Crisis Management and Value for Money:
Keys for Success During Trying Times
By JOHN M. SAULNIER, QFFI Chief Editor & Publisher

As people party more at home to beat the recession blues, these 1,000-gram packs of Fishermans Choice King Prawn Skewers are sure to warm up the occasion.

In an environment where middle-class consumers are curbing spending, retail price-cutting on some items is the ‘new normal.’ At the same time, top-end products are holding their own.

In a year of continued economic recession and financial turmoil, when credit insurance screws were further tightened on seafood buyers and suppliers, those with strong balance sheets continued to survive. Some even thrived.

Others, with credit worthiness deemed to be relatively risky by banks and ratings houses, were forced to creatively contrive to stay alive. At the end of 2009, those with the wherewithal remained standing tall, while some folks without enough cash in their stash took a fall.

With the arrival of 2010, crisis management is still very much the modus operandi among many players in the seafood industry, and some are clearly better at adapting to market conditions than others. While pressure remains especially heavy in the commodity shrimp sector, a number of Benelux-based producers and distributors of value-added frozen seafood items appear to be faring well despite the market’s turbulence.

“Our business has been good. Overall turnover is up more than 10% compared to 2008, though profit margins are down,” Ruud van Zuidam, managing director of Fishermans Choice, told Quick Frozen Foods International on November 17.

Having said that, the Den Haag, Holland-headquartered chief executive curbed his enthusiasm about prospects for the new year. “I think 2010 could be a difficult time, as a lot of people are unemployed,” he commented. “Unless the job situation improves, the restaurant sector will continue to suffer.

However, with the price of shrimp still a relative bargain, operators should be able to maintain traffic by offering ‘all you can eat’ specials at reasonable prices.”

Fishermans Choice, which specializes in shrimp-based finger food products packed primarily in Indonesia and Thailand under its proprietary brand name as well as private labels, figures that the time is right for European retailers to stock up on its snack and appetizer ranges.

“People who take more meals at home to save money can still enjoy a restaurant-quality experience with our products,” he said.

This is because the same high-standard ingredients that go into the company’s foodservice line are used to produce an assortment of BAP-certified retail packs of value-added snack products that range from butterfly shrimp to mini fish skewers.

Among established items on offer are Body Peel Black Tiger Shrimp in one-kilo boxes, BBQ-Gourmet Tapas in 400-gram packs, 500-gram boxes of 50-count Dim Sum Shrimpers, and 1,000-gram Fish’n Vegetable Skewer packs.

“We generally launch two to four new products each year, and will surely have some exciting introductions to show this Spring at the European Seafood Exposition in Brussels,” assured Van Zuidam.
Preferring not to provide details at this time, he did reveal that a new retail line called SuperChoice will soon be rolled out.

A strong financial base is fundamental these days, when one considers that an importer often pays for orders up to one month before they clear Customs, and then places the goods in cold storage for several months before making delivery to wholesalers or distributors. Then, it can be another month or two before payment is received.

As a Groothandel/Wholesaler Brouwer member, the foundation of Fishermans Choice is solid. The company is engaged in a broad cross section of food product provision to a largely European clientele. In addition to frozen fish and seafood, its catalog ranges from Italian specialities and Asian treats to drinks, snacks and chips.

Commentary from Culimer

“While price pressure has been enormous in the commodity shrimp segment, we have fortunately noticed that this has not been the case with top-end products,” said Martin Brugman, managing director of Rotterdam-headquartered Culimer BV, which specializes in a wide assortment of middle- and high-end seafoods ranging from smoked tuna and marlin canapés to whole crab, king crab, split legs and clusters, to swordfish, butterfish and sashimi-grade yellowfin tuna.

“The market as a whole may have shrunk, but our volume and turnover is about the same as last year,” Brugman told Quick Frozen Foods International on Nov. 9. “Volume started picking up after the summer, and it seems that there has generally been a slow but sure recovery occurring in the industry.”
Still, buyers are not keen on building up inventory to levels that were considered normal in past years. Importers, on the other hand, have no choice about keeping stock on hand and paying for the costs associated with having products ready to roll whenever and wherever.

“You can feel the financial pressure that some wholesalers and distributors are under, which makes them reluctant to commit to large volumes,” said the managing director. “So we have to plan more and more for providing just-in-time deliveries.”

This trend is also evident in China, where positions to lock in prices for shellfish and other products consumed during Lunar New Year/Spring Festival celebrations are typically locked in long in advance of the holiday rush.

“We are doing reasonably well in China, even though price pressure at the moment is even greater than in Europe,” said Brugman. “Crab is our big-selling item there, because it is popular on all special occasions. What is a nice surprise is that our smoked items are growing in demand as well.”

Eat Fish Twice Per Week!

One development that the economic crisis has had on the seafood business in Europe is that more fish eaters are opting for lower-priced products. While the trend toward greater use of pangasius and tilapia has been ongoing for some time among processors and restaurateurs alike, the momentum toward less expensive, farm-raised species seems to be picking up among retail shoppers who increasingly demand more value for money.

