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« November 2008 Table of Contents

Retail Profile: Planning for the future

Andronico's sustainability program nets sales gains, customer approval

The salmon at Andronico's is so popular that in the spring and summer it sometimes accounts for 50 p e rcent of seafood sales.

So in 2004, Andronico's, with eight stores in the San Francisco Bay Area, took a big risk - along with its first stand on sustainable seafood - when it decided to sell exclusively wild salmon.

"We have chosen to be wild-only until we know the state of farming salmon is better than now," says Reid Pomerantz, meat and seafood buyer for the specialty retailer. Prompted by widely publicized concerns about PCB levels in fish and environmental effects of farming salmon, the company wanted to be proactive, he says.

"We knew as a company from the owner on down that [sustainability] is something we need to attack and address," says Pomerantz.

Several grocery chains in recent years have announced sustainable-seafood purchasing policies , including Whole Foods, Ahold 
USA, Wal-Mart and Wegmans. Several more are changing purchasing plans to reflect corporate views on sustainability and 
crafting formal sustainable-seafood buying policies.

Sustainable seafood loosely translates to farmed and wild seafood harvested without harm to its population, habitat or any other species in its ecosystem. In lieu of an industrywide standard translating that ethic into purchasing criteria, conservation groups like the Monterey Bay Aquarium's (MBA) Seafood Watch program designate certain fish as "green" (best choice), "yellow" (good alternative), or "red" (avoid).

Nearly 40 percent of U.S. wholesalers, chain restaurants and supermarkets stopped purchasing certain seafood products last year due to environmental concerns, according to research in May from the Seafood Choices Alliance, an association of producers, buyers and conservationists advocating sustainable seafood.

Initially, when Andronico's went to sourcing exclusively wild salmon, the price difference between farmed and wild wasn't that great and the decision helped seafood sales. But by 2005, that price gap had widened and sales dropped 30 percent by volume, according to Pomerantz. And while Andronico's made up about 10 percent of that value with the higher price, it also spent more 
on labor butchering whole fish rather than purchasing pinbone-out farmed salmon fillets.

"We recovered," says Pomerantz. "It's up to me to source things that pique [customers'] interest and generate demand for new items and some things that would take the place of what people would do with salmon."

Pomerantz turned to Arctic char and farmed steelhead trout. "Some of those things really picked up the slack and we did quite well with those."

Three years ago at a trade show, Pomerantz met representatives of Sustainable Fishery Advocates, a non-profit organization founded in 2002. SFA's initial project is FishWise, in Santa Cruz, Calif., a labeling system for grocers that incorporates MBA's system.

Andronico's seafood labels now list the catch method and Monterey Bay color rating, in addition to the required product name, price, country of origin and whether the fish is farmed or wild.

Andronico's contracted with FishWise for guidance and training help. Some FishWise partnerships with retailers include signage, but Andronico's opted to incorporate the FishWise logo into its existing sign program. Overall, the sign cost was a significant investment, while the FishWise investment was "minimal," says Pomerantz.

FishWise audited the product mix at several of t h e stores against MBA's Seafood Watch guide and judged it to be about 50 percent "best" or "good" and 50 percent "avoid." With more information on catch methods and origins, Pomerantz went to his wholesalers and distributors and said: "This is my program. If you want to continue to do business with me, this is what you need to do."

Some vendors faded away while others worked extra hard to find "green" or "yellow" sources of popular products like swordfish and Pacific black cod, petrale sole and rock cod.

FishWise held training sessions for Andronico's department managers and seafood department staff. By fall 2005, Andronico's rolled out the labeling program to three of its stores and then launched it to the other five in April 2006.

Now, popular "green" items include Alaska salmon, Alaska halibut, trout, catfish and tilapia; popular "yellow" fish are black cod, Pacific red snapper and petrale sole.

Shrimp was the most challenging "red" product and wasn't solved until about eight months ago, says Pomerantz, when with FishWise's help he found a source of domestic wild, Gulf of Mexico shrimp covering eight to 10 SKUs of shrimp. To fill out the range of sizes, Pomerantz turned to Ecuadoran farms that are third-party certified organic, but are banned by California law from being marketed as organic until there is a U.S. Department of Agriculture organic label.

The ultimate goal, says Pomerantz, is for all products in the case to be on the "green" list. Now, the product mix is 60 percent green, 30 percent yellow and 10 percent red, says Pomerantz.

"There's a higher price to be paid and price to be passed on," says Pomerantz. "Certainly, there are some [customers] who have balked. The majority, because of whatever their own beliefs are, are willing to pay for it."

Over time, the program has benefited seafood sales. "Not a day goes by that we don't hear it at store level or get comments through the customer service line about how much the program is appreciated."

But this is just the beginning, says Pomerantz. "We're really at the infancy stages. I know from a reality point of view that we need to do this a little faster."

Contributing Editor Lisa Duchene lives in Bellefonte, Pa.