipes.”

At Harbor Seafood in New Hyde Park, N.Y., simulated shellfish is a relatively small but growing line. Last year, the company produced 11 million pounds under the Oyster Bay banner and another 2 million pounds in private label.

Among the newest branded offerings is a 1-pound retail package that’s priced in the $2 range.

“It has improved graphics to show it’s a higher-end product,” says Rich Marino, vice president. “It’s attractive and catchy, and we’re getting a tremendous amount of repeat sales.”

Harbor Seafood plans to introduce an imitation-lobster option within the next several months and sees “lots of room for product development, new flavors and different forms,” Marino says.

World Wide Food Products in Jamaica, N.Y., which makes the Geisha and Queen of the Ocean brands, also sees potential for surimi seafood, albeit it currently represents less than 5 percent of business, says Lloyd Glazer, sales manager.

World Wide, which sources its surimi from China, recently introduced an 8-ounce package of Imperial Imitation Crab that’s offered for under $1 by discount retailers, primarily on the East Coast.

World Wide additionally sells shredded-style faux crabmeat to manufacturers that prepare salads for supermarkets — a burgeoning market for surimi-seafood stakeholders.

Foodservice fuels sales
Retail-related initiatives are only part of the story. Many analog providers, including Trans-Ocean and Shining Ocean, derive significant sales from foodservice channels.

Trident Seafoods, one of the largest global producers of surimi paste — the whitefish base to which starches, red colorings, flavorings, binders and stabilizers are added to make imitation shellfish — is “foodservice-driven”
domestically, says Joe Bundrant, the Seattle company’s vice president of sales and marketing.

Trident’s simulated-crabmeat products — namely the Sea Legs, Leg A Sea and Sea Shells brands — come in 2 1/2-pound frozen packs, most of which is destined for foodservice applications, though some retail selections are available.

Restaurants comprise the vast majority of surimi-seafood revenue for Jana Worldwide in Natick, Mass., the sole supplier of imitation crabmeat to QSR giant Subway. Still, after a multi-year hiatus — Jana sold its non-sandwich business to Trans-Ocean in 1997 — the company is back with China-sourced surimi seafood in supermarkets, as well as bulk packs for in-store salads.

“It’s a small percentage right now, but I’m hoping to build the Jana label by importing a quality, commodity-level product that I can sell for around $1.25-$1.35,” says David Krozy, regional sales manager.

Marketing in Spanish
Another tactic to bolster interest in simulated shellfish is bilingual labeling to reach the nation’s booming Hispanic population, estimated at more than 41 million.

Trans-Ocean’s Jaiba Supremo, a Hispanic-targeted, flaked-surimi item in a 1 1/2-pound resealable package for $4.99 to $5.99, has proven popular across the country.

“We just added a leg form to it, and we’re looking at an omega-3-fortified formulation before the holidays,” Shaheen says.

Harbor Seafood also has boosted business with labels in Spanish.

“We want to make people more comfortable with the product,” says Christian Limberg, national sales manager.

Analog manufacturers aren’t handling promotional duties alone. The Alaska Seafood Marketing Institute is touting imitation shellfish, too, since Alaska pollock and Pacific whiting are among the most common fish used in surimi paste.

ASMI recently launched a Web site — www.alaskaseafood.org/Surimi/index.html — devoted to surimi seafood, touting its “succulent, sweet flavor” and highlighting that it is “naturally low in fat, cholesterol and calories” and an excellent source of protein and omega-3 fatty acids.

Andronico’s Markets, with 10 upscale locations in the San Francisco area, knows all about those benefits. Andronico’s carries imitation crabmeat at most stores, where it’s available in frozen packages or in the seafood counters for $5.99 a pound. (A few sites carry faux lobster meat for $7.99 to $8.99 a pound.)

“It’s a pretty consistent seller,” says Marc Kane, the company’s vice president of meat and seafood in Albany, Calif.

Lots of retailers also use simulated shellfish as an ingredient. Last September, for example, Safeway ranked first in a taste test of supermarket sushi conducted by the San Francisco Chronicle. Safeway’s California roll, listed at $4.69 for 12 pieces, contained imitation crabmeat.

And whether or not most Americans know it, surimi has been a restaurant staple for years.

Subway, with nearly 24,000 units worldwide, uses about 6 million pounds annually for its Seafood and Crab sandwich, which was introduced in 1976 and remains a local option for franchisees.

The proprietary blend is made with 10 percent real crabmeat, says spokesperson Les Winograd, who notes the recommended sub prices are $3.49 for the 6-inch and $5.29 for the foot-long.

Analogs are not used just by chains. Del’s Restaurant, a long-time eatery along historic Route 66 in Tucumcari, N.M., uses flaked imitation crabmeat for its shrimp-and-surimi deli platters ($39.99) and for an occasional Crab Louie entrée ($6.99).

And Aubrey’s Café, which has four locations in eastern Tennessee, includes 3 ounces of substitute crabmeat in its Seafood Alfredo ($11.45).

“We sell at least 100 of those a week,” says Greg Stewart, kitchen manager at an Aubrey’s outlet in Knoxville.

Sushi shops, of course, have been leveraging surimi seafood for decades. The Sushi Itto in San Diego, for instance, features the signature Sushi Itto roll, made with imitation crabmeat and salmon skin. And the Doraku, located on Miami Beach, offers surimi-stuffed shitake mushrooms as a special.

Prices up
All told, surimi’s status is on the rise — along with costs.

“All of us are paying a good 25 percent more for raw surimi blocks ,” says Faris of Shining Ocean, which primarily sources from Alaska.

Part of the reason, he explains, is that key manufacturers have put surimi on the back burner to focus on higher-value pollock fillets bound for Europe and China.

“Over the last six months, we could buy certain types of surimi for 75 cents to 85 cents [a pound],” Faris says. “Now we’re going to be paying more like 95 cents to $1.10. Almost everybody that I know of has had to raise prices.”

“Our product is close to 15 percent surimi content, so if that goes up, you add another nickel a pound,” says Trans-Ocean’s Shaheen.

Of even greater concern to some executives, especially given the heightened promotion of imitation shellfish, is ensuring quality to satisfy consumers — and keep them coming back.

“A fair amount of product is from overseas, and it has not always been consistent,” says Marino of Harbor Seafood.

“Some manufacturers just focus on rock-bottom prices and low-end formulas, and that’s not good for the industry,” says Faris of Shining Ocean. “The more that surimi-seafood manufacturers stick to higher-end formulas, the more there’s opportunity for growth."

September 2005 - SeaFood Business

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