« December 2007 Table of Contents
Seafood buyers will be put to the test in 2008, but
they're already prepared for the challenge
By Steven Hedlund
December 01, 2007
When the holiday hangover wears off and the reality of the
new year sets in, chances are the challenges seafood buyers
faced this year will continue to put them to the test in 2008:
Seafood prices and energy costs are rising. The U.S. dollar is
depreciating. The housing slump and escalating household bills
are impeding consumer spending. And food-safety deficiencies
overseas are damaging consumer confidence in seafood.
In this month's Top Story, four of the nation's leading
seafood buyers, each representing a different industry -
restaurant, supermarket, hospitality and cruise line - give
their take on what lies ahead in the seafood trade in the
coming months. Their outlook will help you chart a course for
2008 and weather the storms that may arise.
"Seafood is the most difficult thing we buy," says Gene
Marino, director of purchasing for Princess Cruises in Santa
Marino isn't alone. Whether you're a seasoned fishmonger or
a rookie, sourcing seafood is an arduous task. And so is
understanding the issues that influence consumers'
seafood-purchasing decisions. This year, the safety of U.S.
seafood imports took center stage when the U.S. Food and Drug
Administration slapped an import alert on five farmed seafood
species from China, creating a public-relations nightmare for
"I've been doing this for 30 years, and every time something
like this happens it goes away," says Joe D'Alessandro, senior
director of seafood merchandising for The Great Atlantic &
Pacific Tea Co. in Montvale, N.J. "But this is the first time
it hasn't gone away. I have a feeling that this will continue
to be one of the hot-button topics."
Despite the challenges they confronted this year and will
likely continue to face, the seafood buyers interviewed for
this story expect their seafood sales to increase in 2008.
Seafood sales set sail
In the cruise line business, food is the name of the game.
The dining experience trails only the destination as the most
important decision passengers make when selecting a cruise
line, says Marino, of Princess Cruises, which is owned by
Carnival Corp., the world's largest cruise line operator.
Seafo od plays a key role in Princess' dining experience,
representing 30 to 40 percent of the cruise line's food
purchases, in terms of value, notes Marino.
"We're big seafood users," he says, "and we're trying to use
more and more."
Annually, Princess, with a total of 16 ships, uses more than
1 million pounds of shrimp, 600,000 pounds of Alaska salmon,
500,000 pounds each of lobster tails and king crab legs and
200,000 pounds of Alaska halibut.
"People are more adventurous about dining [when on a cruise
ship], because it's not as if they have to pay for, say, orange
roughy, if they didn't like it," says Marino. "They can order
orange roughy, and if they don't like it they're more than
welcome to order a steak instead. They can be adventurous
without the commitment of a $35 or $40 entrée. But once they
try it, they usually don't ask for the steak."
Consumers and businesses like Carnival are pinched by
skyrocketing energy costs: Crude oil pushed the $100-a-barrel
mark last month. On Dec. 1, the Miami company adopted a fuel
surcharge of $5 per person, per day; several other cruise lines
have done the same.
Despite climbing fuel costs, "the cruise line industry is
doing very well and is growing," says Marino. "It's a very good
value for vacation. The ship has to sail full, so if demand
isn't there, prices come down. Luckily, demand has been
The weakening U.S. dollar is making it harder and more
expensive for U.S. buyers to source seafood imports, which
represent more than 80 percent of the U.S. seafood supply, as
the strengthening euro prompts domestic and foreign suppliers
to target the lucrative European market (see Top Story,
November SFB ).
The ailing currency has been a double-edged sword for the
cruise line. On one hand, Carnival passengers can pay for a
European cruise with U.S. dollars, evading the exchange rate,
explains Marino. On the other hand, the depreciating U.S.
dollar is making it harder and more expensive for Carnival to
source seafood imports, notes Marino.
"This has been a tough year," he says. "We had to ask for an
increase in our budget. We advised senior management that we
did the best that we could to mitigate [food] costs through the
introduction of new products and trying to buy at the right
time. There's upward pressure in the food market in general,
[especially] in seafood. But we don't want to take items off
the menu, and we can't pass higher [food] costs along to our
Still, Marino expects Princess' seafood sales to increase in
2008. "Our seafood sales will grow [due to] organic growth and
demand for seafood [overall]," he predicts. "Americans are
eating more seafood than ever for health reasons."
Seth Salzman, senior VP of Boneheads Grilled Fish & Piri
Piri Chicken in Atlanta, couldn't agree with Marino more.
"People recognize that if you batter and deep fry something,
it's just not good for you no matter how you slice it," he
Founded by Raving Brands in 2005, Boneheads operates seven
restaurants - five in the Atlanta area, one in Boca Raton,
Fla., and one in Lake Forest, Calif. - and plans to open six
units in 2008. The fast-casual chain targets time-pressed
diners seeking a healthier alternative than conventional fast
And seafood is an ideal fit on fast-casual menus - it's high
in omega-3 fatty acids, it's lean, it cooks quickly and it
encourages menu creativity. Seafood, most of it grilled,
accounts for 80 percent of Boneheads' menu, in terms of
Menuing a mix of seafood species is key to managing rising
seafood prices, advises Scott Vogel, culinary director for
Boneheads, which offers shrimp, salmon, mahimahi, grouper and
tilapia, among other species.
