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Top Species: Blue crab

Competition from other species puts the crunch on crab

By Joanne Friedrick
February 01, 2010

Once the competition seemed to center on domestic blue crabs versus its imported cousins. Now the battle for a share of the U.S. market is coming from other seafood species that have come down in price to rival imported crab as a lower-cost alternative.

"I think we're going through a leveling-off period," says Christian Callahan, VP at importer SeaWise in Portsmouth, N.H. Swimming crab has been on par with tilapia within its growth and popularity, he says, "but it has also 
lost a certain amount of 
its luster."

"Hot-button" items change within the culinary landscape, says Callahan, and suppliers have to be able to adapt. When crab was at its most popular, he says, many new suppliers got into the market, especially with imported product. "Now we're seeing some pullback and stabilization. The pie is the pie, and we're just fighting for a share of it."

Finding space on the menu is more challenging for crab-based items, adds Callahan, especially when the prices of other seafood, such as lobster and shrimp, have fallen recently.

"When shrimp and lobster prices drop, it's easy [for restaurants] to justify replacing crab on the menu," he says.

Jack Brooks, owner of J.M. Clayton, a crab processor in Cambridge, Md., agrees that consumers are weighing more options these days, with crab, finfish, shrimp and lobster coming in at similar price points.

"The restaurant business is off," says Brooks. "We hope we have an uptick in the economy" to take the focus off price.


Imported or domestic?

Within the blue-crab category itself, Brooks says there is a divide between domestic product, which retails for about $20 a pound for jumbo lump, and imported, which sells for around $14 to $15 a pound.

At retailer and wholesaler Bob's Seafood in St. Louis, owner Bob Mepham says many of his customers are willing to pay the few extra dollars for fresh domestic versus pasteurized imported crabmeat. "You only have to eat it once to know the difference," he says.

But Mepham acknowledges he still "sells tons" of pasteurized Indonesian crabmeat, especially to restaurants. On the domestic front, he carries live and processed blue crabs from Louisiana, Maryland and Delaware. "We try to get live, but so many die in transit," he laments. 
Supplies have been good this year, he says, with only a few weeks when domestic product was unavailable.

Overall, crabmeat sells well, but not as well as it did in the recent past, says Mepham. Of course, he adds, that was also when jumbo lump sold for less than $10 a pound, about half of what it is now.

During the holidays, says Brooks, the market for domestic crab was brisk, with plenty of product in the pipeline and prices lower than usual. "But expenses are still high for the watermen and for us," he notes.

Still, he says, the import price dictates what the market will bear, because there is so much more imported product available than 
domestic blue crabs.

For the first 10 months of 2009, imports of both swimming crabs ( Portunus pelagicus ) and blue crabs ( Callinectes sapidus ) totaled 33.3 million pounds, with about one-third of that coming from Indonesia.

Meanwhile, the number of U.S. watermen harvesting blue crabs has dropped precipitously over the years, says Callahan. "Without the mystique of the watermen working the live catch, you lose the nostalgia for specialty seafood," he explains.

The chance that the domestic industry will turnaround is unlikely, he adds. "The plight of the American crab processor is an industry hit with increased labor costs and regulation, and a decrease in supply. We regulated them out of business," Callahan says.

Imported product is heavily tied to the dollar, and as the dollar fluctuates, so do the price and supply of imported blue crab, says Callahan. When prices rise, 
he says, buyers look for lower grades of crab to 
cover demand.

One positive aspect of having blue crab return to more of a niche product, says Callahan, is the opportunity for the environment and 
the crab stocks themselves to recover.

"One of my greatest concerns is the impact of the 
industry on the environment," he says. While 
suppliers try to reduce the impact, he says the ultimate control rests with the 
fishermen. Importers are producing crabmeat from smaller crabs, he says, "and we're getting them before 
the true sexual maturity of the animal."

Callahan would like to see controls put in place overseas similar to those used in the Maine lobster industry, which protects 
immature lobsters from being harvested.

While the National Fisheries Institute's Crab Coalition has made efforts in 
Indonesia and the Philippines to control the style of crab fishing and the size of the crabs caught, says 
Callahan, a competitive environment can often override those efforts.

J.M. Clayton's Brooks, who deals in both domestic crabs from Maryland and imported product from Indonesia, believes the majority of resources are healthy now, which is a good sign. The challenge, he notes, is for prices to rebound. "We just have to weather the storm and hope margins come back," 
he says.


Crab cakes: Adding value

One way both suppliers and sellers of crab products can add value these days, says Honey Konicoff, VP-marketing at Phillips Foods in Baltimore, is to focus on building the crab-cake 
business, either with premade products or with recipes that use various grades of crab.

"Crab cakes are strong on menus," she says, "and there are still opportunities for innovation in 
the category."

According to a MenuTrends Direct report from Datassential, crab cakes increased in menu penetration to 15.1 percent overall in 2009. Broken down by restaurant segments, fine dining leads the way, with 48.2 percent menuing crab cakes in 2009, followed by casual-dining establishments at 22.8 percent, mid-scale at 8.9 percent, and quick-service at 3.3 percent.

Crab cakes appear as an appetizer on 10.7 percent of menus, just behind mussels at 10.8 percent and ahead of shrimp cocktail, clams, scallops and fried shrimp. The big leader in appetizers, however, is calamari, which garners space on 23 percent of appetizer menus. Still, crab cakes are one of the fastest-growing appetizer items, appearing on 
11.5 percent more menus since 2007.

As an entrée, 55.1 percent of seafood restaurants offer crab cakes, followed by steakhouses at 31 percent. When presented as an entrée, 44.4 percent of times crab cakes are the center-of-the-plate option, followed by 22.7 percent in combo plates and 20.7 percent as a sandwich. The average price of a crab-cake entrée 
is $15.79.

Using this type of data, says Jimmy King, VP-
finance at Phillips, the company can help its customers better decide what they need for their menu.

"The majority of our sales are still in crabmeat," he says, especially among buyers on the East Coast, who prefer to make their own crab cakes. "But one of our focuses is that we can make [the crab cakes] here. [Our customers] can save some labor, especially with the economy being what it is."

Depending on a restaurant's target price point for crab cakes, says King, Phillips is able to build a product that fits various specifications. "Some people want to trade down [in grades] 
but still want a quality product," he explains.

Retail provides another outlet for selling crab cakes, says Konicoff. "We see 
opportunity at the deli 
prepared counter," she says, in addition to the more 
traditional channels of 
frozen foods and the sea-food counter.

Whichever channel retailers choose, she says, price promotion and prominent placement within the seafood department or store aisle are crucial.

Fourth-quarter and first-quarter sales are bolstered by special occasions, such as Christmas, New Year's, the Super Bowl and then Lent. But one of the keys is to get buyers to think about using crab and crab cakes beyond the holidays, adds King.

Stores can attract additional crab-cake sales by displaying recipe cards and offering price promotions, Konicoff adds.


Contributing Editor Joanne Friedrick lives in Portland, Maine


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