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American lobster

Value-added products represent opportunity to expand market

The years of record landings may be over, but Maine's
    lobster supply holds steady. - Photo courtesy of Maine Lobster Promotion
    Council
By Lisa Duchene
November 01, 2006

Maine lobster is steeped in a 
tradition of wooden boats, bright-colored buoys and shore dinners every Fourth of July. In the marketplace, the prevailing tradition has been the stability that comes with steady supplies and fairly predictable price patterns.

This year, when Maine's soft-shelled "shedder" lobsters turned up in traps in late June, four to six weeks earlier than usual, Maine tourists were around for the feast, says William Atwood, owner of the William Atwood Lobster Co. in Spruce Head, Maine. The local markets tend to prefer softshells while air-shipment markets require the durable hardshells.

This year also marked a slight price drop for the first time in several years of 10 to 20 percent increases annually, says Jeff Holden, president of Portland Shellfish, a lobster processor in Portland, Maine.

Prices since Atlantic Canada's spring season began have been running about 25 to 40 cents lower than last year's. In early September, graded product was tagged at $4.80 to $5 per pound. A Maine distributor's price to restaurants was $6 to $7 per pound and $5 to $6 a pound for bulk supermarket orders of 5,000 to 10,000 pounds.

Canadian hardshell prices this spring were at $5.75 to $6 per pound. They dropped a bit in late June, when Maine shedders arrived, climbed to $6.75 for the July 4 holiday and, in early September, were in the $7.50 to $8 range.

"Lobster gets away with pricing a bit more than other species, because it's considered a top item when it comes to seafood," says Holden. "But everybody found last year that it's only worth so much, and people are only going to pay so much," says Holden.

With other luxury shellfish like Canadian snow crab and Alaska king crab at reasonable prices, lobster had to become a bit more competitive.

"Some of those other species are coming down in price and [lobster] was going up," says Holden. "It's a collision course. The big users start moving away. That doesn't mean they're taking it off the menu, but they start moving away from featuring it.

"Those kinds of things have a tendency to soften demand. That's where you get a correction, and that's where we are right now [in early Sep­tember]," says Holden.

Strong and steady market

Restaurant demand for large lobsters - like the 3- to 5-pound live Maine lobsters Shula's 25 steakhouses serves as part of its promise to deliver the "biggest and the best" - is strong and steady, say suppliers.

"I think lobster is one of celebratory things, and I think people come to our restaurants specifically for lobster," says Ryan Nelson, executive chef of the Oceanaire Seafood Room in Indi­anapolis.

The restaurant moves 250 to 300 pounds of lobster a week in dishes like a cold shellfish platter with crab, oysters and mussels for $69 and whole steamed lobsters from 11⁄2 to 6 pounds, priced at $26 per pound.

Occasionally, Nelson menus a lobster roll for $19.95 as a lunch special. "It's really popular," he says. "Every time it's on the menu, it sells out." Those prices have been pretty steady, at about $25 to $27 per pound for the last three to four years, he says.

What John Hogan, chef at Keefer's Restaurant in Chicago, loves most about lobster is its firm texture, which contrasts beautifully with creamy ingredients like avocados.

He menus lobster and avocados in a salad with a citrus vinaigrette for $14.99; in a lobster BLT with bacon, pancetta, lettuce, tomato, and a creamy shallot vinaigrette on whole wheat for $18.95; and in a lobster salad with celery, onions, shaved cabbage and lemon-and-herb-mayonnaise for $18.95.

Keefer's sells about 50 pounds of lobster weekly and has found pricing fairly stable. Typically, toward summer's end, getting hardshell product can be a struggle.

A matter of time

On the supply side, the timing of landings worked out well for Maine lobster distributors in 2006, since new-shells and tourists arrived at the same time. In 2005, the new-shells didn't arrive until November.

But the timing of new-shells did not work out so well in 2006 for Canadian lobster buyers who had impounded hard-shells to meet the increased summertime demand - at an anticipated rising price - until Maine's production ramped up.

Atlantic Canada's lobster-fishery openings are designed in part to avoid new-shells. The hardshells, much more durable for shipping than fragile softshells, are a point of differentiation for Canadian lobsters, says A. Estelle Bryant, senior planning development officer for the Nova Scotia Depart­ment of Agriculture, Fisheries and Aquaculture.

Atlantic Canada's 2005 lobster harvest was about 96.7 million pounds. Nova Scotia caught just over half, with a 2005 harvest of 52.4 million pounds.

By mid-September, the bulk of Maine's catch was landed, Atwood 
estimated. The final harvest tally could prove to be higher than last year's, he says. Maine's 2005 lobster harvest was 67.3 million pounds, a slight drop from a record high in 2004 of 71.2 million pounds.

Lobster prices have also gone down a bit from last year because there are fewer live lobsters left in inventory.

"People pay too much sometimes, hoping the market will follow them up," says Holden. "Everybody in the business got caught in that position last year to some degree, some worse than others."

