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Top 10 Species: Crab

Market heats up as more players enter the domestic and imported king crab trade

By Rick Ramseyer
April 01, 2007

If you're a buyer or seller of king, snow or Dungeness crab, you've probably already scrapped your playbook from the past couple 
of years.

Prices for red king crab have fallen in domestic markets, in large part due to a huge jump in Russian imports that have U.S. seafood representatives questioning the legality of some of the harvest.

Depleted inventories of frozen snow crab in early 2007, meanwhile, coupled with the snail's-pace start of the opilio season in Alaska, kept prices aloft pending the April launch of Canada's Atlantic snow crab fishery.

And the Dungeness crab catch on the West Coast is a far cry from the record hauls of the past few years, resulting in tight supplies and sky-high prices.

In addition to those disparate issues, several industry stakeholders have unveiled marketing initiatives to promote crab, while a well-known blue-crab processor - Phillips Foods - has introduced pasteurized king crabmeat for foodservice operators.

The bottom line? Look for the crab market to heat up in the months ahead.

 

Royal pain

Alaska's 2006-07 Bering Sea red king crab season, which got under way Oct. 15, wrapped up in November with a total allowable catch of 15.5 million pounds, a 15 percent decrease from 2005-06, according to the Seafood Information Service in Juneau. It was the fishery's second year under an individual fishing quota (IFQ) system, which replaced the three-day, derby-style format of previous years.

The dip in domestic production has been more than offset by a flood of product from Russia. Indeed, from January through December 2006, imports of Russian king crab, much of it from the Barents Sea, surpassed 56.3 million pounds, a dramatic 
climb from the 37.5 million pounds imported in 2005, according to the National Marine Fisheries Service.

Not surprisingly, that abundance has resulted in retail prices of up to 25 percent lower for king crab, leading some U.S. seafood leaders to question the lawfulness of Russia's harvest.

"We know the volume is in the neighborhood of 30 million pounds of [illegal] product," Arni Thomson, director of the Alaska Crab Coalition in Seattle, told the news Web site Alaska Report last year.

Moreover, industry representatives say that since crab is considered a processed item, and thus exempt from County of Origin Labeling (COOL) requirements, some Russian product is being marketed as Alaska king crab, inadvertently or not.

"We've worked hard to brand Alaska king crab, and it's on lots of menus, especially in fine-dining," says Laura Fleming, communications director for the Alaska Seafood Marketing Institute in Juneau. "But it would be interesting to know how much of that crab is actually from Alaska.

"It's up to the vigilance and the integrity of the people who are supplying and purchasing seafood," Fleming adds. "What separates Alaska king crab from other products is it's carefully managed for sustainability. So there are more things [to consider] than price."

F.W. Bryce in Gloucester, Mass., owned by Nippon Suisan (USA), is projecting to sell 1 million pounds of red and brown kings this year. And though the company currently uses Alaska product, it also intends to source from Russia.

"Our purchasing of product is very detailed, with independent inspections to make sure the product is right," says Keith Moores, president of F.W. Bryce.

Some seafood businesses nonetheless only handle crab from Alaska. The Crab Broker in Las Vegas derives the lion's share of sales from the red kings it supplies to upscale restaurants and specialty retailers.

"I probably sell into 40, 45 states," says Rob George, president, estimating he provided 275,000 pounds of frozen Bristol Bay red kings and another 90,000 pounds of fresh crab to customers like Bob Chinn's Crab House in Chicago, the Red Eye Grill in New York and Joe's Stone Crab in Chicago and Las Vegas, plus grocers like Wegmans, Whole Foods and Ohio-based Dorothy Lane Markets.

Despite some companies' Alaska-only stance, it's clear the Russian-fueled profusion of crab has resulted in bargains for red kings, which generally are considered a luxury item. One recent industry report cited prices in Seattle supermarkets as low as $6.99 per pound for small king crab legs and $9.99 to $11.99 per pound for large legs.

Christian Limberg, national sales manager for Harbor Seafood in New Hyde Park, N.Y., which sources red and brown kings from Alaska and Russia, as well as snow crab from Alaska, Canada and Russia, says lower-than-usual prices resulted in small kings being priced at or below snow crab prior to the kickoff of Canada's East Coast opilio season. In late February, for instance, several retailers were selling small king crab legs for $5.99 to $6.99 per pound.

"That's a slam dunk," Limberg says. "It opens up [retail and foodservice] applications for king crab that weren't available before."

 

New products, promotions

The king crab category is 
getting more competitive these days with new players, products and promotions.

Phillips Foods in Baltimore, a longtime provider of blue-swimming crab, last month unveiled a 1-pound plastic container of pasteurized king crab meat for foodservice applications.

"Our intention is to create a new category of use and demand," says Honey Konicoff, VP of marketing.

Phillips, which initially is sourcing Russian red kings from the Bering Sea and is processing the crab at its own plant in Vietnam, also plans to introduce three retail options in late May: a 1-pound metal can; a 1-pound plastic tub with shrink sleeve; and an 8-ounce shrink-sleeve plastic tub.

"It's a combination of leg meat as well as shoulder and knuckle meat," says Konicoff, citing potential uses in sautés, pasta, salads and as an appetizer. (The crabmeat will be used in Phillips' seven full-service restaurants.)

"We anticipate the price will be comparable to jumbo lump," Konicoff says. (In late February, 16-ounce cans of jumbo lump blue crab from Thailand/Indonesia were selling for $16.25 to $16.50, according to Urner Barry Publications in Toms River, N.J.)

