If you could peek inside America’s cupboards and refrigerators, you’d see tableaus that capture changes wrought by the pandemic: Towers of paper goods, loads of comfort food, caches of upmarket coffee. You might also be surprised to see an unusual amount of seafood.
Frozen seafood sales at US supermarkets and other food retailers rose 26% in the four weeks ended Dec. 27 from a year earlier, according to market research company IRI, far stronger than the 6% growth for consumer packaged goods overall. Fresh seafood sales rose 25% in the same period. That strong result wasn’t just a holiday binge: Since the onset of the pandemic, seafood sales growth has tended to outpace that of the grocery store as a whole by a comfortable margin.
The seafood spending surge is an example of the hard-to-foresee ways the pandemic continues to displace and redirect consumer demand. Typically, an outsize share of Americans’ spending on seafood is at restaurants. Consumers spent $69.6 billion in 2017 on seafood at restaurants and other food-service venues, according to a US government report, compared with $32.5 billion spent at stores for home consumption. But with many white-tablecloth dining rooms closed or operating at reduced capacity during the pandemic, shoppers who perhaps rarely cooked seafood before have decided to put seared salmon, shrimp scampi and steamed lobsters on their own kitchen tables.
The trend is apparent everywhere, from big-box retailers to discount chains and traditional supermarkets. Walmart Inc. has had such strong growth in both fresh and frozen seafood at its US business during the pandemic that the giant expanded its fresh shellfish offering in the fall. Lidl said it had a “double-digit” increase in seafood sales in the past year, while Albertsons Cos. executives said on a January earnings call that seafood sales had delivered quarterly comparable sales growth above the company average. Conventional supermarket Stop & Shop said it is carrying a bigger selection of seafood as shoppers have increased purchases, while Whole Foods Market is experiencing “huge growth” in frozen seafood, according to Wesley Rose, the chain’s vice president for seafood. That led the upscale chain to expand its selection to include value packs of halibut, barramundi and arctic char. With fresh offerings such as red snapper also selling well, Whole Foods has added black cod and farm-raised striped bass to fish counters at most of its stores.
Like adapting to any of the abrupt consumer shifts brought on by the pandemic, leaning into the seafood craze is a tricky balance for retailers. They must figure out how to satisfy the boom in demand while taking care not to alter their operations and strategies in a way that leaves them stranded if the trend proves fleeting. Mark Murrell, CEO of Get Maine Lobster, an online shop that sells its namesake crustacean and other seafood, told me he saw a small bump in sales in March that gave him a hunch stay-at-home living could be a boon for his business. He started pouring money into Google, Facebook and Instagram ads, and it worked: Sales increased more than 600% in 2020 from a year earlier. The huge year has led him to pull forward investments in related products such as butter, spices and sauces. Yet when he needed more freezer space to accommodate all the food he is selling, he decided to rent it on a monthly basis, which avoids a major capital expense — and gives him flexibility if business conditions change.
For seafood producers, the increase in sales from households has been a help when many restaurants have shut down, but it hasn’t come close to filling the gap. Revenue at commercial fisheries fell 29% from their five-year average in the January through July period, according to a report by NOAA Fisheries.
Covid-19 has rattled the industry in myriad other ways, too: Guidance from the CDC suggests quarantining workers for 14 days prior to boarding a ship and modifying workstations or shift schedules to allow for more social distancing. Meanwhile, the middle of the seafood supply chain – processors and distributors – has experienced a world of pain. Gavin Gibbons, a spokesman for the National Fisheries Institute, says debt has swelled at these types of facilities in recent months, in part because of how contracts tend to work in the industry. Typically, restaurants receive their seafood, start serving it to customers as popcorn shrimp or tuna tartare, and pay the supplier some 30 to 60 days later. As restaurant revenues have nosedived, they’ve struggled to pay those vendors. The institute says the seafood industry has added $2.2 billion in debt since the onset of the pandemic, adding financial stress to a sector that was already strained by the US’s trade war with China.
It is striking that seafood sales are sizzling at stores while things look so bleak several steps back in the supply chain, a dichotomy that underscores how the pandemic is tearing through the consumer industry in complicated ways. But what’s happening at grocery stores offers reason for long-term optimism for the wider seafood industry. The sales gains have been quite persistent; the bounce is not fading almost a year into the pandemic. That suggests many consumers are making a bona fide habit of preparing these items and could keep them in their weeknight dinner menu even when they’re able to sit down to a lobster feast at a restaurant.
Bloomberg
