Ask any seafood industry professional, stakeholder, or analyst about 2023, and they’re likely to groan.
“As much as it pains me to say this, 2023 was a year of headwinds and struggles for seafood, including fresh, frozen, and shelf-stable,” 210 Analytics Principal Anne-Marie Roerink said when queried about last year. “The seafood retailing industry certainly did all the right things to kickstart sales, including increased levels of promotion, keeping prices flat, and even driving more favorable prices for the consumer. But, the reality of the marketplace was a harsh one for seafood.”
Inflation was once again a primary antagonist for the U.S. economy in 2023, Roerink said, with American consumers paying 30 percent to 35 percent more for food overall last year compared to 2019. As 2024 gets underway, the “sustained impact of inflation ... has a lot of consumers scrambling to balance their budgets,” she said.
According to FMI – The Food Industry Association Vice President of Fresh Foods Rick Stein, the impact of inflation last year was particularly intense for the seafood industry.
“Inflationary price increases certainly had a negative impact on the sale and consumption of seafood in 2023, with many shoppers turning to more affordable proteins as they adjusted their spending habits to the economic environment,” Stein said.
Data from Circana revealed a 3.8 percent decrease in sales by volume for refrigerated finfish during 2023 and a 1.8 percent dip in sales by value for the category. Meanwhile, frozen finfish sales by volume and value fell 4.2 percent and 3.1 percent, respectively. Refrigerated shellfish sales dropped 5.6 percent by value in 2023, though sales by volume actually rose 0.9 percent, thanks in part to crab sales growth. Frozen shellfish sales dropped 2.9 percent by volume and 7.3 percent by value.
Inflation certainly wasn’t the only obstacle obscuring U.S. seafood consumption, Roerink said, noting that “the nation as a whole is facing record credit card debt, now exceeding [USD 1 trillion, EUR 924 billion], in addition to the savings built up during the first pandemic year now being depleted.”
“On top of all this, the end of the emergency SNAP/EBT allotments in Q1 and student debt repayments resuming in Q4 meant a marketplace with a lot of economic pressure on America’s pocketbook,” Roerink said.
These troubles pushed consumers to opt for familiar, routine meals more often – an unfavorable trend for seafood, Roerink said, as “it is a very thin slice of the population who routinely purchase seafood” compared to the American majority, “who only purchase it a few times a year.”
“That meant a loss of household penetration to just 53 percent of households purchasing fresh seafood in 2023 – a loss of 2 percent,” she said.
Retailers were hit hard by the category’s decline, Roerink said, with some choosing to do away with their full-service seafood counters in response, while others downsized the size and scope of cross-merchandizing displays.
“When starting with household engagement of 53 percent versus, say, 87 percent for beef, it is harder to justify cross-merchandising displays involving seafood than beef,” Roerink noted.
Stein said it is in retailers’ best interests to reverse this trend in 2024.
“In terms of format, we continue to see that shoppers value a well-stocked seafood counter with knowledgeable and engaging staff,” Stein said. “At the end of the day, the frequent seafood shopper is a desirable customer with typically higher baskets, so appealing to them with a well-stocked seafood counter, knowledgeable staff, and resourceful online seafood shopping experiences can help differentiate a food retailer. However, there are labor, training, and resource limitations that can make this difficult for food retailers. Innovative and creative solutions can help overcome those limitations and build real loyalty with shoppers.”
Of course, 2023 wasn’t all doom and gloom for pockets of the seafood industry, with sellers of crab and salmon weathering the tumultuous year well.
“Fresh and frozen crab was one bright spot we saw in 2023 due to favorable pricing,” Stein said. Brisk crab sales showed that “deflation can indeed move more pounds on rising consumer demand,” Roerink added.
Salmon also did well in 2023, as consumers turned to a species familiar to them, according to Roerink.
“Frozen salmon did have an encouraging performance, and we may continue to see some pounds move from fresh to frozen as a way to manage food waste at home – one of the main money-saving measures among consumers,” Roerink said.
Salmon has also played a supporting role in sushi’s latest rise. Cooke Director of Global Supply Brett Cooke said the seafood company, which specializes in salmon, plans to expand its sushi-style offerings.
“We’re seeing increased interest in being able to provide a sushi-ready or a sushi-cut frozen product for delivery to different foodservice operators,” Cooke said.
Prepared sushi has become a segment staple with staying power for grocery providers. Over the past four years, sushi’s share of promotional activity among supermarkets shot up to 5 percent, “more than doubling its share in 2019,” foodservice research and consulting firm Datassential reported.
“While sushi can be found at a variety of restaurants, it is primarily found at Japanese restaurants. There are just over 20,000 Japanese restaurants in the U.S. and just over 5,000 of those are limited-service restaurants, where takeout and delivery are primary service segments,” Datassential Chief Business Officer Dave Jenkins said. “With sushi, supermarkets have found a product that is difficult to prepare, growing in popularity, and has very limited distribution … a formula that is not too different from fried chicken and pot pie.”
