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« July 2006 Table of Contents

25th Anniversary: Happy 25th, SeaFood Business!

SFB celebrates two and a half decades of covering the seafood industry

Welcome to SeaFood Business ' 25th anniversary celebration! Join us as we look back at two-plus decades of change in both the industry and this publication. Stocks of some species have risen and fallen. New farmed species such as tilapia and basa have taken over some markets. Family-run businesses have been handed over to younger generations.

Producers have gone from just putting fish in a box to branding product and evolving into a marketing-oriented business. Here's to another 25 years of progress!

Seafood consumption increases

Per-capita seafood consumption increased 4 pounds in 24 years, from 12.8 pounds in 1980 to 16.6 pounds in 2004 (the most recent figures available).

The list of Americans' favorite seafoods began to change in 1990 as imported farmed product began to dominate supply. That year, canned tuna was No. 1 on the Top 10 list, followed by shrimp, cod, pollock, salmon, catfish, clams, flatfish, scallops and crabs. By 2001, shrimp had replaced tuna as the most popular seafood, and tilapia appeared on the list for the first time. Consumers ate 4.2 pounds of shrimp per capita in 2004, fueled by low prices and increased marketing. Tilapia jumped to the No. 6 spot on the list in 2004, the result of low prices, consistent supply and increased menu mentions at casual-dining restaurants.

U.S. fisheries go up and down; antidumping cases increase

The boom-and-bust cycles of many domestic fisheries filled SFB headlines in the early '80s. In 1982 the Alaska salmon industry had more canned product than it could market, followed by its largest salmon season in history in 1984. Mean­while, the state's king crab fishery was a bust, dropping more than 160 million pounds within four years to almost 17 million pounds. The state's cod fishery was also coming up short, and fishing efforts eventually shifted to pollock. By the late 1980s, pollock overproduction forced the market to crash.

North Atlantic cod found its way onto upscale New York City menus in the late 1980s, and national chains ran big promotions. But overfishing decimated the fishery, and Atlantic Canada placed a moratorium on cod fishing in 1992. In New­foundland alone, 19,000 fishermen and plant workers were displaced.

Groundfish and scallops were in short supply in New England. Landings of cod, haddock and flounder, the region's "bread and butter" species for three centuries, hit historic lows. The region's fishermen were forced to turn to dogfish, skate and monkfish, niche species that would later become mainstream.

Although some Mid-Atlantic states saw strong blue crab harvests, domestic crabmeat production fell 43 percent from 1996 to 1999. Packers were unable to compete with cheaper imported product.

Gulf fish stocks were in good shape through the '90s, but net bans and 
other regulations took their toll on supply. Some Florida fishermen turned to niche fisheries like golden crab.

By 2003, Gulf and South Atlantic fishermen, struggling with increased fuel and labor costs and competition from imported farmed product, formed the Southern Shrimp Alliance and looked to trade relief. The SSA's antidumping case, the most significant filed by a domestic fishery in the past 25 years, resulted in tariffs on shrimp imports from six countries in 2005.

Several other domestic fisheries filed antidumping cases in an attempt to curb the flow of competitive foreign product. Tariffs were placed on whole farmed salmon from Norway in 1991, Chinese crawfish in 1997 and salmon fillets from Chile in 1998.

U.S. catfish farms emerged as a steady supply source in the early 1980s and even launched a marketing campaign in 1987. But the industry struggled to compete with cheaper imported basa. This led U.S. catfish farmers to file an antidumping case, and tariffs were placed on Vietnamese basa imports in 2003.

A flood of farmed imports

In the early 1980s, groundfish imports from Canada and Japanese surimi were the industry buzz. Buyer demand for steady seafood supplies at affordable prices bolstered imports of farmed shrimp, salmon and tilapia 
by the mid-1990s.

In the early 1980s, most of the imported shrimp came from China. Black tigers had taken over the market by 1986, but Taiwan's shrimp industry crashed when a virus hit the farms in 1988. Production shifted 
to Thailand, Indonesia and the Philippines.

Ecuador became the second-largest supplier of white shrimp to the U.S. market by 1995. By 2000 the white-spot virus and economic turmoil contributed to a 50 percent drop in product from the country. But not to worry - Thailand, China, India, Vietnam, Ecuador and Brazil filled the void, farming the faster-growing, more-disease-resistant white shrimp.

Farmed salmon has also been a story of ups and downs. Norway was a dominant U.S. supplier of farmed salmon in the 1980s and even set up a Norwegian Salmon Marketing Coun­cil in New York in 1989, spending more than $1 million on salmon promotions. But when Norwegian salmon was slapped with a tariff in 1991, the market turned instead to Chile, which became the biggest supplier of fresh Atlantic salmon fillets by 1997.

Antidumping duties were placed on fresh Chilean salmon in 1998, but the duties were not high enough to interrupt the flow of product. Con­solidation and bankruptcies in the salmon-farming arena began in 1990 and continue today.

Value-adding expands

Processors' demand for higher margins, combined with demand for more consumer-friendly seafood, spurred further processing of product beyond steaks and fillets. In the 1990s value-added meant ready-to-eat products, such as marinated seafood, or ready-to-cook seafood kabobs, salmon burgers, swordfish chops, seafood sausages and tuna carpaccio. In 2005, breaded-seafood manufacturers reformulated their products to be trans-fat free.

