Increasing Asian demand for Canadian seafood has the industry looking east for growth
Reporters trying to track down busy seafood company execs are finding it a tough go these days. “Sorry,” receptionists invariably tell us, “he’s on a plane bound for Asia.” Truth is there’s hardly a vice-president of seafood sales or marketing anywhere who hasn’t penciled Seoul, Bangkok or the China Fisheries and Seafood Expo in Dalian in their calendar this year. “That’s where I’m heading tomorrow,” laughs Jeff Duffin, vice-president of Marketing for Bedford, N.S.-based Clearwater Seafoods. The reason, says Duffin, is a burgeoning Asian middle class that has discovered an appetite for high-quality, prestige products like Canadian lobster and scallops. “There’s this growing consumer base in a lot of the Asian markets that us and others I’m sure are seeing as a potential opportunity and just a great growth area.”
Others who agree include Patrick McGuinness, president of the Canadian Fisheries Council, who says something interesting is happening to the 85 per cent of seafood Canada exports each year. More of it is increasingly finding its way into Chinese retail and foodservice sectors, not just to China’s traditional re-processing sector, which ships Canadian seafood to consumers in Western Europe and Japan.
“In the not too distant future they’ll be consuming about US$20 billion of seafood. So that’s really encouraging,” says McGuinness. “And our industry has been on the forefront of participating in marketing campaigns to the Chinese retail sector and expanding our sales.”
Guy Dean has watched China’s newly discovered taste for the Canadian catch increase too. “Dungeness crab has become a really strong market in China and Hong Kong and that continues to grow,” says the vice-president of Import, Export for Albion Fisheries in Vancouver, B.C. “We’re getting lots of enquiries from more and more Chinese distributors looking for Canadian products to be consumed in China.”
The trick? To make sure Chinese distributors get that all-important return call. That’s because the Chinese are looking everywhere for high-quality seafood, including the U.S. In 2010 the U.S. discovered that less of the seafood it sent to China for reprocessing was being shipped back to American consumers. “They kept it for domestic consumption,” says Gavin Gibbons, Media Relations director for the National Fisheries Institute. “So that is certainly something that we’re watching in terms of China’s growth as a seafood market. Absolutely.”
Asia: giving as good as it gets
It turns out Asian seafood processors watch our markets as much as we watch theirs. Consider, Gibbons tells us, tilapia. Back in 2003 Tilapia sat ninth among the top seafood species that represent 90 per cent of seafood consumption, according to the National Marine Fisheries Service (for 2012 Statistics Canada shows imports from China of 1,084,999 kg of frozen, fresh and chilled tilapia valued at $2.6 million). By 2010 tilapia had leapt to fourth spot on the list, where it has been vying for supremacy with salmon, canned tuna and shrimp ever since. McGuinness calls the growth in tilapia consumption “a worldwide phenomenon,” driven largely by a demand for lower-priced seafood. But the world also has a growing preference for milder tasting white fish, which lends itself to greater versatility in seafood preparation.
“A lot of people don’t like the smell of seafood,” says Kelly Nelson, executive vice-president for Lunenburg, N.S.,-based Highliner Seafood. “Tilapia is a very bland fish and so is an excellent carrier of sauce or coatings. It’s very, very attractive to consumers.”
Highliner has found “a big market” for both tilapia and penagasius or basa, which like tilapia is farmed in Asia. Why this is important, McGuinness says, is that despite their love of Canada’s north Atlantic cod, cash-strapped Britons, among others, have switched to tilapia and penagasius in the wake of that fishery’s decline. A joint effort is underway in Iceland, Norway and Canada to re-brand Atlantic cod for that day when the cod fishery recovers.
“We recognize that we can’t compete with tilapia and penagasius head-on in terms of the prices. So what we’re doing now is trying to see what attributes we can identify in north Atlantic cod that significantly differentiates it in the marketplace,” says McGuinness. Among those attributes are the firmness and flavour of cod. But one of the biggest differentiators from farmed tilapia, he adds, is that cod is a wild fish harvested “in the pristine waters of the north Atlantic.” Europeans, too, are paying attention to issues of sustainability and food safety.
It’s not all about price
Pricing in the seafood industry can be a volatile exercise. When worldwide demand rises, seafood prices rise accordingly. When a financial crunch occurs like the one on Wall Street and later in Europe, manufacturers lower the price to keep seafood sales and consumption up. And so it is in the current economic climate, says Nelson, where lower prices help hold consumer attention and maintain market share. “Seafood prices now have really come down again and probably will be very positively priced at least for the next year or so. So we see seafood having a very positive position in the protein category.”
Lower prices are hardly cause for celebration for Blake Tipton, who makes his living buying, processing and marketing wild pacific halibut from his offices at S.M. Products in Delta, B.C. Tipton says that less disposable income and lower prices in the U.S. after 2008 have created instability in the Canadian West Coast fishery. In 2011 things got so bad that Canadian and U.S. restaurants took halibut off their menus in favour of other white fish.
And then there were all those Asian rim countries flooding our shores with Asian seafood. “There’s so much inventory around, fish coming in from places like Indonesia and New Zealand, and Fiji into the North America market,” explains Tipton. “That’s cheaper fish, so supply in demand has forced the price down.”
When prices and profits drop there’s less inclination to invest in new facilities or technology. But some are willing to make those investments if it means appealing to consumers on terms other than pricing. This January Albion will move into a brand new 65,000-sq.-ft. distribution facility in Richmond, B.C. that features cutting edge technology aimed at addressing consumer concerns over food safety. “The product enters the building and never gets touched more than once,” says Dean. Meantime, a newly installed, fully integrated ERP system ensures every packaged product, including fresh seafood, is barcoded and scanned electronically as it passes through the system. “So we have complete traceability on all our products, which has become more and more of an issue for food safety and sustainability.”
The price tag for that system is approximately $750,000; for the entire facility, more than $17 million. Dean credits his company’s executive team for making these capital expenditures possible by “reacting well to changes throughout the economy.” That includes responding early to consumer concerns about the environment by managing its carbon footprint, including energy efficient facilities.
“We’re excited because we’re positioned well on sustainability,” says Dean. “But what’s also exciting for us is now we’re seeing the industry starting to catch up with what we saw 10 years ago as a company increasingly conscious of both the environment and food safety.”