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Distributor Survey: Supply concerns

Biennial survey reveals reliability a major issue for distributors

Distributors continue to rank sourcing, rising costs and fraud as their big problems. - Photo by James Wright
By Christine Blank
December 01, 2013

While distributors’ primary concerns about their business — sourcing, rising costs and product fraud — haven’t changed in two years, the challenges have intensified, SeaFood Business found in its biennial distributor survey.

“Supply is always our No. 1 concern. Competition with domestic product from overseas controls the pricing, and goes hand-in-hand with demand,” says Joe Lasprogata, VP of new product development for Samuels & Son Seafood in Philadelphia. 

Ross Swanes, VP of Northern Fish in Tacoma, Wash., says sourcing quality products is not as much a challenge as is urging retail and foodservice buyers to be flexible with product variances. 

“There are fish available; it is a matter of how stringent the restaurant group or the supermarket chain is. If wild species come in at a certain size — such as there are only large coho salmon available — it can put an inordinate amount of pressure on a particular size,” Swanes says.

Rising wholesale costs are distributors’ second-biggest headache at 59.2 percent in 2013, versus 53 percent of distributors in 2011 who put cost at the top of their list. Product fraud — including country of origin, mislabeling and short weights — is a top concern of 45.8 percent of distributors this year, versus 38 percent in 2011.

Rather than wholesale prices, delivering seafood that is a value for consumers is difficult in today’s market, some distributors say. 

“We service some very urban areas. The boroughs of New York City, for example, are very multi-ethnic. They love seafood and you need to put something in front of them that is affordable, practical and is of value,” says Mark Emmons, VP-sales and purchasing at NAFCO Wholesale Fish Dealers, in Jessup, Md. “Items such as tilapia and swai fillets are becoming more important every day to convey value.”

Seafood mislabeling is troublesome for distributors and their clients, Lasprogata agrees, but the industry has received unfair treatment by the media. “Everyone has gone off of the one Oceana study,” he says. “What makes them an expert? The way that surfaced was not fair or accurate.” The Oceana study, released earlier this year, found seafood mislabeling at U.S. retailers as often as 25 to 70 percent of the time, depending on the species. 

Often what is deemed “seafood fraud” is actually lack of education among retail seafood employees, according to Lasprogata. “A lot of times, people behind the retail counter don’t know what they are doing, and it is just a mistake.”

Distributors’ other top challenges include rising fuel prices (45.8 percent), expanding their seafood sales (25 percent), sustainability certification (20.8 percent), U.S. Food and Drug Administration testing (15.8 percent) and HACCP (Hazard Analysis Critical Control Points) compliance (11.9 percent).

Where it’s from 

Despite increased quality and food-safety measures from overseas suppliers, distributors say their customers are still concerned about whether products are domestic vs. imported and wild vs. farmed.

According to this year’s survey, 39.6 percent of distributors say customers are concerned about domestic vs. imported product, compared to 33 percent in 2011. Half (50.4 percent) say their customers are concerned about whether seafood is wild vs. farmed, compared to 43 percent in 2011.

“Imported seafood is a huge part of our business. If we went with all domestically produced product, there is not enough seafood for everyone,” Swanes says. 

Northern Fish’s clients are not typically concerned about buying imported seafood, according to Swanes. They simply want to know all their options before making a purchasing decision. “Everyone wants to be presented with the options, such as what is the current price and availability of prawns out of the Gulf versus imported shrimp,” he says.

Lasprogata is concerned that the seafood industry hurts itself when it compares wild and farmed species. “For example, Alaska did a nice job marketing the wild salmon, but why did they have to put [farmed salmon] down? Farmed salmon is a good product and we deal in both,” Lasprogata says. “Over 50 percent of the products we sell are farmed, up from 10 to 15 percent around 10 years ago,” he adds.

“The prevailing consumer view — not our view — is that aquaculture is not sustainable. Although the wild species are exciting, it is not usually [workable] for someone who has designed a program in April and is making their purchase in September,” Swanes says.

Close to home 

While wild vs. farmed and imported vs. domestic seafood are hot issues, sourcing sustainable and local seafood are also top-of-mind for retail and foodservice buyers; 45.8 percent of distributors say customers are asking for more local seafood, versus 40 percent in 2011. About 46 percent say their clients are asking for sustainable and/or certified sustainable products this year. 

While buyers are seeking sustainable seafood, there is a lot of confusion because of the wide variety of eco-labels and certification schemes out there, distributors say. To that end, many buyers are focusing more on local sourcing. 

“There is so much confusion about sustainability, so some people say, ‘I understand geography and I want to help local, family businesses, so I will just go with local,’” Swanes says.

Most distributors have expanded their product lines over the past two years; 17.7 percent carry between 200 and 399 products, 15.8 percent have between 15 and 49 products and 15 percent feature between 100 and 199 seafood SKUs. 

“We handle 30 to 40 different varieties daily, but have access to between 300 and 400,” Lasprogata says.

Diversification is increasingly common, as 53.1 percent of distributors added to their product line over the past year, while 36.9 percent have about the same number of products and 10 percent carry fewer products.

“We have expanded what we carry fresh day-to-day, and also carry things we have never carried before. Our salespeople and chefs want to talk about something new,” Swanes says. 

Samuels & Son has added several products over the last year, including farmed cobia from Virginia — “it tastes just like wild,” Lasprogata says — and Skuna Bay salmon from Canada. Meanwhile, value-added seafood for retail clients is one of NAFCO’s biggest growth areas, Emmons says.

For the complete set of accompanying charts and graphs, visit our digital edition page.

Methodology 

SeaFood Business surveyed 3,500 distributors in August and received a response rate of 7.4 percent. Distributors that deal in seafood alone made up 60.8 percent of the respondents, while broadliners comprised 23.1 percent and protein distributors made up 8.8 percent of the responses and 7.3 percent of those surveyed identified their business as “other.”

Contributing Editor Christine Blank lives in Lake Mary, Fla. 

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RAFFLE WINNERS — SeaFood Business solicited our readers to complete the survey and they responded with enthusiasm. Our $100 Amex gift card winners are Robert Bronisevsky, KNS Distributor; Michael Willing, Aloha Seafood Co.; Eric S. Stacy, New Orleans Fish House; and Charles Gibbons, Multi Fish & Seafood. Congratulations!

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  December 2013 - SeaFood Business

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