While fresh seafood sales fell slightly in the first half of 2023, analysts say the department has a lot of factors in its favor that should boost sales for the remainder of the year. And deflation on shellfish such as crab and lobster are already boosting sales of those items.
Fresh seafood sales fell 0.9% to $3.27 billion for the first half of 2023, while units dropped 1.7%, according to Circana data provided by 210 Analytics.
“The marginal difference between the unit and dollar performance reflects the very low inflationary levels for seafood as supplies were able to keep up with demand for many species,” said Anne-Marie Roerink, principal at 210 Analytics.
Finfish generated about 60% of total fresh seafood sales at around $1.97 billion, while dollar sales increased slightly by 0.2%. However, inflation pushed units down 3.1%, according to Roerink.
For instance, fresh salmon retail prices rose 1.3% in May, and were up in other months as well. Still, salmon is a “true powerhouse” in fresh seafood, responsible for more than 71% of all finfish sales during the first half of the year, according to Roerink. Salmon sales rose 2% in the first half to $1.4 billion, which was up 2% in dollars, even though units experienced a small decline.
Salmon’s strengths include its strong nutrition and health profile, according to Roerink.
“As long as pricing holds, I foresee continued strength in salmon sales,” she said.
On the other hand, cod sales plummeted 14.4%, trout sales declined 3.1, and tilapia sales decreased 2.2%.
While overall shellfish sales fell slightly by 1%, unit sales bumped up 2.4%. Prices of crab and lobster fell “significantly” in the first half of the year, which resulted in a spike in demand for both species, Roerink noted.
Crab was the top seller in shellfish, as sales soared 13.9% to $513 million, while units also jumped up 26.6%. While overall crab sales dropped by 1% due to the comparison with last year’s skyrocketing prices, crab units increased by 2.4% in the first half of the year.
“Crab is benefiting from extremely favorable consumer conditions allowing them an unexpected delight,” Roerink said. “Retailers who are investing in crab-focused promotions have seen tremendous success and they seem well worth it.”
For instance, Fresh Thyme Market based in Downers Grove, Ill, has conducted multiple crab-focused promotions this year, “delighting shoppers with unexpected favorable prices amid aggressive inflation in many areas of the store,” Roerink noted. For Father’s Day weekend, Fresh Thyme had large snow crab clusters on special for $6.99 a pound and king crab claws and arms for $17.99 per pound, according to Fresh Thyme Meat and Seafood Merchandising Lead Jason Resner.
While fresh lobster sales slid 8.3%, units rose 3.4% in the first six months, due to deflation, according to Roerink.
Contrary to crab, fresh shrimp sales dropped 11.4% and units were down 14.1%. Scallop sales fell 8.2% and units dropped 9.7%.
Outlook for the remainder of 2023
Analysts say the outlook for fresh seafood for the remainder of the year is mixed, given seafood’s higher price point compared to other proteins. Among the many factors in the category’s favor is the growing selection of sushi and seafood ready-to-eat meals offered by retailers, the positive health benefits of seafood, and Americans’ increasing affinity for preparing seafood at home.
While overall food and beverage inflation has decelerated to single-digit percentages, “it is important to remember that this is on top of double digit inflation seen last year,” Roerink said. “When compared to the early months of the pandemic, consumers are paying between 25% and 30% more for food and beverages bought at retail. Add to that all the other parts of life that are more expensive, from transportation to energy and housing, and it is easy to understand that the pressure on America’s pocketbook is real.” Seafood has always had a more premium connotation, Roerink noted, and “high elasticity”, so a small increase in prices causes a much higher reaction in demand than meat and poultry — especially chicken.
At the same time, other categories such as eggs, beef, and chicken have come down in price, while promotions across the store have increased.
“All this provides some relief to the consumer budget, which in turn may help the seafood category,” Roerink said.
Additionally, Americans’ cooking seafood at home more post-Covid-19 — and retailers’ significant advancements in offering recipes and prepared ready-to-heat seafood meals and ready-to-eat items like sushi — will keep the category strong this year.
“Inflation is about two points higher and away from home that home right now. That bodes well for the seafood counter at retail,” said Mark Baum, senior vice president of industry relations and chief collaboration officer at FMI - The Food Institute during a media webinar on FMI’s new report, The Food Retailing Industry Speaks 2023.
During a recent strategy meeting, Baum said executives discussed being more creative with “storytelling” and getting consumers who were just starting to dabble with seafood recipes during the pandemic “to really expand on their interests in doing more of that.” For some households, deli-prepared foods are replacing restaurant meals, Roerink noted. Because retail deli prepared foods are performing well overall, “we’re seeing the piggy back effect where feet are hitting the aisle and discovering the seafood offerings,” she said.
In fact, sales of prepared seafood items at delis grew 4.7% for the 52 weeks ending May 23, according to Nielsen data analyzed by Idaho Falls, Idaho-based strategic insights company Category Partners.
The sales growth was driven primarily by inflation, with unit volume rising only 0.5 percent during the past year, according to Eric Le Blanc, senior vice president of marketing. However, the most recent 13 week sales ending May 23 show a different story, as units jumped up 13.7% and dollar sales grew 0.9%.
Grocers have “gotten really creative with what they’re offering consumers with the prepared meals and just their overall offering,” said Kate McShane, who covers the U.S. retailing industry for Goldman Sachs, during the company’s recent State of the U.S. Consumers and Retailers webinar. “I do think grocery stores look a little bit different than they did before the pandemic when it comes to ready-to-heat, ready-to-eat, all of that stuff.”
Retailers who are engaging with customers on prepared seafood and educating shoppers how to cook meals at home will benefit the most. “there are a lot of us who didn’t grow up on the coast and grew up more in the middle of the country. And so we aren’t as experienced as we perhaps would like to be in preparing some seafood products,” said Leslie Sarasin, president and CEO of FMI.
“To the extent that our retailers are really engaging with their customers, helping them learn how to prepare these products, and use them in their homes and make them popular among others in their family, I think is really going to make a huge difference in how this moves forward,” Sarasin added.
FMI’s The Food Retailing Industry Speaks survey also found that 74 percent of retailers plan to expand foodservice departments and enhance their perimeter departments this year, which is likely to boost seafood sales.
Price relief at retail
For the first time in a while, salmon prices dipped below year-ago levels in June of 2023. In the latest 52-week view, salmon prices averaged just 4.9% above year-ago levels. Crab and lobster prices continued to be substantially more favorable to the consumer in the longer and shorter time periods.
Both fresh and frozen seafood managed flat or increased pound sales in June 2023. However, deflation pulled dollar sales below June 2022 levels as consumer demand has not yet caught up with the deflationary patterns.
June price per pound, change vs. year ago, change vs. 3 years ago
- Fresh salmon: $11.46 -1.4% +25.5%
- Fresh crab: $8.30 -19.2% -14.5%
- Fresh shrimp: $9.10 +3.3% +20.8%
- Fresh lobster: $7.94 -6.4% +4.8%
- Fresh catfish: $7.23 -1.8% +29.5%
- Fresh finfish: $10.57, -0.9%, +29.1%
- Fresh shellfish: $8.04, -7.3%, -2.1%
- Total fresh seafood: $9.28, -3.2%, +14.8%
- Total frozen seafood: $7.23, -7.5%, +6.3%
- Total shelf-stable seafood: $5.30, +2.2%, +7.2%
Sources: Circana, 210 Analytics