Another new player on the scene is Ocean to Ocean in Virginia Beach, Va., owned by Icelandic USA. In December, Ocean to Ocean received its first shipment of Russian king crab, and "we expect to handle three or four truckloads in 2007," says salesman Robert Bajek. The crab will be available under the Neptune brand.

New marketing efforts in the crab category also are under way. ASMI is ratcheting up promotion of Alaska shellfish, which accounts for 1 percent of the volume of all Alaska seafood, yet 11 percent of the value.

Crab, in fact, is the focus of one of the three ASMI-funded television ads that feature actor and comedian Ben Stein. The crab-tailored ads, which aired last year to coincide with the king and opilio harvests, may run again 
in 2007.

Further, ASMI continues to forge foodservice partnerships. Rockfish Seafood Grill of Plano, Texas, for example, is participating in a "crab craze" promotion at its 16 restaurants in Texas, Arizona, New Mexico and North Carolina. Between Feb. 21 and April 8, Rockfish customers can choose between five crab dishes, including an Alaska king crab entrée.

"We are excited to offer our customers wild Alaska king crab because it is an exceptional product and has a great story," says Rockfish marketing director Aaron Horton, a reference to the crab's awe-inspiring harvest.

ASMI additionally taps that excitement with a new foodservice brochure that touts Alaska crab's sustainability, flavor and versatility, using dramatic photos showing fishermen hauling pots in heavy seas. A February news release announcing the brochure carried this headline: "40 Ft. Swells, 20 Hr. Shifts, 700 Lb. Pots, Countless Great Dishes."

 

Pining for opilio

Snow crab is a mainstay on menus at U.S. casual-dining chains and buffet houses, as well as in supermarkets around the country. Most of that product comes from Canada, with a smaller amount from Alaska.

The 2006-07 Bering Sea opilio fishery opened Oct. 15 with a total allowable catch of 36.5 million pounds, a 2 percent drop from the previous year. Despite the fall kickoff, most harvesters waited until mid-January or later to begin fishing, in part because of the concurrent Pacific cod season. Moreover, a fire aboard the F/V Steller Sea, a major floating crab processor, kept January snow crab landings low.

"There were boats out there that had crab, but they had to bob in the ocean for two or three weeks waiting for the Stellar Sea to come back online," says George of The Crab Broker.

With frozen crab inventories running on empty since late last year - and some fishermen not expected to deliver product until last month - one Northwest seafood processor set a base ex-vessel price of $1.52 for the 2007 season, a big boost from the preliminary 2006 price of 84 cents.

At press time, meanwhile, seafood buyers awaited the start of Canada's East Coast snow crab fishery, which last year brought in 195.8 million pounds of opilio. But Canada's quota is declining - it totaled 220.6 million pounds in 2005 - and further cuts may be announced for 2007.

F.W. Bryce, which last year sold in excess of 6 million pounds of snow crab, most of it from Canada, is projecting to sell 8 million pounds in 2007, much of it destined for retail and ca-
sino customers.

"Snow crab is our second-largest item, behind farm-raised salmon," Moores says.

And though pre-harvest prices remained high, Moores says they don't accurately reflect the market, since up to 70 percent of Canada's snow crab production is committed to existing foodservice and retail programs.

"A large majority of Canadian production is programmed, and those are going off of a price that was secured probably at the end of May, early June last year," Moores says. "So they could still be executing at maybe $1 to $1.50 below the [current] price."

 

Dungeness down

It's easy to understand buyers' disappointment with this season's Dungeness crab harvest. In Oregon, where Dungeness is the most valuable fishery for a single species, the catch has fallen markedly after landmark hauls the past two years of 27.6 million pounds and 33.6 million pounds, respectively.

In late February, landings stood at 12.5 million pounds, and by season's end in April could reach 14 million pounds - a level that industry officials stress is still above the historical average of 11 million pounds.

"It's a cyclical fishery, and right now we're on the down side of it," says Hugh Link, interim administrator for the Oregon Dungeness Crab Commission in Coos Bay.

The less-robust Oregon catch mirrors the climb-and-decline cycle in other areas. California hauled in a record 24.8 million pounds in 2004, while Washington's harvest peaked at 34 million pounds in 2003 before dropping to 15 million pounds in 2004.

Dungeness imports also have eroded. For 2006, the United States brought in about 339,000 pounds of the crab, down from 826,700 pounds a year ago. Of that, Canada's contribution plummeted to just 137,000 pounds after supplying nearly 743,000 pounds two years ago.

Prices, of course, have risen accordingly. "Last year, Dungeness crabmeat prices stayed fairly steady; this year they appear to be going up rapidly - I've heard as high as $16 a pound wholesale as of March 1," Link says. "And ex-vessel price to the boats from some of the major processors has gone up to $3.05 since last week after starting at $1.60."

Early last month, King's Fish House in California had live Dungeness crab selling for $29.50, while Pure Foods Fish Market in Seattle listed three frozen Dungeness crabs for $66 over the Internet.

"When you come into a year like this, with less Dungeness available, you want to make sure you keep product on the menu and in the stores where you market the hardest," says Link, citing casinos in the South and along the Gulf Coast as examples. "Then, when we have another good year, those doors are still open for us."

All told, given the commotion in the crab category, it's little wonder there's a bit of uncertainty in the marketplace. That leads Limberg of Harbor Seafood to offer some friendly advice.

"Buyers should stay in close contact with their suppliers so they don't get caught at the top or bottom of the market," he says. "I can't remember in years past it being this crazy."

Find other SeaFood Business articles with crab here.

Contributing Editor Rick Ramseyer lives in Cumberland, Maine

 

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