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« November 2006 Table of Contents

Surimi seafood

Producers focus on quality and consumer education to expand the analog market

Surimi seafood, another name for imitation crab, lobster or other types of shellfish, can be a tasty addition to everything from salads and sandwiches to dips, soups and casseroles.

The trouble is, most Americans don't buy surimi seafood - or even know what it is.

Category stakeholders are thus ratcheting up efforts to educate U.S. consumers about the merits of simulated shellfish. Strategies include introducing health-oriented products, emphasizing higher-grade formulations and, in at least one instance, adding an eco-label.

Moreover, one of the surimi sector's long-time players, Louis Kemp, was acquired in April by industry heavyweight Trident Seafoods, which intends to restore a brand that's been in decline after being held by a series of different owners.

The need to give surimi seafood a prod is apparent from U.S. consumption figures, which for years have remained in the ballpark of 170 million pounds at retail.

"There's only one in 10 households, if that, that even bothers to use [imitation shellfish], so we've got a long, long way to go," says Michael Faris, president of Shining Ocean in Sumner, Wash., maker of the Kanimi and Kanimi Deluxe brands.

"But there's a lot of opportunity."

There's already been plenty of jockeying in the marketplace, as competitors fight to pick up market share from Louis Kemp.

For the 26 weeks ending Sept. 2, sales of refrigerated or frozen Louis Kemp-branded surimi seafood fell more than 21 percent, according to ACNielsen retail tracking, while Trans-Ocean Products and Shining Ocean increased sales by 25.6 percent and 21.4 percent, respectively.

Trans-Ocean recently surpassed Louis Kemp for the first time as the nation's No. 1 retail surimi-seafood brand.

Through Sept. 2, Trans-Ocean posted 26-week sales of $12.3 million, compared with $10.1 million for Louis Kemp. That computes to a dollar share of nearly 29.4 percent for Trans-Ocean and 24.1 percent for Louis Kemp.

"At one time Louis Kemp had a 60 percent market share," says Louis Shaheen, VP of sales and marketing for Trans-Ocean in Bellingham, Wash., which makes the Crab Classic line. "So this is exciting for us."

For 2006, Trans-Ocean will pro­cess more than 23 million pounds of imitation shellfish for retail outlets, where the best-selling flake style goes for $2.99 for an 8-ounce package. The company will process another 3 million pounds for the U.S. units of the Subway sandwich chain in Milford, Conn.

Subway's Seafood Sensation sandwich, which contains 10 percent real crabmeat, is made with Alaska pollock processed by Trans-Ocean and supplied to Subway by Jana Worldwide in Natick, Mass.

Shining Ocean, meanwhile, is on track for 11 percent growth in 2006, says Faris, citing the use of sales tools such as retail promotions and countertop sampling. The company also provides surimi seafood in bulk to Japanese sushi bars, as well as to processors that make salads destined for supermarkets.

"That's a large portion of our business," Faris says.

Shining Ocean isn't the only company gaining from the salad trend.

Future Food in Carrollton, Texas, which sells seafood salads, dips and spreads in retail stores nationwide, introduced the Salads of the Sea party pack. The bundle, priced around $11.99, features three 12-ounce containers of the brand's top sellers: Cajun Krab Dip, Seafood Cheese Spread and Cajun Smoked-Salmon-Flavored Spread.

Platters, too, are a big part of the surimi-seafood lineup at supermarkets. Stop & Shop, with more than 360 stores in New England, New York and New Jersey, offers the Imitation Lobster & Crabmeat Platter for $18.99, boasting 3 pounds of faux crab and lobster meat.

And Harris Teeter, a 153-unit chain in Matthews, N.C., has the $39.99 Seafood Sampler, which includes 1 pound each of simulated crab legs and flakes, plus 2 pounds of shrimp and 8 ounces of cocktail sauce.

Trident weighs in

Trident, long a foodservice force with its SeaLegs surimi seafood, strengthened its retail position in March by purchasing Louis Kemp and its production facility in Motley, Minn., from packaged-food giant ConAgra of Omaha, Neb.

Trident now intends to jumpstart Louis Kemp, known for its Seafood Delights crab, lobster and scallop blends, by upgrading the surimi 
formula to include 100 percent Alaska pollock - with no Pacific whiting - combined with more 
real shellfish.

It "reverses the trend to cheapen the product, and we think the market is ready for [one] that works just like crab and lobster in many, many applications," Trident spokesperson John van Amerongen wrote in a recent e-mail.

Trident also is putting more marketing muscle behind Louis Kemp with an on-package coupon and a retail brochure.

"We're convinced [consumers] will like what we've done with Louis Kemp," van Amerongen wrote, "and they'll want to buy [it] once they understand our commitment to making it the very best surimi that's available."

Publicizing the benefits

To spur sales of simulated shellfish, Trans-Ocean is working with an advertising agency to develop a consumer-focused marketing campaign that likely will launch next year. The campaign may include magazine ads and freestanding inserts, plus regional testing of radio and perhaps TV spots.

"The health aspect of surimi seafood is not being told," Shaheen says. "It's low-fat or no-fat, it's omega-3-fortified, it's low-calorie, it's fully cooked and it's easy to use. It's simple seafood."

Further, Trans-Ocean hopes to capitalize on use of the Marine Stewardship Council's eco-label on its 8-ounce packages of flake- and chunk-style imitation crab carried in more than 1,000 Wal-Mart stores, says Shaheen.

MSC's distinctive blue tag "is an easy way for consumers to identify seafood from fisheries that meet the MSC's strict environmental standards," Peter Redmond, VP of Wal-Mart Seafood and Deli, noted in a news release.

Shining Ocean recently introduced the Crab Smart and Lobster Smart lines, promoted as "a smart, low-fat way to add omega-3 oils and calcium to your diet."

The 12-ounce retail packages sell for around $3.

The company also is testing a crab-flavored, heart-healthy snack item in a few markets. That effort stems from the success of Shining Ocean's Shrimp Combo, made with a formula that includes real crab and shrimp, fortified with omega-3 and calcium.

"It's one of the most expensive items in the market [$3.99 for a 12-ounce package]," Faris says, "but it does very well for us."

Quality push

Surimi seafood is made from the paste of cooked, mild-flavored whitefish, to which starches, red colorings, flavorings, binders and stabilizers are added. When it's done right, industry members say, it's excellent.

But some leading analog suppliers are concerned that inconsistent quality reflects badly on the whole category. They say the price of whitefish, which rose by double digits in 2005 and has stayed high, has led some companies to seek cheaper formulations that contain more water and less fish, or lower-grade species like itoyori.

A flood of imports from countries such as China has compounded the problem.

Christian Limberg, national sales manager at Harbor Seafood in New Hyde Park, N.Y., is concerned that some packers are sacrificing quality by focusing strictly on price, 
potentially impacting consumers' perception.

"Regardless of where the product comes from, you have to maintain the integrity," says Limberg.

He notes that in 2005, Harbor Seafood sold more than 13 million pounds of simulated shellfish, the vast majority of it made with domestic whitefish.

Challenges aside, industry representatives stress that higher-grade surimi seafood, supported by effective marketing, remains a promising opportunity.

To "get more customers and grow your success, you have to make a better product, and you have to put some marketing horsepower behind it," Trident's van Amerongen wrote. "But the potential for growing and recapturing the category still exists." - R.R.