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The business climate in the seafood industry is going to get better. A surge of seafood promotions this summer is laying the foundation for strong sales in the coming months.
We have already seen big increases in imports of salmon and shrimp, despite the fact that until recently many sellers were hampered by higher cost inventory. And there have been plenty of reports of hand to mouth buying, and weak demand suggesting that lower priced shrimp and salmon was not kicking things up a notch.
But the data tells a different story. The demand recovery from a period of high priced seafood, especially shrimp and salmon and shellfish, is underway, according to insights from Urner Barry’s retail database, which is compiled from weekly feature activity from major banners in 17 distinct markets.
Breaking down major seafood categories, promotions are up in shrimp, salmon and shellfish. Only frozen fillets, including cod, tilapia, pangasius and others is relatively flat compared to a year ago, up only 5 percent.
Salmon promotions surged 54 percent this summer. Shrimp Promotions surged 47 percent. Shellfish, including crab, lobster and mollusks was up 37 percent.
Weekly Shrimp Promotions
Promotional activity at retail is highly correlated with tonnage sold, and for some products 50 percent to even 90 percent of the total retail volume will come through promotion. So when the absolute number of promotions on various seafood items increases, it means volumes have increased as well.
For shrimp, the increased promotions have been evident for the entire past 12 months, with virtually all months showing an increase. But the year-over-year increases in promotions really surged starting in February, and have continued to gain momentum since.
The implication here is that the large volume of shrimp being imported is in fact working through the pipeline, and the market demand is adjusting to the higher level of supply. As prices still have a lot of room to come down at retail, this momentum is likely to continue as competition forces retailers to lower their sales prices.
For salmon, promotions were relatively stable year over year until June, when they really took off. For the three months of the summer, salmon promotions, which include wild salmon, were up 54 percent over the prior year.
Although promotions on the shellfish category are up overall, we will need to look more closely at specific species, but both crab and lobster appeared to have more promotions as well.
Another favorable trend on the macro level is the relative price of beef and seafood at retail.
Between January and May of this year, the difference in Urner Barry’s retail index for seafood and beef averaged $2.37, with seafood more expensive. Since June, that index differential has averaged $1.68. The trend is clear that seafood prices are closer to beef prices than they have been in some time.
Although sellers may be seeing sluggish demand or lack of frenzied buying, the numbers on the retail side suggest a very healthy move to sell more seafood, which will in turn support some price increases and maintain margins down the road, as buying costs for major items like shrimp and salmon begin to increase again.
For more information, visit www.seafood.com.
Editors' Note: Urner Barry's retail seafood index is based on weekly compilations of feature activity of all proteins from 17 major U.S. metropolitan areas, which offers a comparison of total seafood promotions for June July and August in 2014 and 2015. Overall promotions for 2015 are up 26 percent over the summer of 2014.