Tilapia, the only product Boneheads sources from China, "has
the most growth potential on our menu," he says. "It's become
very popular. It's light and sweet in flavor. At the grocery
store it's inexpensive. People recognize that, and then they
see it on our menu.
"But we're always looking for new products," adds Vogel.
"Actually, we're testing barramundi, and we're excited about
When menuing new seafood species, "you take a bit of a
gamble," acknowledges Salzman. "Do we bring in a product that
people aren't familiar with? Or do we stay with what's safe and
comfortable, with what people know? Because of our price point,
we can take that chance. Our customers will spend only $8 or $9
or maybe $10 on their meal. So even if they try it and say,
'It's $10. I eat here twice a week. If I don't like it, no big
deal. I just won't get it again.'"
In addition to controlling increasing seafood prices,
ensuring the safety of the seafood Boneheads menus is
paramount, notes Vogel.
"Food safety was the hot button issue in 2007, and I'd like
to say that it probably won't be in 2008, but it will likely
remain so," he says. "The most common question we get is, 'What
portion of your seafood comes from China?' People are worried
if the seafood is coming from a reputable company. We deal with
big companies that are all very reputable."
fish sales benefit
For Avendra, the hospitality industry's largest
procurement-services company, dealing with economic fraud in
the seafood industry is its No. 1 obstacle.
"Clarification on industry standards and truth in labeling
seem to be my biggest challenges," says Christa Ingalls,
seafood commodity manager for Avendra. "Many seafood products
don't have industry standards, and comparing between different
manufacturers can often be a challenge. Our customers are also
very concerned about mislabeling."
Despite the need to crack down on seafood fraud, Avendra -
formed in 2001 by Fairmont Hotels & Resorts, Marriott
International, Hyatt Hotels Corp., ClubCorp USA and
Intercontinental Hotels Group - projects its seafood sales to
increase in 2008. The Rockville, Md., company purchases 26
million pounds of shrimp, 22 million pounds each of lobster and
salmon and 18 million pounds of crab annually.
The growing U.S. lodging industry will be partly responsible
for bolstering Avendra's seafood sales next year, says Ingalls.
The $133 billion industry expanded by 8 percent each in 2004
and 2005 and 7 percent in 2006. Continued growth is
anticipated, she notes, as many of the 77 million baby boomers
are now in their peak earning years and will have more money -
and more time once they retire - to spend on travel.
Keeping the seafood it serves affordable for baby boomers
and other guests won't be easy, admits Ingalls, but Avendra's
$2.5 billion in purchasing power helps it manage increasing
"We have long-term contracts that allow for a steady flow of
pricing through our system," she says. "I have also developed
numerous contracts that allow for locked-in pricing for longer
periods of time using best buy/time practices and large-volume
D'Alessandro, of The Great Atlantic & Pacific Tea Co.,
has been in the retail seafood business for three decades, and
he can't remember the last time a seafood-related issue
garnered as much attention as China has in the mainstream
"One of the things we're looking at in 2008 is renewing
consumer confidence in seafood because of what's happened with
food safety," he says. "We're going to continue to drive that
"As soon as we found out about [the increased presence of
banned drug residues in Chinese seafood], we felt the right
thing to do was to send lots of all of our seafood to be tested
to ensure there was nothing in there," continues D'Alessandro.
"We've had no issues, thank God."
The Montvale, N.J., company operates about 300 grocery
stores under five banners: A&P, Super Fresh, Waldbaum's,
Food Emporium and Food Basics. Conventional supermarket chains
such as A&P are being squeezed by big-box and club-store
retailers like Wal-Mart and Costco on the low end and specialty
and natural-food retailers like Whole Foods on the high
Since late last year, A&P has adopted a
perishables-focused fresh format in about 80 stores and
upgraded its seafood departments, auditing every seafood
product, switching many suppliers and product specifications
and revamping its shrimp program.
"Some companies have decided to take their seafood managers
out and go with pre-packaged product, but we're doing quite the
opposite," says D'Alessandro. "We're [emphasizing] service, and
we realize how important that person is behind the
Providing value is equally important, notes D'Alessandro. "I
don't care if you make $20,000 a year or $120,000 a year," he
says. "There isn't a person I know that doesn't want a
Ken Engasser, seafood category manager for A&P, says
training seafood-counter staff will be his No. 1 hurdle in
"That's the biggest challenge - making them a fish expert or
a mini-category manager. So much of our success is how they
interact with consumers and how they merchandise the products,"
says Engasser. "Consumers are becoming more educated. Part of
our struggle is the ongoing education of consumers [through]
our store associates, who interact with them."
And that's a struggle Engasser and D'Alessandro are
confident A&P can overcome.
"We definitely expect our seafood sales to increase in
2008," says D'Alessandro. "We see our customers moving toward
healthier eating, and we know seafood can provide that. Also,
it's a convenience. It's the fastest protein to cook. It's our
job to market those key points to help drive our business."
Associate Editor Steven Hedlund can be e-mailed at