« August 2013 Table of Contents
Top Species: Pangasius
Higher duties don’t sway U.S. suppliers from backing swai
By Joanne Friedrick
August 01, 2013
It may not be a name that rolls easily off the tongues of consumers, or even retailers and foodservice operators, but pangasius is riding a popularity wave within the United States.
After watching prices steadily climb earlier this year due to increased tariffs, U.S. pangasius buyers have begun to breathe a little easier now that prices have eased a bit. Yet even with a 77-cent per kilogram increase in the duties assessed on imported pangasius, the U.S. market continues to seek more supply from Vietnam.
The United States accounted for 24 percent of Vietnam’s total earnings from pangasius exports from January through May, or approximately $170.2 million, according to the Vietnam Association of Seafood Exporters and Producers (VASEP). Europe, traditionally the leading pangasius (swai, tra, striped pangasius, sutchi) market, moved to second place with a value of $159 million for that same period, accounting for 22.4 percent of Vietnam’s pangasius exports.
Other countries in Vietnam’s export mix were Colombia at 2.9 percent; Mexico, 6 percent; Brazil, 6.1 percent, the Association of Southeast Asian Countries (ASEAN), 7.4 percent; and all others, 31.2 percent.
World pangasius production is estimated at 1.25 million metric tons in 2012, with slight decreases expected this year, according to 2012 Groundfish Forum data. Vietnam produces the lion’s share of the world’s pangasius supply. In 2012, Vietnam exported more than 227 million pounds of pangasius to the United States.
Exports were down slightly in February and March 2013, according to VASEP, which coincided with the rise in the import duty imposed by the Department of Commerce (DOC). The retroactively enforced tariffs were applied to companies that shipped pangasius to the United States between August 2010 and July 2011. The new duty was determined when the surrogate country — used to determine market value — was switched to Indonesia from Bangladesh and the estimated cost of production on which the duty is based rose to 80 cents per pound vs. the previous 42 cents.
Prices rose as a result of the DOC decision, but have since leveled off, says Chris December, president of importer QVD Aquaculture in Bellevue, Wash.
“This decision sent a shock wave into the marketplace and caused panic during a four-week period,” he notes. “The market has since calmed down and we are experiencing pricing back to pre-March levels.”
VASEP reports that frozen 5- to 7-ounce pangasius fillets averaged $1.80 per pound in June, slightly higher than the average of $1.70 earlier in the year.
Hector Medellin, business development manager for Texas-based swai importer Houston Seafood Co., says prices went up about 35 cents a pound for the four weeks following the duty hike, but then dropped continually as suppliers in Vietnam better understood the true impact of the tariff. Prices eventually settled about 10 to 15 cents higher than previous levels, says Medellin.
December says duties are just one factor in a formula that includes raw-material inventories, quality of the finished product and competitive pressures. While the cost of raw material hasn’t changed much in the past two years, he says, quality has lessened as “some factories are producing sub-par product to compete in a very crowded marketplace.”
Products and possibilities
Alan Kahn, VP-marketing at Clear Springs Foods in Buhl, Idaho, which produces a line of value-added swai products, agrees that prices have stabilized in the past 90 days after some fluctuations. “It’s still a good value,” he says, adding that supplies are also consistent from Clear Springs’ Vietnam-based supplier.
After getting a good response to its coated swai fillets for foodservice and retail markets, Clear Springs recently launched a line expansion, adding both new flavors and a new form that offers 1- to 3-ounce portions.
The flavors — Sriracha, tortilla and Parmesan — are a reflection of trends in the market, he says, and the size is easily adaptable to fish tacos. “It doesn’t look cookie cutter,” says Kahn of the portions, but has a more random, back-of-the-house produced look.
“When we introduce a swai product, we do it with coatings that are unique and on trend,” says Kahn. Flavors that have done well within independent restaurants or at retail, such as Sriracha, and have gotten some mainstream play are likely candidates for new product development, he says.
“We only do value-added, and can custom manufacture to a customers’ need, so if a large customer wants a specific coating, we can do that,” he says.
The newest flavors are in the introductory phase, says Kahn, but Clear Springs is already looking at other possibilities for swai.
Maritime Products International in Newport News, Va., was one of the early supporters of pangasius. The fish fits the taste and texture profile that many consumers are looking for, says Maritime President Matthew Fass, noting its mild, consistent flavor. “It always looked like a fish that would work for consumers worldwide,” he says.
Fass says swai, after starting in retail, has found a niche in foodservice as a buffet item or for fish-and-chips. But he believes there is even more potential for the fish if consumers can become more familiar with it.
“It’s a top species, but it still doesn’t have the name awareness” of other fish like tilapia, says Fass.
Houston Seafood’s Medellin says when pangasius first came into the market many saw it as a substitute for higher-priced domestic catfish, but soon found customers liked it because of its clean, mild taste, not just its value. Now, he says, some customers are carrying both catfish and pangasius, marketing them as separate, unique products.
QVD offers three brands for its pangasius products — Basa Vina Pearl, H2Origins and Vina Pacific — and has seen double-digit growth, says December. As a result, the company “has put significant efforts into the supply chain and has effectively increased capacity by 250 percent to support the strong demand,” he adds.
Still, notes December, consumers are not that familiar with pangasius by name and thus the industry could see even stronger demand in the future. The deciding factor, he says, will be product quality. The United States is still seeing an influx of poor-quality product, much like Europe saw a few years ago, and that could sour consumers on pangasius and stall the growth curve, he adds.
The industry is taking steps toward ensuring both quality and sustainability, says December, in the form of sustainability certification programs such as the Best Aquaculture Practices (BAP) and Aquaculture Stewardship Council and (see Global
Retail on page 34).
QVD is a two-star BAP-certified company and, December says, is always looking to raise the bar.
“The bar, however, cannot be so high as to make us uncompetitive, and so a balance of affordable improvements must be established to ensure the product remains competitive but of the highest quality,” he says.Contributing Editor Joanne Friedrick lives in Portland, Maine