Marketing a healthful protein

Seafood's healthful profile and, more specifically, the role omega-3 fatty acids play in consumers' diet, have been a regular marketing theme in the industry over the past two decades. SFB's first coverage of seafood's importance in a healthy diet appeared in the fall 1982 issue in a story titled "Seafood-rich diets discovered effective in controlling heart disease."

The first Seafood & Health conference was held in 1985 in Seattle. This gathering of industry professionals, medical researchers and nutrition educators was repeated 20 years later in Washington, D.C.

The industry has seen national promotions come and go since the early 1980s. The Catch America Campaign, a joint government/industry effort to promote seafood, was launched in 1982. The National Fish & Seafood Promotional Council was established in 1987 and spent $9 million to promote seafood during its three-year run. The council's Spokesfish, launched in 1989, advised consumers to "eat fish and seafood twice a week."

The topic of generic marketing resurfaced among National Fisheries Institute members in 1999. Later changed to a "resource enhancement and access program," the effort was abandoned after the group was unable to resolve who would pay for, and benefit from, the program.

Consolidation across the board

Processors ramped up operations and added plants in the 1980s, but competing operations began consolidating in the 1990s, and that trend continues today. So far this year, SFB has reported 17 supplier or distributor mergers and acquisitions.

Retail consolidation began in earnest in the 1990s, contributing to further consolidation on the supply side. In the February 1999 issue, SFB reported, "Supermarket executives won't soon forget 1998, the year the nation's biggest grocery store chains went on a wild feeding frenzy, buying up smaller chains and sending shock waves through the front offices of supermarkets from Boise to Bangor.

"It started with Albertson's buying American Stores in August. Then Safeway bought Dominick's during the second week in October. The following week, Kroger nabbed Fred Meyer. Finally, late in October, Ahold scooped up Giant. When the dust settled, these four consolidations, worth more than $41 billion, had reorganized 10 of the nation's largest supermarket chains."

Seafood-safety programs

In 1985 congressmen from beef-producing states called for mandatory seafood inspections in an attempt to put the industries on equal footing. The topic was unsuccessfully revisited in 1989, when similar bills were introduced. In 1994 the Food and Drug Administration proposed regulations for a mandatory seafood program called Hazard Analysis of Critical Control Points for processors, packers, warehouses and importers. HACCP became official in late 1995, and the industry was given until the end of 1997 to reach compliance.

Import regulations designed to prevent a terrorist attack on the nation's food supply were introduced in 2003, delaying shipments and increasing paperwork for brokers and importers.

Country-of-origin labeling for retail seafood products was instituted in April of 2005, mandating that products be labeled as to origin and whether wild or farm-raised.

NGOs and seafood-buying guides

Fish-bashing by environmentalists and nongovernmental organizations began in earnest in 1987 with Public Voice's release of "The Great American Fish Scandal: Health Risks Un­checked." Earth Island Institute in 1990 launched a campaign to encourage consumers to ask for "turtle-safe" shrimp at supermarkets and restaurants. SeaWeb and the Natural Re­sources Defense Council launched the "Give Swordfish a Break" campaign in 1998. It had little effect on swordfish supplies but put seafood-bashing front and center. Greenpeace scaled Long John Silver's headquarters in Lex­ington, Ky., that same year with a banner protesting the chain's use of factory-trawled fish. In the past decade NGOs have focused on methylmercury in seafood and its effects on pregnant women, nursing mothers and young children.

In 1999 the Monterey Bay Aqua­rium released its "Seafood Watch" guide, and the National Audubon Society's Living Oceans Program introduced its "Seafood Lover's Alma­nac." Both guides are aimed at influencing both professional buyers' and consumers' purchasing decisions.

Sustainability to the forefront

While the 1980s were all about finding the fish and finding markets for them, the past decade raised the question: How much is too much?

The Marine Stew­ardship Council, founded by Unilever and the World Wild­life Fund in 1996, was first to put a global focus on seafood sustainability with an independent certification pro­gram. Nine­teen fisheries have received an eco-label, including the Alaska pollock and salmon fisheries. Wal-Mart, the world's largest retailer, announced this year that it would start sourcing its wild seafood from MSC-certified fisheries.

Darden Restaurants, Sys­co and Ahold are just a few companies that began to explore sustainable-sea­food-buying programs. In­de­pen­dent certification programs such as those founded by the Global Aqua­culture Alliance and SalmonChile address quality and sustainability issues for farmed shrimp and salmon.

Dot-coms, terrorists and nature

Remember the dot-com frenzy of 2000 to 2001? Venture capitalists believed all seafood could be bought and sold online. But we all know what happened to the dot-com dream.

Then the Sept. 11, 2001, terrorist attacks brought the entire U.S. airline industry to a halt. The seafood industry, heavily dependent upon airfreight, was left with pro­duct it couldn't get to its customers.

The deadliest tsunami in recorded history battered South Asia in December 2004. U.S. seafood suppliers and fishermen rushed to aid fishermen in the region. Then disaster struck at home as hurricanes Katrina, Rita and Wilma ripped apart the Gulf Coast in 2005. It will take the region's fishermen and processors years to rebuild their industry's infrastructure.

Stay tuned to see what the next 25 years hold for the seafood business.

Editor Fiona Robinson can be e-mailed at frobinson@divcom.com