Casting a Wide Net

November 24, 2010
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The outlook for private label seafood depends on which part of the market you fish in. Upscale offerings and appetizers are holding their own but the national brand sharks are circling the canned segment.

Asking private label seafood suppliers what sort of year they’re having is a bit like asking fisherman in different parts of the same lake how they’re doing-the answers can be completely different depending  on whether they’ve found the sweet spots where the fish are biting. For private label seafood, the sweet spots this year are appetizers and frozen/refrigerated products. Canned products like tuna, on the other hand, are coming in for intense national brand competition that is hurting sales.

And while innovation is being sought by retailers when it comes to product, quality and packaging for entrees and frozen offerings, in appetizers the old salts like shrimp are still the big fish for private label to drag into their nets.

Just like with any good fish story, the truth can be separated from tall tales by looking at the numbers-in this case, sales numbers rather than fish weights. Dollar sales of refrigerated private label seafood offerings rose 9 percent in the 52 week ended Sept. 5 when compared to the same period last year, reaching $60.4 million, reports Chicago-based market research firm SymphonyIRI. That came as overall refrigerated seafood category sales climbed only 1 percent to $363 million in the same period.

On the frozen side of the seafood flotilla, sales of private label rose 16.5 percent to slightly more than $1 billion in the same 52-week period. Within frozen, sales of private label cooked shrimp were up almost 9 percent to $450.7 million while overall frozen shrimp sales were up only 2.5 percent to $709 million. Sales of private label raw shrimp rose a whale-like 20.7 percent to $275.8 million while overall sales of frozen raw shrimp were up only a minnow-like 4.9 percent.

Sales of private label frozen fish were up 25.94 percent to $304 million in the same period while overall sales of frozen fish rose 9.7 percent, according to Symphony IRI data.

The canned side of the private label pond presents a different picture entirely. There, dollar sales of canned private label tuna fell 1 percent in the 52 weeks ended Sept. 5 to $140.6 million while overall sales of canned tuna rose 3 percent to $1.1 billion.

Private label’s share of canned tuna is a guppy-like 8.9 percent

Looking at canned tuna, William Purcell, president of Purcell International, Walnut Creek, Calif., says “Last year, people traded down and there was a huge shift to private label and, in general, brands got hammered. This year, brands are fighting for market share, doing all sorts of promotions. Private label is taking a back seat.”

But while the perfect storm may have hit the tuna fleet, the skies are a lot sunnier in the high-end seafood specialty world where Matt Mariani, CEO of Santa Rosa, Calif.-based Sonoma Seafoods trawls for business. 

“Our customers have maintained [buying] and we’ve seen some growth,” this year, Mariani says. He attributes that growth to people shifting from restaurants to eating at home, where they’re looking for more adventuresome fare than just some canned tuna.
Sonoma makes stuffed seafood items, value-added entrees and crab cakes. It’s put some items in microwavable, steamable trays, a convenience-oriented form of packaging that’s been gaining popularity in the seafood aisle. 

“Fish is maybe the only large protein group that is best cooked by steaming,” notes Tom Sunderland, director of marketing with Ocean Beauty Seafoods, Seattle, a smoked fish producer. The challenge for any seafood sold in steamable packaging is to education consumers about its use, Sunderland notes. Many retailers are thus following, rather than leading national brand seafood processors in moving to steamable packaging, letting the national brands do the consumer education job for them, he says.

Finding New Angles

When he looks at the private label seafood horizon, Sunderland says he sees “innovation in steam technology, a lot of interest in innovative products. I’m still hearing from a lot of people, ‘please bring us high quality.’” Mintel International’s Global New Product Database shows 61 new private label seafood products rolled out from January through Sept. 17 of this year. That’s roughly on pace with last year when 82 were introduced for the entire year. Chicago-based Mintel only tracks processed fish products.

Aldi’s, Trader Joe’s, Kroger and Safeway are private label seafood innovators, Sunderland contends. “Safeway’s private label group has been pretty innovative in seafood. They have very nice packaging, very nice product and they have advanced cooking technology in their private label as well,” he says. Also at the head of the fish pack is Target, he adds. “Target should get a  lot of credit, specifically for seafood. They have been reasonably bold in experimenting with new value-added products,” he says. 

As far as potential growth in private label seafood, Sunderland advises that “the biggest opportunity is frozen seafood.” But he also cautions retailers that “frozen seafood needs attention. Those retailers for whom frozen matters all succeed at it. Frozen takes attention like anything else and I think it tends to be ignored, say compared to the fresh case. Make frozen seafood a higher priority. [You would] find amazing success.”

On the seafood appetizer front, “we’re still seeing apprehension of trying anything new,” says Jeff Legge, vice president  of sales and marketing at Canadian producer Ocean Pier Inc. Shrimp and crab are popular appetizers even though “shrimp, people feel comfortable cooking themselves. Crab, people are not comfortable doing anything with,” Legge says. Retailers he deals with are looking for packaging that helps cut their labor costs as well as lowers their inventories, Legge says.

 Master cartons that feature easily rip-able tops are popular because they reduce the amount of labor needed to display frozen seafood items in store, he explains. Retailers also are asking for smaller master cartons to cut their inventory carrying costs and make it easier to distribute product to smaller locations, he says.  “They don’t want backroom inventory,” Legge says, noting one of his major customers has converted from 12-packs of product to eight-packs to address the inventory issue.

The Sustainability Hook

Sourcing of seafood and the issue of sustainability of various species tends to get widespread coverage in the general press, but when it comes to decision-making in-store, seafood suppliers say most shoppers are not making buying decisions based on sustainability or sourcing. 
“They care [about sustainability] but they don’t make their decisions according to sustainability. Right now they’re making their decisions according to quality and price and they’ll say in that order,” says Sunderland.

The reason sustainability isn’t a major consumer issue is because of the amount of confusion that exists on the topic, Sunderland contends. Mariani’s company has gotten its Marine Stewardship Council (MSC) certification as a processor and it puts the MSC logo on some branded products but has not done so as yet with its private label offerings. Some retailers do have plans to move in that direction, Mariani says. The issue is the cost of doing so for private label, he notes. Any product carrying that logo, which connotes responsible harvesting of seafood, has to pay a percentage of sales to the program.

“I do think that the whole sustainability thing, even though it has slowed down, is going to continue and it will be interesting to see at what level private label retailers decide to feature that,” Mariani says. 
Indeed for that issue, as for so much else in the seafood category, it may all depend on where in the lake your boat is anchored.

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