While shellfish sales declined in the most recent quarter, price deflation — particularly for snow crab — is driving sales and volume increases for certain species.
Notably, monthly retail sales volume of snow crab soared 222% for the first six months of 2023 compared with the first six months of 2022, according to the “Wells Fargo Agri-Food Institute’s Industry Update - Q2.
The hefty price declines in snow crab this year — and corresponding retail promotions — have helped lift the entire shellfish category. While overall shellfish sales dropped 3.7% for the 13 weeks ending Aug. 13, according to Circana OmniMarket Integrated Fresh, a Chicago-based market research, volume rose 3%, thanks to an impressive 6.5% decline in the average price.
Fresh crab sales jumped 5.6% for the quarter, while volume hiked up 28.3%. Frozen crab volume also spiked up 50%, according to Circana.
“Now that prices have come down in crab and lobster in particular, we’re seeing the volume come back in a big way, and many retailers are getting behind it as higher cost inventories have been worked off,” said Chris DuBois, executive vice president - fresh/protein practice leader for Circana. “Features are big and often front page and I think it’s a great way to bring people back to the seafood case.”
Crab prices came down “so substantially that consumers did react to the hot deals that are out there, resulting in a big upswing in volume sales,” agreed Anne-Marie Roerink, principal at 210 Analytics. “Retailers have done a tremendous job creating new events jumping on the favorable pricing and bringing a lot of visibility to the deals as well.”
Downers Grove, Ill.-based Fresh Thyme Market, which operates 70 stores, is one of the retailers capitalizing on snow crab prices. Noticing the significant drop in wholesale prices early this year, buyers worked with its crab importer, Direct Source, to contract for a significant amount of Canadian snow crab at a favorable price, said Jason Resner, meat and seafood sales, merchandising, marketing, and procurement lead for Fresh Thyme.
Throughout the year, the retailer has run multiple crab promotions some weeks and during holidays, such as $5.99 to $6.99 per pound for the July 4 holiday. Plus, the retailer ran an in-house contest, awarding gift cards to seafood associates at stores that sold the most crab.
Heading into the winter holiday season, Resner expects retail snow crab prices to be around $1 per pound higher than they are currently. However, while there will be some inflation on crab going into the holiday season, the shellfish is still going to be “super cheap” compared to last year, which will help fulfill seasonal demand, Resner predicts.
While Encino, Calif.-based Gelson’s Markets does not sell much snow crab, Sean Saenz, vice president of fresh foods, also expects to see more demand leading up to the holiday season.
“From talking to our suppliers, we should see favorable costs through the end of the year, with demand increasing as we get into the fall holidays,” he said.
Shrimp sales, volume suffer
Contrary to crab, sales and volume of shrimp — typically the most popular fresh shellfish — have declined in recent months. Even though farmed shrimp wholesale prices have declined due to high inventories and imports, consumers are not generally seeing those price declines at retail, analysts say.
“I’m surprised to see average US shrimp [retail] prices higher than both lobster and crab on a per pound basis,” Roerink noted. “Prices for shrimp are high and that’s not going to help consumers use more shrimp in salads and midweek dinners.”
There has been a 17% decline in fresh shrimp wholesale prices over the past 15 months, according to the Urner Barry White Shrimp Index.
The cause of the plummeting price, according to Wells Fargo, stems from a 6.8% hike in Imported shrimp in 2020 and a major increase of 19.8% in 2021.
“Given over 85% of all shrimp consumed in the U.S. is imported and U.S. consumption has never increased 20% year-over-year, this significant volume of imported shrimp had to go somewhere and the logical assumption is that inventory in cold storage continued to grow as we entered 2022,” the report said.
Faced with a softening market, U.S. importers were forced to make “significant cutbacks on imports given the headwinds of lower pricing, limited storage capacity, higher freezer costs, and increasing costs of capital,” Wells Fargo said.
Still, some retailers are passing along the cost-savings. While shrimp hasn’t deflated as quickly as crab, Resner is seeing lower advertised retails in both competitors’ stores and at Fresh Thyme, especially on larger sizes.
“As shrimp costs come down — similar to crab — we are passing that savings through to the customer,” he said. Similarly, Gelson’s is experiencing a slight increase on sales and volume of its farm-raised shrimp since the retailer has been able to promote them at a much lower sale price due to the lowered wholesale cost, Saenz noted.
“Keep in mind that we offer both wild caught shrimp from Mexico and farm-raised shrimp sold behind the glass and in one-pound frozen bags — with most of our customers preferring the wild-caught shrimp from Mexico,” Saenz said. “For us, it’s not so easy to promote farm-raised shrimp as some of our customers still question farm-raised shrimp and have come to love our wild caught shrimp from Mexico, which are offered in the shell, peeled and deveined in-house daily, and cooked in-house daily.”
Those customer preferences could change in the future, however. “By providing more education on the farm-raised methods that are currently being used and hot sale pricing, customers will be more open to purchasing farm-raised shrimp,” Saenz said. “Our shoppers still buy more freshly defrosted shrimp sold behind the counter versus the bagged frozen shrimp,” he added.
Scallop outlook positive
As scallop wholesale prices become more favorable than last year and earlier this year, some retailers have noticed an increase in sales.
“Scallops have finally started to come down in cost over the last 10 to 12 weeks,” Saenz said. Gelson’s most popular size is the large 10/20-count dry sea scallops, although it also carries U-10 dry sea scallops and IQF bay scallops.
“With the cost decreases, we have lowered our retails significantly; however, the volume has not increased enough to cover the lowered retails,” Saenz said.
At the same time, Gelson’s has not been promoting scallops, and now plans to change tactics.
“With the lowered retail, we have sold more pounds versus the prior 10 weeks and with some promotion, we should be able to close the sales gap,” Saenz said.
The larger sized scallops are trending lower than last year at a greater rate than the medium to smaller sizes, Resner noted, so the retailer has been able to price them more favorably for shoppers.
This article is an excerpt from the October 2023 issue of Supermarket Perimeter. You can read the entire Shellfish feature and more in the digital edition here.