The important thing is that people continue to include marine products in their diets for health reasons as well as for culinary fulfillment, stressed Mariëtte Lutgerink, director of the Dutch Fish Marketing Bureau. So rest assured that the Rijswijk-based organization will gear up its “Eat Seafood and Fish 2x Per Week” campaign in 2010.

“We are intensifying point of sale distribution of promotional information in retail stores, and getting the message out via radio and the Internet,” she told QFFI. “Research indicates that children are increasingly overweight nowadays, and are not eating enough fish. That is why we are especially targeting young people, as well as women and those who might be deficient in certain vitamins and minerals that fish contain.”

The Bureau has also been busy promoting its “Cooking with Class” and “Special Days” projects, in which dieticians educate primary school children in The Netherlands. The emphasis is on eating healthy foods, and youngsters are taught to make fish part of their menu selections.

“While Holland is a major fish and seafood producing and processing country, per capita consumption of such products at home is only 3.4 kilograms per year. We aim to increase this over time,” Ms. Lutgerink explained.

Marine Harvest

Sales of Norwegian salmon to customers in major export markets boomed in 2009, in the wake of supply disruptions in Chile due to the ISA virus problem.

For the Marine Harvest Group (MHG), among major developments in 2009 were the affordability of cod as a raw material for use in value-added fish dishes, and the fact that Norwegian-sourced frozen salmon became a hot seller in the USA and other markets.

“With the drop in Chilean salmon supplies because of ISA (infectious salmon anemia virus), there is now huge interest in importing frozen salmon portions from Europe, which puts pressure on the available volumes in Norway, with a positive increasing price effect for the producers,” said Laurent de Baynast, sales and marketing director at Brugge, Belgium-based Marine Harvest VAP Europe. The downstream business unit of MHG rang up sales of 450 million euros last year.

As the largest supplier of farmed salmon in the world, Oslo, Norway-headquartered Marine Harvest is working overtime to keep up with demand. Even with rising prices and more value-challenged dollars needed to pay for the deliveries, American buyers have not slowed their pace of ordering. Indeed, the US National Marine Fisheries Service reported that imports of frozen and fresh Norwegian salmon fillets hit almost 14,000 tons for the first three quarters of 2009 – up over 400%!

The cod story was another matter entirely, as a depressed market saw the price for fresh fillets plummet from 18 to 10 euros per kilo, while frozen fillets fell to 6 euros. As price resistance to fresh cod increased, sales dropped to the point where suppliers began freezing the raw material rather than deliver it to wet markets.

“So it’s back in our assortment again, and we are happy to offer it to customers,” said Dag Cours, director of product development for Marine Harvest VAP Europe.

Meanwhile, following a flood of introductions of frozen new products in 2008, the pace of rollouts was deliberately slowed down last year.

“One reality of an economic crisis is that retailers scrutinize stocks more closely, and clean out items that are not moving fast enough. Quality products are thus better recognized and appreciated at this time,” said Cours. “This is good, because minimal production runs and price levels are needed to maintain economic sustainability.”

He continued: “Most retailers think twice today about launching new products. I am not unhappy about this because our turnover at present is greater than the previous year, even with fewer offerings on the shelves. It is no fun to launch new products only to see them disappear from the market a few months later due to insufficient promotion. However, for 2010 we believe that the market will again embrace innovative fish products.”

Thumbs Up at Vichiunai

For Brugge, Belgium-based Vichiunai Europe, a leading supplier of surimi and other fish and seafood items packed at company-owned factories in Lithuania and Estonia, the overall picture in 2009 was positive.

“We really can’t complain, though admittedly business was better in some countries than in others,” said Rob Schreur. “Part of the reason for this is that Vichiunai saw the economic crisis coming already in the summer of 2008, and acted to secure contracts sooner than later.”

Schreur recently replaced Peter Lammertyn as sales and marketing director, as Lammertyn has gone to, well, green pastures in the frozen vegetable industry. But before assuming new responsibilities with Dujardin Foods in Ardooie-Koolskamp, the Vichiunai veteran of seven years assured Quick Frozen Food International that “the smell of seafood will be in my system for the rest of my days.”

Vichiunai Europe would seem to be in good hands with his successor, who comes from a well known Dutch food business family and literally grew up around the industry. Furthermore, he was instrumental in creating and developing a few start-up import-oriented operations and a salad supply company on his own before sinking roots in Belgium and joining the EU’s leading home-grown surimi manufacturing and distribution firm.

“What makes us different from other surimi suppliers, as well as makes us more reliable during trying economic times, is that we are a producer and not a trader,” pointed out Schreur. “This means that our plants can quickly make adjustments to recipes, if desired by customers.”

Looking to the year ahead, Schreur is waiting to see what quantities of raw materials from Alaska will be available for processing. He noted, however, that while Alaska pollock is predominant in the production of surimi products, tropical species are increasingly becoming an important input.

Responsible for day-to-day tactical decision making and supervision of a pan-European sales team that covers territories from the United Kingdom and Ireland to France, Spain and Italy, Schreur reports directly to Managing Director Dirk Belmans.