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Perishables Buyer Cover Story

Seafood Marketing Snapshots

Although seafood is challenged by sustainability and traceability concerns, retailers can drive sales through private label, value-added products and other initiatives.

March 21, 2013
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The newswires have been buzzing of late about the recently released results from Oceana, Washington, D.C., regarding widespread labeling fraud in the seafood industry. For anyone who has been following the seafood market, this is not new news—particularly for those who have been tracking the molecular-forensics work of marine biologist Steve Palumbi since the 1990s. Incidences of fraud have regularly surfaced over the years, but Oceana’s report brings this vital issue to the forefront of the public’s consciousness. When consumers detect a lack of transparency in the supply chain of their food, their confidence is challenged—and their purchasing dollars follow suit.

From 2010 to 2012, Oceana conducted one of the largest seafood-fraud investigations to date, collecting more than 1,200 seafood samples from 674 retail outlets in 21 states to determine whether or not they had been properly labeled. DNA testing found that 33% of the 1,215 samples analyzed nationwide were mislabeled, with samples of snapper and tuna showing the highest rates of mislabeling with an incidence of 87% and 59%, respectively. In fact, only 7 of the 120 samples of red snapper purchased nationwide for the purposes of this investigation actually turned out to be red snapper. Of course, seafood-labeling fraud can occur at any point in the supply chain, and buyers often rely on the trustworthiness of their suppliers. Beyond DNA testing, determining a fish species can prove highly difficult after it has been filleted.

To combat this rampant industry dishonesty, FDA has been working on DNA barcode genetic identification technology for several years, and has begun installing such equipment in its labs. Handheld DNA testing devices, such as the QPyre Handheld Sensor—developed by researchers from the University of Florida to help combat rampant fraud in sourcing of grouper in the state—have also been developed. Such handheld devices will help retail buyers clearly determine if their purchase orders are what they claim.

The seafood industry regularly teeters on such a delicate balance, not only related to the current question of trust and truth in labeling, but also in the realm of sustainability. But all indicators point to a progressive escalation of seafood importance as a cost-effective source of lean protein and healthful omega-3 fatty acids, and an important global source of food in general. And although seafood can prove a difficult perishables category in terms of profit potential, retailers are finding ways to drive sales, particularly through development of private-label lines.

 

A Question of Sustainability

From a sustainability perspective—particularly in terms of nutrition and world hunger (the United Nations has launched a major international initiative to better understand the role of aquaculture in food security)—seafood will factor heavily into the future of the entire global food industry. Chefs and consumers have long shown a bias toward fresh, wild-caught seafood. And although wild-caught seafood is a major aspect of the seafood market today, it’s regularly fraught with environmental factors that see catch limits imposed to help counteract rampant overfishing through the years.

One case-in-point is the recent catch limits imposed on cod in New England. Earlier this year, the New England Fishery Management Council, Newburyport, Mass., approved a year-to-year limit cut of 77% on cod catches from the Gulf of Maine, and 61% on cod from Georges Bank (a prominent fishery between the Gulf of Maine and Atlantic Ocean). This measure will, reportedly, be backed by federal managers at the National Oceanic and Atmospheric Administration. Regulators note that this move is necessary to help reverse the ongoing, systemic decline of these species. Because both pollock and haddock are bottom-dwelling groundfish, like cod, the limits will also affect catches of these fish for fear of inadvertently catching the cohabitating cod.

But sustainable fisheries management is an achievable goal, as evidenced by the system in place for Alaskan pollock, which uses mid-water trawls to help minimize the impact on the marine environment. The Alaska Seafood Marketing Institute, Juneau, Alaska, notes that this approach results in a average of only 1% bycatch of nontargeted species. The total allowable catch for Alaskan pollock, set by the North Pacific Fishery Management Council, Anchorage, Alaska, was raised 3.8% this year. Alaskan pollock accounts for around 30% of all U.S. seafood landings by weight.

Sustainability has long maintained a strong connection to seafood, and certified-sustainable seafood labeling is rising at a rapid rate. A key player in this game is the Marine Stewardship Council (MSC), London. The announcement earlier this year that the McDonald’s Corporation, Oak Brook, Ill., will now carry the blue MSC ecolabel on packaging for its fish menu items at all U.S. locations will catalyze a dramatic degree of visibility of MSC’s sustainability initiatives. McDonald’s has invested in sustainable-fisheries support for a decade and is the first national restaurant chain to sport the MSC ecolabel. The chain uses MSC-certified Alaskan pollock for its Filet-O-Fish sandwiches, as well as the Fish McBites launched earlier this year. The initiative will include in-store promotions and marketing efforts.

