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Trend Watch: Recession resilient?

Canned seafood sales may be a bright spot during economic slump

An increased focus on dining at home may boost canned
    seafood's short-term outlook. - Photo by Laura Lee Dobson
By Lauren Kramer
August 01, 2008

While all companies are dealing with the fallout related to the nation's economic uncertainty, one seafood segment that stands to benefit from the troubled times ahead is canned seafood. Consumers trying to cut back on their grocery bills may opt for less expensive canned seafood, priced between $3 and $9 per pound of protein, and forego fresh seafood.

Canned seafood consumption has been stagnant over the past few years, according to the National Marine Fisheries Service. Per-capita canned seafood consumption totaled 3.9 pounds in 2007, down from 4.7 pounds in 2000. Per-capita consumption of fresh and frozen seafood has increased from 10.2 pounds in 2000 to 12.3 pounds in 2006 (see Newsline, p. 8).

Opting for canned seafood in an economic recession gives consumers maximum nutritional benefit while saving money. But the trend toward canned over fresh and frozen seafood may not be revealed until 2007 consumption data is available, according to Alan Lowther, a survey statistician with NMFS.

Larry Andrews, retail marketing director for the Alaska Seafood Marketing Institute, agrees that it is too soon to gauge the recent economic impact on canned seafood consumption numbers.

"The canned seafood category has undergone a number of changes in terms of product forms over the past few years, and all those changes have some impact on the results we may be seeing," he says.

Andrews points to canned salmon as a prime example of a format in flux. "You're getting into more skinless, boneless product and smaller can sizes, with a move away from 14.75-ounce to 7.4-ounce sizes," he says. "Pink salmon is increasingly being sold in pouches containing fillet forms, so you can buy a pre-grilled or pre-spiced fillet portion. That will have some impact as consumers move into that category and become more familiar with it."

The ways in which canned seafood are being used are also changing, according to Andrews.

"Younger consumers are using it on salads or omelettes or breakfast frittatas. It's becoming an ingredient in another dish that may become the center-of-plate dish," he adds.

With a household penetration of 70 percent, canned tuna dominates the canned seafood category, and San Diego-based Bumble Bee Foods believes economic conditions will be driving consumers back to the center aisle.

"We definitely believe there's a correlation between the economy and consumers' food purchases," says Dave Melbourne, senior VP of consumer marketing at Bumble Bee. "At the end of 2007, 41 percent of consumers said they would be eating out less and doing more things at home. Historically, when there's a downturn in the economy, we do see an increase in the sales of dry food, and tuna specifically is a destination category."

With a household penetration of 20 to 30 percent, canned tuna consumption has nevertheless been on a downward spiral since 1984, says Harry Balzer, VP at the NPD Group. "That indicates there are larger forces at play than purely economic issues, foremost among which is convenience," he says. "The trend in this country has been toward packaged meals, not just packaged foods like canned tuna, which requires some degree of preparation."

Both as a brand and an industry player, Bumble Bee is focusing on the healthy, nutritious properties of tuna, and the fact that it is low in calories and fat and high in omega-3 fatty acids.

"With two-thirds of our population overweight, there's a real focus on healthy eating options," Melbourne says. "And consumers are nostalgic about their tuna. It's a fast, convenient, portable meal solution and one they grew up with."

Bumble Bee data indicates that 52 percent of consumers use tuna in a sandwich, and 22 percent use it in a salad. "There are so many different ways consumers can use this affordable protein solution," he adds. "It's up to the industry to educate consumers on the versatility of these products and their health benefits."

Both Bumble Bee and Chicken of the Sea are focusing their marketing efforts on the healthful, convenient aspects of canned tuna.

"As people are watching their pocketbooks but still interested in meeting their health requirements, canned and pouched seafood become increasingly popular choices," says John Sawyer, senior VP of sales and marketing at Chicken of the Sea International.

But as food prices rise, canned seafood is not exempt. "We've raised our prices marginally, primarily due to the rising cost of goods," says Sawyer. The average price of tuna at retail was up 2.6 percent in 2007.

"Just as all food companies are being faced with rising costs, we've seen increases in the price of fish, fuel, steel and many of our input costs," says Melbourne. "Still, it's important to understand that canned seafood, tuna specifically, is an incredible value - affordable, for a healthy, nutritious protein solution."

The question marketers need to ponder is how to gain new customers who are pinching pennies.

"Fifty cents of every dollar spent on food goes to a restaurant, so we know that eating out will be the first thing Americans moderate," says NPD's Balzer. "But when they go to the supermarket, the question is, what will they buy? Any food price that's not moving as rapidly as our income will have the natural advantage. Canned seafood, an already popular category, is something we're very familiar with so it will have a natural advantage over this time. But the long-term question is, will it remain a packaged food or will it become more of a packaged meal?"

 

Contributing Editor Lauren Kra m er lives in British Columbia

 

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