While overall fresh seafood sales were disappointing for the first five months of 2024, experts believe that retailers that focus on growing the deli prepared seafood category will flourish in the second half of the year.

Fresh seafood sales fell 6.6% to $2.5 billion for the year ending May 12, according to Chicago-based research firm Circana, while volume declined 4.8%. 

While overall seafood prices have declined 1.9% over the past year, shoppers’ economic concerns persist. And fresh seafood is still an expensive option at $9.49 per pound on average in May versus beef at $6.73 per pound, pork at $3.22, and poultry at $3.08 per pound, per Circana.

The “significant price difference” is a key factor in the decline of both fresh and frozen seafood sales — with frozen shrimp being the biggest contributor to this trend, according to Chuck Anderson, VP of operations and partner at Certified Quality Foods, a Dallas-based firm that helps retailers and distributors measure quality seafood.

Across the meat and seafood departments, premium, higher-priced cuts are “lacking in consumer engagement, whereas grinds and chicken are growing steadily in pounds,” agreed Anne-Marie Roerink, principal at Lakeland, Fla.-based 210 Analytics.

“It shows that the ‘juggle is real’ and consumers are in a nonstop balancing act to make ends meet. And that’s when having the premium, more costly perception for seafood can result in not even being considered as consumers think through dinner plans.”

“Many seafood prices are down from last year, but lower prices have not driven volume. With volume down and deflation, it has been difficult for retailers to achieve sales goals,” Anderson said.

Overall consumer economic concerns are also a factor. Supermarket food prices have increased around 33% since 2019, Anderson noted.

“But how many customers have had a 33% pay increase?”

Additionally, gas prices averaged $2.60 per gallon in 2019, but have stayed over $3 per gallon for a while, Anderson added.

“Inflation may be easing this year, but the cumulative effects of inflation are hitting the middle class hard. Something has to give. Consumers are cutting back on eating out and selecting less expensive options in the store,” he said.

The continued declines in seafood sales are “disappointing and concerning,” Roerink said.

“The industry has done all the right things, from taking the steps to turn inflation into deflation and promoting at much higher levels. But unfortunately, we are not yet seeing that translate into growing consumer demand.”

Another significant factor in the decline of seafood sales is how major seafood holidays fell in the first half of 2024, Anderson noted. The Super Bowl, Ash Wednesday, and Valentine’s Day all fell on the same sales week, leading to a decrease in seafood purchases, he explained.

“This trend underscores the importance of understanding the seasonal nature of the seafood industry and planning accordingly. Holidays are a significant sales driver for retail seafood, as they call for special products, and nothing is more special than seafood,” Anderson said.

Fresh species to focus on

Better pricing and distribution in stores is helping boost sales of certain fresh species over the past year, according to Chris DuBois, executive VP and Fresh/Protein Practice Leader at Circana. For instance, snapper sales soared 20% for the year ending May 12, while sales of cod — the second highest selling finfish after salmon — increased 8% and haddock sales rose .4%.

Fresh salmon sales dropped 5.5% for the year and volume declined 3.9%. While the price of salmon fell slightly — 1.7% — it is still around $11.31 on average per pound.

“With higher boat prices for wild salmon and increased disease and production issues for farmed salmon, I don’t see salmon prices coming down this year. This will continue to put pressure on sales and gross profit for seafood retailers,” Anderson said.

Despite lower shrimp and crab prices over the past year and retail promotions, crab sales dropped 10.8%. However, volume rose 1.8%, thanks to 12.4% deflation and retailer promotions. Similarly, shrimp dollars declined 10.6% while volume increased slightly by 0.26%, based on deflation of 7%.

Wholesale shrimp prices are near historic lows, providing an opportunity for promotions, according to Anderson.

“It will take ongoing promotions to bring customers back to eating shrimp on a regular basis to overcome the lower retail price points.”

Anderson has noticed fewer promotions for jumbo shrimp and crab legs and more promotions for smaller sizes, as retailers are trying to find appealing price points for cash-strapped customers.

“As the US consumer base continues to gentrify, I recommend continuing to offer and promote high-end and jumbo size seafood products while promoting lower-priced options and smaller sizes to keep customers buying seafood instead of switching to other proteins. This can be a store-by-store strategy and a market by market based strategy.”

Anderson believes lobster, scallops and halibut will continue to slide as lower catches and higher prices will keep some customers away. While halibut sales rose 6.3% over the past year, lobster sales plummeted 16.5% and scallop sales stayed relatively steady, rising .5%.

Focus on deli prepared seafood in the second half

All the experts agree that retailers should focus on deli prepared seafood sales in the second half, as sales of seafood entrees, apps, sushi, poke bowls and the like continue to grow.

Deli prepared seafood, such as ready to cook seafood entrees, have been a bright spot, showing increasing sales all year, primarily due to inflation impacting high-end restaurant traffic, Anderson said.

“Some consumers are choosing ready-to-cook seafood from the supermarket over dining out at fine dining or fast-casual restaurants, such as Eddie V’s or Red Lobster.”

Sushi, in particular, has grown “to become quite the powerhouse,” Roerink said. Sushi sales are up 2% versus last year, while volume fell slightly by 0.6%, and the growth over the past few years is “tremendous,” Roerink noted.

In the fresh seafood departments, soup sales shot up 469% over the past year, while seafood trays are up nearly 52%. In deli, seafood appetizer sales skyrocketed 301% over the last year.

Deli prepared products with salmon and shrimp have been the biggest gainers, as both are familiar, so customers are more comfortable cooking and consuming those species at home, according to Anderson. Continued stress on middle-income consumers this year will provide more opportunities to steal sales from restaurants with deli-prepared seafood.

In fact, Technomic recently adjusted its prediction for restaurant sales downward — the firm originally expected a 5.4% hike in 2024 and now expects a 3.8%, Roerink noted. The foodservice consulting firm expects pressure on restaurant trips and a 3.7% increase in prices.

“That means a retail-centric environment for a little while longer,” she said.

Quick service restaurants have demonstrated that high quality fish sandwiches can sell, DuBois said, and shrimp prices are “also extremely low on the wholesale market,” he noted.

Emphasizing DuBois’s point, 59% of consumers said they would purchase more deli prepared foods if price were not an issue, according to IDDBA’s May study.

Additionally, 43% said they would cook from scratch less, if money were no issue, Roerink said.

“As is, hybrid meals — in which consumers combine items cooked from scratch with items that are semi- or fully-prepared — are the top meal type across all generations with the exception of Boomers,” she noted.

Millennials and Gen Z prep and cook food in different forms and with different ingredients than Boomers, who have driven sales of seafood for a long time, DuBois agreed. Younger generations are more likely to mix takeout food with food prepared at home for meals, and they also typically use shorter prep times for meals.

“That means convenience and flavor matter. Right now, the Meat department and Deli department are outperforming on those dimensions,” he said.

As inflation is starting to cool and wages are likely to continue to catch up, Roerink said, consumers “may get to a point where there is a bit more breathing room. Once we see that turn in the economy, it is very likely that deli prepared food sales — which are very strong already — are going to accelerate even further.”

Anderson expects similar consumer buying patterns for the remainder of the year. Less affluent shoppers are being squeezed by inflation and will continue to cut back on seafood, he predicts. However, the core affluent seafood shoppers “will continue to buy finish and shellfish and not look at the prices when doing so.”

In the second half of the year, high income consumers will continue spending, DuBois agreed.

“Inflation is coming down and as long as the economy remains strong with low unemployment like we’ve had, the premium products and categories will be fine,” he said.