British grocery chain Waitrose is one of the most-recent retailers to institute MSC labeling for its private-label tuna. Domestic chains like Wegmans, Trader Joe’s and Whole Foods Market, among others, also sell MSC-certified seafood.

But even as more sustainable approaches to fisheries management are employed, farmed seafood will grow increasingly prominent. In short, the world will need to rely on aquaculture, along with sustainably wild-caught seafood, in order to feed it citizens—and this sentiment will travel through both developed and developing nations. Beyond food security, seafood is also vital to improving overall human health via the marine omega-3s found in fish like salmon, lake trout, mackerel, sardines, etc. Awareness of the importance of omega-3s in the diet continues to escalate, so marketing of fish high in these essential fatty acids (they’re not manufactured by the body so must come from dietary sources) will prove a strong selling point.

 

QSR Cues

A look inside activity in the foodservice sector—and particularly quick-service restaurants (QSR)—can serve as a strong predictor of food trends that will soon trickle into retail. And lately, seafood has seen a notable uptick in QSR activity.

According to Aug. 2012 research from Datassential, Chicago, handheld seafood entrées are currently among the fastest-growing items on U.S. restaurant menus. The firm also notes that incidence of seafood “sliders” on menus grew by 200% from 2007 to 2011, while menuing of fish tacos grew by 60%. This activity points toward convenience (handheld) and portion control (snack sizes), both of which should factor into retail purchase decisions.

In addition to the release of Fish McBites by McDonald’s—which has indicated that more McBites menu items will surface in the coming months, perhaps featuring specific flavors or spice levels—other QSR chains have been adding more seafood items to their menus. Wendy’s added a Premium Cod Fillet Sandwich, notable for its use of Japanese panko breadcrumbs. Also, Carl’s Jr., along with corporate cousin Hardee’s, is menuing a Charbroiled Atlantic Cod Sandwich, while Burger King offers a Premium Alaskan Fish Sandwich. Differentiating factors, like the use of a specific batter or breading (lighter, crispier) or place names for fish origin (Alaskan, Atlantic), are clearly at play here.

 

Going Private Label

It can prove notoriously difficult to make a profit in fresh retail grocery seafood departments. This has availed the opportunity for retailers to move more steadily into private label to help control costs.

According to a 2012 survey conducted for PLBuyer by Consumer Science, Ft. Worth, Texas, about half of respondents reported that they buy private-label seafood. Notably, 69% of that group said that it matters to them that the seafood they buy is from sustainable sources. The study found that higher wage earners (making more than $50,000 annually) are more likely to purchase private-label seafood; in that income group, 61% say they buy private-label seafood.

Although some retailers offer fresh private-label seafood options—this year, A&P launched a new line of fresh private-label seafood, part of its Great Atlantic Seafood Market department, highlighting the speed of delivery from boat to store—the bulk of perishables activity in this market is in the freezer case, where loss to shrink is diminished compared to fresh.

In 2009, Safeway launched its Waterfront Bistro private-label line. The line includes frozen shrimp, scallops, cod, halibut salmon, as well as several value-added frozen products, including:

  • Garlic Lemon Pepper Sockeye Salmon
  • Sesame Teriyaki Pacific Salmon
  • Toasted Black Pepper Tilapia
  • Lemon Dijon Pacific Salmon
  • Parmesan Tilapia
  • Sesame Chili Tilapia

Winn-Dixie has also jumped into the private-label seafood seas with its Fisherman’s Wharf brand, which includes frozen shrimp, flounder, cod, perch, whiting, grouper and tilapia, as well as frozen seafood dinners.

Trader Joe’s, which stocks its stores with around 80% private-label products, offers Hake en Papillote (parchment-wrapped hake with grilled zucchini, cherry tomatoes, and pesto) and Marinated White Fish Vera Cruz (swai marinated in olive oil, tomatoes, green olives, chiles, onions and capers).

Moving forward, transparency and sustainability will prove key in renewing and maintaining consumer confidence in seafood, thereby helping drive sales. Also, flavor-forward frozen products—often private label—will pique customer interest. Since preparation of seafood is often a hurdle with consumers, providing guides on corporate websites can help ease culinary concerns, as will availability of value-added, ready-to-cook products.

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