The late bloomer of value-added perishables is finally coming into its own, say retailers who are beginning to tune into value-added seafood's profit-earning potential, health benefits and ability to increase variety at the seafood case.
According to a study on seafood market trends, carried out by Find/SVP, New York, value-added -- which is defined as any fish product that has undergone further preparation or processing -- has been identified by market analysts as the sector likely to show the most growth over the next five years [see Page 56 for more details on the study].
Many retailers interviewed by SN said they saw the category's growth potential and viewed value-added as an essential -- and often long overdue -- component of their seafood offerings. However, they said growth has been hindered by factors such as price barriers and consumers' unfamiliarity with the category.
Charlie Nuara, seafood director at Pathmark Stores, Woodbridge, N.J., said value-added seafood "is growing in popularity, but slowly. It's probably because of the price and customers also have to get accustomed to it."
"I don't know if value-added seafood has brought in more customers, but it has given our regular [seafood] customers more offerings," said Mike Witt, director of meat operations at Nash Finch Co., Minneapolis.
"All the categories are going through value-added. Seafood is just another part of the picture," said the seafood buyer for a Midwestern wholesaler who asked to remain anonymous.
"Seafood sales have been declining against other forms of protein because it's missing something," the seafood buyer said.
"You just don't see a lot of value-added seafood happening," said Jim Porzenski, meat director at Supervalu, Minneapolis. "I guess the needs are not there."
The Midwestern seafood buyer noted that in "Middle America," it is hard to keep the seafood category afloat and unique. But value-added is a good way of "keeping seafood alive and kicking."
The seafood study said that the value-added approach may have the greatest potential in inland areas, like the Midwest, where seafood purchases are not as common.
The study went on to note that in coastal areas, where seafood consumption is already high, customers are less likely to increase their purchases based on the availability of value-added products.
While some retailers said they currently feature an extensive array of prepared seafood dishes, and unusual items like seafood sausages, most told SN that their value-added sections tend to focus on marinated and stuffed products and kebabs.
"Stuffed flounder and shrimp and seafood kebabs are the items that we are handling in most of our stores,"said Supervalu's Porzenski.
Witt said that Nash Finch has offered 18 ready-to-microwave seafood entrees as part of its Menu Sensations program for the past year and a half.
At the Food Emporium unit in Fort Lee, N.J. the seafood value-added offerings -- which include three varieties of seafood sausage and entrees like salmon teriyaki with sesame seeds -- are extensive and are displayed in their own case.
"We will cook any seafood item that we have to customer's liking, using any method of cooking," said seafood director Thomas Fallacaro, about a program called the Outgoing Chef that Food Emporium currently has in seven of its locations. Food Emporium, based in the Bronx, N.Y., is a division of A&P, Montvale, N.J.
Many of the retailers interviewed already had plans for expanding their value-added seafood line.
"We are looking at doing our own marinade, and maybe tying it in with deli and meat. The marinades could be used in the meat department," said Pathmark's Nuara.
The seafood study noted that many retailers were preparing their own products and that those who were able to create their own signature items not only enjoyed higher margins, but also are adding products that are less sensitive to price fluctuations.
Al Kober, seafood buyer for Clemens Markets, Kulpsville, Pa., said that the company was "looking at ready-to-microwave salmon, shrimp and scallops. It's a raw product that has been partially cooked."
"You'll definitely see new products. You'll see more companies jumping into it. And you'll see more premade items being purchased," predicted Rick Cavanaugh, seafood manager for Queen Anne Thriftway, Seattle.
Value-added seafood was seen by many as a solid profit-generator in a category where shoppers can be put off by high price points.
The Midwestern seafood buyer noted that, unlike purchasing two pounds of salmon -- which has a precise cost per pound -- "the exact portions of value-added can combat price points by making it less apparent what it costs."
Value-added in the seafood sector usually results in higher margins, according to the seafood study, because the added ingredients are usually lower in cost than the seafood itself.
Jonathan Stamell, president of Holt, Hughes & Stamell, a marketing and communications company specializing in food and food-related products and services in Portland, Maine, suggested using what he called a "meal concept" with value-added seafood to soften price points.
"If you put seafood, sauce, rice and vegetables together, you can use a meal standard to judge it and say 'I'm paying $10 to feed the family rather than this much [for the individual ingredients],' " Stamell said.
The ease of preparation typical of value-added seafood items -- many of which can be microwaved -- also helps address consumer concerns about how to prepare seafood, which in turn has contributed to sales, according to retailers.
"There's still a lack of confidence about cooking procedures," said Clemens' Kober. "People are really concerned about cooking seafood."
Value-added offerings that offer simple preparation methods can also make seafood an easier category to sell.
"Seafood has the advantage of lending itself better [than other proteins] to microwave cooking," said Kober.
"It may help overcome some people's lack of knowledge about cooking fish," said Queen Anne's Cavanaugh. "And gives people access to a food they wouldn't normally feel comfortable preparing."
"People [who] have been coming for years don't know how to prepare it -- and having value-added makes it easier," said Pathmark's Nuara.
Food retailers, according to Find/SVP's seafood study, in many cases are becoming resigned to the possibility that many of their customers will never become significant buyers of seafood.
Individual portions also make it easier for retailers to offer greater variety in their seafood lineups.
"Once you put it in a package, you can have as many varieties as you do at a restaurant," said Clemens' Kober.
Despite many of its strong selling points, getting value-added seafood out to the market has often been an uphill battle.
"It's slow but steady growth," said Queen Anne's Cavanaugh. He commented that the value-added category hadn't been pushed hard in part because "it requires labor, which we don't have at this time."
"Retailers have always gone kicking and screaming into the seafood department because it's higher labor," said Stamell.
Attempts to market value-added seafood in familiar formats -- like burgers and sausages -- have often been the most successful.
"We have had the best luck with salmon burgers because the burger is a product form that is familiar to people. More people can relate to it and are less intimidated by it," said Queen Anne's Cavanaugh.
"I think what the seafood industry is catching on to is that in order to get growth they need, [they must] make the products look easy and familiar," said Stamell.
Value-added also benefits from the same positive image and marketing appeal as the rest of the seafood category. "If you look at what brought people into seafood, it will be the same with value-added," he said.
