In 2020, we learned many new things that will help propel our industry forward and we also learned that some of the overall trends in our industry continued unabated, pandemic disruption or not.
Seafood has always had a unique role among the centre of the plate proteins in the North American diet. It is the healthiest protein. It has the lowest carbon footprint and the least environmental impact. It has the greatest variety of taste, texture and mouthfeel.
The downside has been that Americans, unlike their counterparts in France, Spain, Italy, Japan and Korea have been unwilling to cook much seafood at home.
Surveys show this is largely due to fear of failure, or fears that a household member won’t like fish. Also, the memory of when retail buyers used to get the worst, 10-day old fish that stank up the kitchen, have remained embedded in the consumer psyche even though this practice has been discontinued for 35 years.
When the pandemic stopped consumers from eating out and forced them to stay home with more time on their hands, the benefits of home cooking — a healthy and varied diet — redounded to seafood’s benefit.
Americans found they could learn to cook seafood — that is was easy and simple. That it had variety, pizzaz and value. The result was an explosion of retail buying.
There is every hope that this expansion of interest will continue into 2021 and beyond. In short, consumer demand is forcing retailers to once again upgrade their seafood offerings, to the immense benefit of our industry.
A Summer of Respite: Tourism
A second observation is that seafood consumption is heavily tied to coastal tourism. This is certainly true in countries like Japan, where tourism is what has long supported the snow crab market. However, it is increasingly true in America as well.
Lobsters and fried fish in New England, blue crabs in the Chesapeake, shrimp and grouper in Florida and the Gulf and salmon in the Pacific northwest all contribute to the regional experience visitors seek when they travel there.
The shutdown of international travel meant a boom in local tourism this year. In May, businesses in Maine and Cape Cod thought the summer season would be a complete bust. They were wrong.
Instead, with a respite from the worst of the virus, people travelled to vacation spots, rentals were full and demand for local seafood was strong.
This helped many companies survive. And it points to the long-term value of regional seafood identities. Like health and variety, the ability of seafood to have a regional attribute contributed to its vitality during the pandemic. Again, this is a long-term benefit that can be leveraged into the future.
A Bifurcated Industry
We sell our products by species and item and there is great variation in the sales channels for different species. This has meant that although some products have sold well and have had a normal year in terms of price variation and availability, other products have collapsed.
The principal difference is how dependent a particular item is on food service demand. So, for example, products like oysters, halibut, frozen salmon and frozen cod are all trading at either single year or multiple year lows. This is due to the collapse of normal buyer demand and is a direct result of the loss of restaurant business in the pandemic.
Single species producers, like oyster farmers, for example, have simply nowhere to go with their product, and they are suffering huge losses.
Other products like fresh salmon, crab, lobster and shrimp, which all have strong retail components, are trading either within their normal range or at new highs.
This mix has allowed seafood distributors and wholesalers, who typically carry all of these products, to survive. These distributors have been able to find outlets for their products that are in demand at home.
The same has been true for producers. Those companies that have access to a variety of species and product forms proved more resilient in some cases than those that were single species producers. This will accelerate the ongoing trend of consolidation in our industry.
More Consolidation, More Capital Investment
To survive this year meant having access to capital.
It was expensive to retool plants and change production procedures. Furthermore, the expense of quarantine, travel and operating in remote communities safely dramatically increased. This has meant that only the financially stronger companies were able to absorb these expenses.
So, for example, we saw the sale of Peter Pan by Maruha to an Alaskan private equity group. There are rumors of the potential sale of the private equity stake in American Seafoods to Coastal Villages.
Other Alaskan native corporations with long-term access to capital have also been on a buying spree. And in one of the biggest deals in Canada, Clearwater Seafoods was sold to a consortium involving Indigenous groups and a corporate partner, Premium Brands.
In Massachusetts, Blue Harvest bought 12 Carlos Rafael’s vessels and 27 fishing permits in February, after having purchased the vessels operated by Atlantic Trawlers in Maine the previous year. This makes the company, a processor of scallops and groundfish, the largest diversified fleet operator in New England.
In Europe, the investments in land-based salmon companies continued unabated. And there remains plenty of private equity money chasing seafood opportunities.
The run-up in stock markets and low to zero interest money has created a huge appetite for seafood investment, because the fund managers can see as well as anyone the long term increases in seafood value as demand for wild seafood exceeds supply.
The pandemic strengthened this trend and spurred deals rather than discouraging them.
These acquisitions are mostly on the producer end of the business. Distributors and restaurant chains were the weaker partners often getting bought up, as with Legal Seafoods, or struggling with expenses and debt due to the failure of their restaurant customers.
There may yet be a negative ripple effect from the permanent closure of restaurants. Companies like Sysco and US Foodservice have taken steps to protect themselves by cutting costs, but so far it is government assistance that is keeping some bankruptcies at bay. It is unclear how much the new stimulus package may address this issue, or simply kick it down the road.
Innovation Galore
Innovation has also saved our industry.
The rapid evolution of online ordering, making inventories visible to buyers and connecting individual consumers with online seafood orders has been a major factor in keeping seafood moving.
This could not have been accomplished without a revolution in quality and consumer trust. 20 years ago, online ordering of seafood was hindered by the uneven quality and description of the products. Consumers were never sure of what they were getting.
Was that sockeye fillet a twice-frozen leftover from two years ago nearing its expiration date? Was that shrimp triple soaked? There has been a general improvement in standards and quality so that more consumers are satisfied with what they buy, leading to repeat business. Some have even exploited the opportunities in the pandemic, buying high quality frozen seafood that was originally sold primarily to independent chefs.
Other innovations have involved keeping production and transportation safe.
Despite the pandemic, the industry overall has designed systems that work. In December, a local post office employee told me that over 200 postal workers in the Concord, N.H. distribution centre were out sick or in quarantine. This is one of the reasons mail service has collapsed. They simply could not deal with the increase in volume due to the pandemic.
Yet the seafood industry has avoided such calamities and has managed to keep products flowing, including imports. This is a remarkable achievement.
Finally, there is menu innovation going on around take out and prepared food.
One of the reasons for frozen lobster popularity is that it has shown itself to be a successful ingredient. Lobster mac and cheese can be a staple takeout dish that can be reheated, while a whole lobster might not be. As restaurants have experimented with menus, some seafood items have benefited. This type of experimentation will continue into next year, particularly as the food service industry feels its way back.
Vaccine on the Horizon
The year 2020 ended on a hopeful note. A vaccine rollout meant that the end of the pandemic is actually in sight in 2021.
Both my daughter-in-law, a doctor and my niece, a nurse practitioner, have already been vaccinated, as has a neighbor in a nursing home. This is an immense relief.
And it means that we will be dealing with rebuilding in 2021.
After the Spanish flu in 1918/19, came the decade of the roaring 20s. The stock market certainly seems to be anticipating this. There is a lot of innovation in the pipeline including new food products, energy efficiency, electric cars, upgraded infrastructure and medical breakthroughs, all of which may get greater range in the coming years, boosting all our fortunes.
This is the glass half-full view.
So, I feel our year ended on a hopeful note. At the end of the musical Hamilton, Eliza sings “who lives, who dies, who tells your story.” We are survivors. We have a lot of positive trends working for us in the coming years: the move to frozen food, the upgrading of retail seafood, the building of a more resilient supply chain, lots of access to capital and a rebirth of restaurant and food service culture.
I hope this time next year we can look back and see we have moved forward in all these areas.
This article was republished with permission of John Sackton and seafood.com.