This formula has served Cincinnati, Ohio, U.S.A.-based Kroger well, with the grocery chain becoming the top seller of sushi in the U.S. In 2022, Kroger sold 44 million sushi rolls, a spokesperson for the company told Business Insider in August 2023.
Kroger, which contracts with Snowfox/JFE Franchising as a primary source for its prepared sushi products, offers an array of ready-to-eat sushi items, including crunchy combo and spicy combo boxes. The company’s California crunch roll is its most popular cooked sushi product, while its rainbow roll is its leading raw offering.
“When customers think of sushi, we want them to think of Kroger,” Kroger Chief Marketing Officer Stuart Aitken told the Wall Street Journal in August 2023. According to the newspaper, sushi sales at U.S. retailers rose 72 percent from 2022 to 2023.
Younger consumers have played a large part in enhancing sushi’s retail popularity. In early 2023, Morning Consult asked Generation Z consumer respondents what their favorite foods were, and rounding out the top five – behind pizza (20 percent), chicken (13 percent), pasta (11 percent), and burgers (7 percent) – was sushi (6 percent). Cooke has witnessed this phenomenon first-hand.
“We were on the way home from a road trip once and my 6-year-old son asked to stop for sushi instead of McDonald’s,” Cooke said. “I was like, ‘Man, I was 25 years old before I tried sushi for the first time.’”
Caviar is also seeing a surge in sales thanks to younger consumers. The delicacy starred in a recent social media trend where Gen Z TikTokers take “bumps” of sturgeon roe. Using the hashtag #CaviarBumps, Gen Zers have been recording themselves placing a dollop of caviar on the back of their hands and then eating it, garnering millions of views in the process.
Caviar sales have increased by 76 percent globally since 2020, according to the Daily Mail, and this latest social media fad has chefs adding more caviar to their menus. Just like sushi, caviar has morphed from expensive treat to a more affordable and accessible item heading into 2024.
“Wild caviar is completely unaffordable, but now China, [the] Netherlands, France, Uruguay, and the United States have nailed the farming practices,” Ariel Arce, the owner of digital caviar delivery service CaviAIR, said. “Caviar now can be approachable and affordable.”
FMI and Stein are anticipating a seafood category rebound in 2024.
“Shoppers who became more comfortable cooking seafood during the Covid-19 pandemic continue to appreciate the health benefits of preparing seafood at home,” Stein said. “In addition, according to data from Circana, food retailers that were promoting refrigerated fresh seafood saw a significant bump in volume, but the same was not true for frozen seafood. Promoting fresh seafood might be a way forward for seafood departments. Given shoppers’ increasing interest in health and well-being, adding more variety to their diet, and eating more sustainable foods in general, we expect the category to rebound in the coming year.”
Stein said shoppers will seek to reduce food waste and stretch their household grocery budgets in 2024.
“At the same time, convenience is key for shoppers, and value-added seafood that is pre-marinaded or ready-to-heat-and-eat will continue to appeal to shoppers looking to create hybrid meals to mix scratch cooking with preprepared items,” Stein said. “Shoppers are also still focused on their health and well-being and will continue to find seafood options to help them meet their health needs. I am still bullish that as the year progresses and economic conditions change, the seafood category will begin to see positive volume again.”
Value-added offerings and deli-prepared foods hold a lot of promise for the industry in the new year, Roerink said.
“We can’t underestimate the impact of the deli-prepared food section on seafood. That’s a winning story. While fresh seafood lags in engagement among younger shoppers at the counter or case, we see above-average engagement in deli-prepared. The vast array of ready-to-cook and fully-cooked meal solutions are one of the few growing areas in the store in terms of units and volume. While chicken dominates prepared meats, salmon and shrimp are making inroads,” Roerink said. “Likewise, they’re making inroads in those grab-and-go dishes.”
The hybrid meal concept has “taken over America’s kitchens among all but the [baby] boomer generation,” Roerink noted.
“That is a great spot for seafood to be, given the continued cooking confidence barrier among those who don’t or rarely purchase seafood,” she said.
According to Stein, the value-added category for seafood will continue to be a gamechanger for shoppers seeking convenience.
“If prices remain high, I think frozen seafood and shelf-stable seafood will also continue to resonate with shoppers who want the health benefits of seafood and don’t want to waste food,” he said.
Stein advised retailers to “really own the seafood category both in-store and online” in 2024.
“Frequent seafood consumers are more likely to shop for groceries online (75 percent), while less than one-half of non-seafood consumers (48 percent) purchase groceries online. It’s important to create both in-store and online seafood shopping experiences that offer information about freshness, meal ideation, and cooking and culinary tips and help educate shoppers on the health and sustainability qualities. I also see food retailers beginning to promote seafood more, which will help gain volume and help consumers consider seafood options more,” Stein said.
