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Top Species: Tilapia

Supplies recover, but prices fall in post-freeze market

By Joanne Friedrick
November 01, 2009

What a difference a year has made in the tilapia industry. In 2008, importers were grappling with the impact of extreme weather conditions that severely depleted supplies of Chinese frozen fillets and sent prices skyward. In areas where the freeze took hold, supplies fell by up to 25 percent.

This year, with an ample source of tilapia, but a weaker economy, prices have dropped to lows rivaling those of 2006.

Yet participants in the tilapia business say there remains room for growth for a species with few flaws and lots of pluses.

"Last year we got hit with the Chinese winter," explains Denise Gurshin, senior buyer-aquacul-ture products for High Liner Foods of Danvers, Mass. "Coming back this year," she says, "volumes are good, and prices are low."

The Chinese farmers aren't happy with the current pricing, acknowledges Gurshin, but she says a correction in their favor is likely in the coming months.

Last year, during the height of the tilapia crisis, wholesale prices for 3- to 5-ounce frozen fillets reached $3 a pound. In September, says Gurshin, 3-5s were selling for $1.65 to $1.75, 5-7s for $2 to $2.10 and 7-9s at $2.45 
to $2.55.

David Loos, VP of Western Edge Seafood in Washington, Pa., quotes similar wholesale numbers, noting prices are likely to rise by 15 to 25 cents per pound through early 2010, as inventory and production tightens heading into the fall and winter.

Inventory has been up not only because overseas weather conditions cooperated this year, but also because of a weaker economy and credit issues with Russia and Mexico that prevented those countries from buying as much as in the past, says Loos.

Another factor impacting the tilapia market, notes Rick Spalding, director of foodservice 
marketing for High Liner's Fishery Products International brand, is some softening of interest in the species related to both the freeze - when customers turned to and stayed with cod - and its more mainstream role in 
the marketplace.

"Tilapia is very established in the market now," says Spalding. "So its message isn't as exciting."

Some farmers may get out of the tilapia market temporarily because they aren't happy with the current price schedule. What some tilapia farmers do when prices fall is switch to growing rice. Tilapia has a six- to eight-month grow-out cycle, so farmers may switch to rice for one cycle and then return 
to tilapia when the pricing is more favorable.

Supplies may be down, but China still remains the biggest player in the frozen tilapia market. In 2008, China accounted for 77 percent of all tilapia imports at 304.7 million pounds, according to the National Marine Fisheries Service. Through July 2009, China produced 78 percent of imports: 172 million pounds out of a total 220. Central and South America, meanwhile, are the primary sources for fresh tilapia, with Honduras, Ecuador, Costa Rica and Colombia among the leaders.

An evolving, growing market

Tom Sherman, VP-consumer sales and marketing for Icelandic USA in Newport News, Va., has watched tilapia evolve in the marketplace, beginning as a live fish sold through ethnic markets and gradually expanding to frozen fillets and value-added products.

Icelandic operates its own tilapia farms in China. Although the company began by working with local farms, "we were dissatisfied with the quality and started our own farm," he says. Icelandic owns the lakes, processing plants and feed supplies, which Sherman says is important "on the traceability side, when you want to say where it comes from and what [the fish] are eating."

"There's a good reason [tilapia] is in the top 10 species," says Sherman. He cites its consistent supply, reasonable price, mild flavor and ease of preparation as attributes. As prices on other firm-fleshed white fish have crept up, tilapia has filled in the gap, he says.

And as far as Sherman is concerned, tilapia "doesn't have any negatives to it." Even the name is nice, he says: "It sounds upscale, and not too foreign. I'm sure it will continue its popularity."

High Liner's Spalding has also witnessed a growth in tilapia, both in the marketplace and at the company.

"Our strongest products are tilapia based," says Spalding. Tilapia products are still registering double-digit growth, he says, although that is slowing somewhat.

The selling point for the fish is its ability to become whatever the chef wants. "It works well with breading or battering," says Spalding, "and works in most of the channels we sell into."

An emerging market for the fish is the healthcare foodservice channel, he adds. The supplier 
recently showed a garlic and 
herb pan-seared tilapia to attendees at a major healthcare foodservice show.

Loos from Western Edge is 
another believer that tilapia is still in its growth phase. "We're getting calls and customers want quotes for Lent," he explains. "It's a good sign to me, so I don't 
want to get too conservative in buying. I keep waiting for the market to level off."

 

The next phase

Both Loos and Spalding see opportunities going forward for tilapia in restaurant chains and quick-serve outlets.

"The opinion was that because tilapia was affordable, it must 
not be good," says Loos. But with the edgy economy, and a turn toward affordability, tilapia's profile has risen.

Captain D's, a quick-serve chain with 580 units in 24 states, has been menuing tilapia for about four years, according to Paula Vissing, senior VP-purchasing and R&D for the Nashville, Tenn.-based restaurateur.

Tilapia appears on the Captain D's Classics and Seafood Selections menus, the former as a seasoned fillet offered with a variety of sauces and the latter with a skewer of shrimp on the scampi platter. It is also part of a promotional $5 Meal Deal menu, served with teriyaki sauce, rice and a breadstick. During the winter holidays, restaurants will offer crab-stuffed tilapia, she adds.

"It's a very versatile fish that takes a lot of different flavors," says Vissing, who buys 5-ounce frozen fillets farmed in China. While certain fish species aren't that recognizable to diners, she says, tilapia is readily identified "as a nice, mild whitefish. We're better off menuing it that way (by name) because it has sufficient recognition."

Even with the higher price of supplies last year because of China's freeze, Captain D's kept its tilapia menu prices the same. "At the QSR level, it's hard to change prices or pull an item off the menu," she explains. Instead, Captain D's looks at total food costs to absorb such fluctuations with a particular species.

Although fish and chips made with pollock remains the chain's top seller, among grilled foods, she says, tilapia is a "top item."

"For us, we're really happy with tilapia," she says. "The bulk of the population prefers it, and we can take a great product and build on it."

 

Contributing Editor Joanne Friedrick lives in South Portland, Maine

 

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