While seafood sales dropped throughout 2022 due to inflation, retailers and analysts are optimistic about sales and volume increases this year.
Fresh seafood sales across all retail outlets declined 5.5% to $522 million in December and 8.2% for the year, according to IRI and 210 Analytics. Units also plummeted 15.8% in 2022, led by a 20.7% fall in shellfish and a 13.2% decline in finfish.
Throughout the year, shellfish realized the greatest decline in sales, dropping 20.2%. On the other hand, finfish sales rose 7%, driven by the strong performance of salmon, which realized a sales uptick of 17.2%.
“The pressure on income is real as inflation has far exceeded most people’s increases in income over the past few years. That means many people are shopping with money-saving measures in mind and perception is reality,” said Anne-Marie Roerink, principal at 210 Analytics.
“We are already noticing a small change in buying pattern with our customers. However, they are not willing to downgrade the quality or freshness of their purchase; it’s more of a shift in proteins purchased, which allows us to add more value option varieties,” said Sean F. Sáenz, executive director of fresh operations at Gelson’s Markets in Santa Fe Springs, Calif.
For example, more shoppers are purchasing farmed Atlantic salmon versus wild salmon due to the wild version’s higher price point, according to Sáenz.
“I believe this is a perfect opportunity to think outside of the box and expand your variety of fresh seafood options as well as value-added items such as seafood salads, soups and ready-to-cook meals.”
For example, Gelson’s recently launched a line of ready-to-heat gourmet soups — including lobster bisque, clam chowder and seafood gumbo — in the seafood department.
“This category is performing extremely well,” Sáenz said.
This year, the retailer will leverage the success of its ready-to-cook meals, which include a seafood protein and fresh vegetables.
“They have become a customer favorite in a short period of time and adding variety and options for the customer will help that category continue to grow.”
To offer more value for shoppers concerned about inflation, some supermarkets are adding more frozen and shelf-stable seafood options. Executives with Lakewood, Colo.-based Natural Grocers, which primarily carries frozen and shelf-stable seafood, believe frozen items are more cost-effective than fresh.
“Buying frozen fish is often cheaper and can be as high quality or higher than some ‘fresh’ fish — a lot of which is previously frozen to begin with. All that is needed is a willingness to thaw the fish before cooking,” said Christie Pettys, product standards manager, and Leigh Paone, category manager of dairy/meat at Natural Grocers. “So, if someone is budget-conscious and likes seafood, doing a little bit of homework can go a long ways to having quality seafood at home that is also affordable. We focus on frozen fish because we can bring a really high quality seafood to the shelf without sacrificing transparency or affordability.”
Often, shoppers perceive frozen and center store items to be cheaper than fresh, Roerink confirmed.
“That may or may not be the case in reality, but we often see people shift their dollars regardless. These same patterns are seen in seafood over the past year and a half: whereas frozen and fresh were the exact same size in 2020 and early 2021, frozen has leaped ahead. Meanwhile, sales for cans and pouches also remain strong,” she said.
Outlook for 2023
Overall, analysts and retailers foresee a brighter outlook for fresh seafood sales in 2023 as inflation moderates, transportation costs decline, and consumers prepare more meals at home.
“I do not expect sales to plummet much further. When I look at how the trend lines are moving from the first to the fourth quarter of 2022, things are definitely getting better,” Roerink said. “Inflation is moderating, volume declines are moderating and at a certain point in time we will start to lap the declines of 2022 and hopefully be able to come in above.”
Chris DuBois, executive vice president, Americas Protein Practice leader, at IRI is “very optimistic” about seafood volume this year, as transport costs have declined and “harvests are strong in key categories which should leave plenty of supply.”
“Wild caught salmon, lobster, and other items will likely play a bigger role in 2023 and we’re seeing stronger volumes in many categories where pricing has come down in the last 12 weeks,” he said.
For example, crab volume has increased as prices dropped in recent months, according to Roerink.
IRI expects total food inflation to be lower in 2023 than 2022 and seafood inflation should be lower as well, DuBois added. IRI projects overall food and beverage prices to increase around 7% to 9%, with dollar sales up 5% to 7% and overall units 1% to 3% lower.
“However, meat and seafood inflation have been trending lower than total Food and Beverage and IRI expects them to continue lower,” DuBois said.
“We expect sales to continue to grow, even despite a potential recession. Customers still want to eat food they love and want the best quality standards,” Pettys and Paone said. “We know consumers will continue to look to us as a leader and as one of the more affordable places they can still buy excellent quality seafood. We strive to bring quality and affordability to the shelf as both are pillars of our core business model.”
Another factor working in fresh seafood’s favor is that the share of home-prepared meals increased from 78.9% in November to 81.5% in December, according to IRI’s December survey. Holiday occasions, along with the recent increase in flu and COVID cases, could be influencing factors in the hike, Roerink noted.
Conversely, the share of households that purchased restaurant meals declined from 80% in November to 76% in December.
“Cutting back on restaurant meals in lieu of preparing meals at home is another important cost-saving measure, according to the December IRI survey,” Roerink said.
Budget-minded options
Roerink expects to see more money-saving measures in 2023 within seafood.
“The dollar will likely follow sales specials more carefully and we may also see more switching from fresh to frozen,” she said. “The interesting thing for fresh is that it is often a same-day consumption occasion, especially when bought at the fish counter. Frozen provides more flexibility and as gas prices remains elevated, this could very well play into the patterns also.”
Traditionally during tougher economic times, consumers shift some of their seafood purchases to meat and poultry, Roerink noted.
“I think that has a lot to do with that price perception, whether it is reality or not. When looking for ways to save, it is not illogical for them to think that they can save by replacing seafood with meat or poultry.”
As a result, it will be important for retailers to stress nutrition, versatility and affordability in 2023, according to Roerink. For instance, retailers can show the savings shoppers achieve with a per meal cost of an entire seafood dinner recipe or demonstrate a per portion cost.While Roerink does not expect “core” consumers to stop buying fresh seafood or even reduce frequency, “light” consumers — those who eat seafood only once or twice a year — may do so.
"I believe this is a perfect opportunity to think outside of the box and expand your variety of fresh seafood options as well as value-added items."
— Sean Saenz, Gelson’s