With frozen shrimp prices continuing to rise as a result of supply constrictions following the outbreak of Early Mortality Syndrome (EMS) disease in Asia and Mexico, a number of restaurants in the United States and other countries are taking the increasingly expensive shellfish off the menu. This and other issues facing the seafood industry were among timely issues discussed October 7-10 at the Global Aquaculture Alliance’s GOAL Conference in Paris.
Henry Hidayat of PT. Bahari Makmur Seja, an Indonesian shrimp processing company, was among those in attendance expressing concern about the prospect of continued falling consumption of shrimp in the USA.
“With prices so high now, what strategy do you have to offer consumers affordable prices?” he asked a panel of retail operators and foodservice suppliers.
Panelists addressing the impact of rising shrimp prices are (left to right): Scott Williams of B.J.’s Wholesale Club, Laky Zervudachi of Direct Seafoods, and Joe Zhou of Darden Restaurants.However, even before the spread EMS – also known as acute hepatopancreatic necrosis syndrome (AHPNS) – began devastating farmed shrimp production in Asia, resulting in upward pressure on prices, the appetite for shrimp in the USA was diminishing. According to statistics published by the National Marine Fisheries Service (NMFS) on October 30, per capita consumption of shrimp dropped by 9.5%, from 4.2 pounds in 2011 to 3.8 pounds last year. That equates to the lowest intake of “America’s favorite seafood” in the United States since 2002.
Confirming that shrimp has indeed been yanked from the menu of at least one major foodservice operator in the USA recently, Beth Grant, commodities procurement manager for Rosemont, Illinois-headquartered US Foods, told GOAL conference delegates: “We are asking our regional sales people to promote different presentations of the product that may be more affordable.”
Having said that, she added, “But it’s contract time with the national chains now, and there’s a lot of talk about what are we going to do for them in terms of price.”
Americans ate 4.5 billion pounds of fishery products last year. At 15 pounds per capita, this reflects a four percent reduction over the previous year. One reason for it, which is not spelled out in the statistics, is that the ongoing Great Recession, coupled with a stubbornly high unemployment rate and thus reduced purchasing power, is forcing many consumers in the USA to trade down in supermarkets as well as at restaurants. While this may be good for purveyors of relatively low-priced chicken and burgers, it is negatively affecting higher-priced seafood product sales.
Meanwhile, demand for shrimp in China, where a rising middle class of consumers is hungry for seafood of all kinds, keeps product flowing into that country which in the past would probably have headed to the United States and Europe at reduced prices.
“Demand for seafood is soaring, but supply is stagnant and markets in East Asia are taking your stuff,” Peter Redmond, vice president of the Global Aquaculture Alliance and session moderator, said to the panel of American and British retailers and foodservice suppliers.
“This keeps me up at night,” commented Ms. Grant, who prior to being employed by US Foods was a seafood purchaser for the Quincy, Massachusetts-headquartered Stop & Shop supermarket chain and San Antonio, Texas-based H-E-B Grocery Stores.
“During a buying trip to China two years ago, a supplier asked if I could be hired away,” she continued, “because his company was about to become a net importer of shrimp. This development means that consumers in the US will have to pay more not only shrimp, but for food of all kinds.”
In a separate panel discussion, Laky Zervudachi of Direct Seafoods, a major supplier of fish to the United Kingdom catering industry, reported that in Britain a major chain has also pulled shrimp from the menu.
One can expect that “more and more production will go to China and other countries in the Far East” that are willing to pay higher prices, figures Zervudachi.
Joe Zhou, senior director of seafood procurement for Orlando, Florida-headquartered Darden Restaurants, commented: “I agree that the shift of wealth from the West to the East will create a new dynamic. Geographical diversity [of supply] is increasingly important to fulfill the world’s food requirements.”
Moderator Redmond, stating that the replacement of poultry for shrimp on restaurant menus is certainly “not exciting” for consumers, asked if retailers are taking higher-priced shrimp off store shelves.
Apparently this is not happening directly, at least not yet.
“What we are doing is trading down in size,” said Scott Williams of Natick, Massachusetts-headquartered B.J.’s Wholesale Club. “Also, more emphasis is being placed on adding value to shrimp. For example, we are offering shrimp-stuffed founder instead of crab-stuffed flounder. So the same value is available to our customers, only in different formats.”
The situation is more complex for Darden, pointed out Zhou, as its 1,700 outlets, which include the Red Lobster chain, make it the world’s largest casual-dining restaurant company and probably the single biggest seller of shrimp in the foodservice sector.
“With us menu shifts have to be gradual. If there is less shrimp on a plate, the customer notices it,” he said.
As such, should shrimp prices continue to escalate, Darden would likely promote the product less rather than curtain its menu presence. At the same time, other fishery products would be highlighted more.
Organizers of the GOAL conference put a number of survey questions to attendees. One pointedly asked what was the most serious contemporary challenge facing the seafood industry. The response from 80% of the delegates, perhaps not surprisingly, was: “Rising Shrimp Prices!” – JMS