D.B. Kenney Fisheries in Westport, Nova Scotia, impounded lobsters this season, hoping the price would go higher. When prices hadn't risen by the end of August, the dealer sold the lobsters. The weakening U.S. dollar against the Canadian dollar also hurt, says David Titus, D.B. Kenney's sales manager.

"Anybody right now who's got hardshell Canadian lobsters can probably get $8 [per pound] now, but if anybody's got any, it would be very, very few," says Titus.

A boon for retailers

The good news is that lobster prices allowed some supermarkets to run specials that weren't possible with the last few years' higher prices, says Logan Clarke, owner of the Lobster Trap Co., in Bourne, Mass. Super­market chains were able to promote live lobster at $6.99 to $7.99 per pound in August and September, he says.

Sweetbay Supermarkets, a Florida chain owned by Delhaize, was not among them. Live lobster is "one of those items that get people off the couch to come shopping," says Jim McWade, Sweetbay's meat and seafood director. But Sweetbay has not seen lobster prices low enough to run 
promotions.

"There is nothing more costly than heavy promotion of lobsters," says McWade.

Sweetbay customers have been buying boatloads of value-added lobster products, a category that saw double-digit growth for the chain over last year. The most successful item has been a frozen, 7-ounce cup of tail and claw meat that retails for $12.99, says McWade. The chain is about to test 2-pound boxes of frozen claws.

Adding value boosts market

Value-added products, such as whole cooked and frozen lobsters and retail packs of ready-to-use meat and tails, have been a stabilizing force over the market in the last several years.

Such products help absorb high volumes and lobsters that aren't fit for the fresh market because their shells are too soft or they are missing a claw.

Three years ago, Morrison's Maine Course in Portland, Maine, went into business specifically to develop and sell value-added lobster and seafood products.

The company's lobster stew has a suggested retail price of $14.99 for two 8-ounce pouches. The pouched and frozen product is natural and preservative-free and can be prepared from the frozen state in eight minutes.

"People want to eat lobster, but they want it prepared for them," says Emily Lane, Morrison's director of sales and marketing. "We believe this is the wave of the future."

The company sells its stew at Hannaford grocery stores and 85 specialty stores in Maine. Next, it intends to target southern New England and the East Coast, says Lane.

Cozy Harbor Seafood, another Portland, Maine, processor, has seen a 300 to 350 percent increase in value-added retail products like lobster meat, lobster tails and whole, frozen, cooked lobster over five years, says John Norton, company president.

Whole, frozen, cooked lobsters are "targeted to people who usually eat lobsters in a restaurant," says Norton. "They can purchase with the convenience of the supermarket, hold it in their freezer until they're ready, and it's all cooked. They don't have the preparation that they do with live lobster."

The lobsters sell for $13.99 to $16.99 per pound, with a finished weight of 1 pound.

"Give [consumers] products that are easier for them to prepare, and they respond," says Norton.

Suppliers are wise to develop and market value-added lobster products, according to market research completed in 2005 for the Maine Lobster Promotion Council.

Consumers weigh in

A national consumer survey by the council found clear and significant opportunity for lobster products that spared consumers from cooking the whole lobster at home. Nearly one-third of consumers said they would purchase lobster meat for $12 per pound, the report found.

Other key findings:

• Forty-six percent of consumers surveyed said they like lobster "very much."

• Ninety-four percent of consumers who have eaten lobster have eaten it in restaurants; 60 percent have never cooked lobster tails at home and 60 percent have never used pieces of lobster as part of a dish at home.

• Almost two out of every three lobster-eaters say they would cook lobster at home more often if lobster pieces were readily available.

• Twenty-seven percent of consumers are bothered by killing and eating a lobster and object to the looks of a whole lobster, suggesting pictures of finished dishes rather than a whole, cooked lobster may be a better bet for packaging.

These findings may explain the shift in demand from live lobsters to frozen tails that Holiday Quality Foods, a 22-store northern California supermarket chain, is seeing among its consumers. Dan Love, Holiday's meat and seafood director, notes that only one store has a live lobster tank.

The industry is also seeing some opportunity in raw lobster meat for the foodservice industry. Clearwater Sea­foods in Halifax, Nova Scotia, and Shucks Maine Lobster in Richmond, Maine, are using a high-pressure treatment to remove the meat from live lobsters without cooking.

The process creates a more convenient product for chefs and home cooks and leaves the meat with its natural, reddish tint, says Bryant.

"It really broadens the range of recipe preparations [chefs] can do because they're working with raw meat," says Bryant. "They really have such a wide variety [of product forms] now. I think there's a company out there that will tailor it to whatever the chef wants," says Bryant.

Buyers can expect some lower prices on live lobsters around November, but they should act quickly, as prices will rise as the Christmas and New Year's holidays approach.

There also may be some bargains on lobster meat, as inventories are high, says Clarke. But any low pricing will be temporary. True to form with the lobster market, this year, too, has been all about stability.

And for next year? The forecast is for more of the same - regardless of whatever surprises 2007's lobster season holds.

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