WRAPPING UP

LYNNE MILLER

Like salmon swimming upstream, case-ready seafood has overcome many obstacles the last few years.

Seafood buyers today tell SN they're finding greater product selection and higher-quality fish, wrapped in packaging designed to preserve product integrity.

"One thing we look for in case-ready is variety of package sizes," said Pam Malone, seafood category manager at Schnuck Markets, St. Louis. "Four or five years ago, I couldn't find random-weight king crab. Now we're able to offer random-weight bagged product."

Retailers have plenty to choose from today. Products typically arrive at stores fresh or frozen, in net-weight packages that are labeled and ready for display in self-serve cases. They offer an array of benefits, from enhanced food safety to longer shelf life. Shoppers can still buy fish -- even when the lights are out at service counters. Perhaps the biggest benefit is labor. Very little skill is required to stock the items in self-serve cases, and that's a big plus for retailers.

"I think our growth is truly a factor of the consolidation and attrition at store level," noted James Faro, president of Sea Star Seafood Co., a case-ready processor in Marlborough, Mass. "Over the last three to five years, we have not seen [retailers] replacing people at store level. Meat and deli people are working in seafood counters."

Demand for prepackaged products comes at a time when people are spending more on seafood in general. Sales -- particularly for unbreaded, frozen items -- have been on the upswing. Unbreaded, frozen fish sales grew 15.8% from 2003 to 2004, and 10.3% the year before, according to ACNielsen category data.

At the 100-store Schnuck chain, about 50% of frozen fish carried is case-ready. These items complement the selection at the service seafood counters, which average 12 to 16 feet long; all but four Schnuck stores have service counters, according to Malone, the category manager.

"Most case-ready product we offer is frozen," she said. "We don't offer a large variety of fresh [case-ready seafood]. Our customers are more interested in fresh product out of the service case."

The fresh packaged items include whole catfish, fillets and nuggets.

Depending on the store's layout, the self-serve cases of frozen, packaged fish are in the seafood department or frozen food aisle. Nearly all the flatfish species Schnuck sells are prepackaged, as are all of the orange roughy and tilapia fillets. Some king crab and lobster tails also arrive prepackaged.

Certain products have developed a strong following, including many prepackaged items, such as the shrimp rings and tuna steaks. Of course, regular promotion helps keep sales robust.

"We promote them on a rotating schedule, with at least one variety on sale each week along with a regular ad plan," Malone said.

In the old days, frozen fish got a bad rap -- and rightly so. Consumers suspected retailers of freezing product that was on the brink of going bad. Packaging also did not protect fish from freezer burn. Today, a lot of fish is frozen when it's still on board the ship, at peak freshness. Packaging has gotten much better, too. Vacuum-packed products are increasingly common.

From Malone's perspective, the quality and extended shelf life of the products and, to a lesser extent the labor advantages, are the chief benefits of case-ready product. Other sources were more pointed in identifying labor as a perennial challenge for seafood departments -- and the issue most likely to drive future growth of case-ready fish.

"Most full-service counters do not make money for stores due to the labor expense," said Graham Redmayne, vice president of marketing for the Sea Fare Group, a Seattle-based sales and market consulting company serving the seafood industry. "The cost of labor to man that counter and the difficulty in keeping that labor has started them moving away from that model. What they're moving toward is packaged seafood products beyond fish sticks."

Across the board, managers find it challenging to recruit and retain talented people to sell seafood, which often requires more salesmanship than other proteins. For that reason alone, even retailers who are proud of their service counters, and continue to do all the fish-wrapping in the stores, recognize the labor-saving advantages of prepacked seafood. Such is the case at Save Mart Supermarkets, the Modesto, Calif.-based chain, with more than 80 stores. Fifty-five of the stores have service seafood cases, stretching across 12 linear feet on average. As a rule, Save Mart customers prefer to buy fish from the service counters, and that's where the chain focuses its energy. The departments also have self-serve cases featuring processed items, such as stuffed clams, smoked salmon and lox, and packages of imitation crab meat. In Save Mart's newer format stores, the seafood departments also have four-foot frozen sections that offer fish entrees and bagged shrimp products.

"We're not currently interested in case-ready," said Tom Hedegard, Save Mart's meat and seafood buyer. "Who knows what'll happen five to 10 years from now? We have a lot of long-term employees, and we do a fairly good job of retaining [them]. With retirements, that could change."

Seafood company officials said the labor challenge confronting retailers helps their business, however, and they're planning for continued case-ready growth. Officials noted their case-ready lines -- particularly natural, unbreaded items -- are experiencing healthy sales.

At Sea Star, for example, demand is up for frozen case-ready products as well as the "refresh" line -- products distributed frozen, but designed to thaw in refrigerated cases. Sea Star's products are in 45 states, typically in leading supermarkets, under private labels or the Beacon Light brand. The processing company has experienced sales and tonnage increases of 30% every year for the past four years, said Faro, the company's president.

"Five years ago, our focus was on eight species. Five years later, we're selling 25 different species," he said, noting the average retailer handles 14 to 15 species.

Seven years ago, Orca Bay Seafood introduced four case-ready products for retailers. Now the frozen line has expanded to 12 items, with wild Alaska salmon being the No. 1 seller. The size of the Renton, Wash.-based company's retail product line isn't the only thing that's changed over the years.

"We learned we can't sell fish [loose] in a bag," said Mark Tupper, national sales manager for Orca Bay. "We vacuum-pack our steaks. They don't pop or leak. We try to make the wild salmon be the exact same experience every time a customer buys it. We make [each piece] the same size and same thickness. We also started out with a 16-ounce bag, but the ring was too high. A 12-ounce bag competes well with poultry and meat. We like to be in the $4.99 to $5.99 ring."

Over the last seven years, sales have increased from 8% to 12% every year, Tupper said. He counts Costco Wholesale and Dierbergs Markets among his top customers. The company's strong markets include Oklahoma, Ohio, Michigan and Chicago -- areas where retailers have had difficulties selling fresh product, he said.

"Seafood counters can't find the right people," he stated.

Demand will increase for case-ready product as more and more consumers and retailers recognize the superior quality of frozen, packaged product, Tupper predicted.

"Promotion is key to moving frozen seafood," he said. "It'll continue to expand."

Not Ready For Case Ready

Smaller or independent retailers -- conceivably the biggest beneficiaries of low-labor, case-ready seafood -- often find it difficult to take advantage of the category. Joe White, director of meat and seafood for Fresh Brands, Sheboygan, Wis., recalled the company's case-ready program didn't give stores enough flexibility in terms of procurement. His smaller stores -- ranging from 26,000 square feet to 38,000 square feet on average -- were required to buy more product than they could sell. Stores lost money on unsold packaged items that had to be discarded.

Today, the parent company of Piggly Wiggly and Dick's Supermarkets uses a supplier that provides smaller quantities of bulk fresh product that store associates receive and overwrap on black trays, flesh side up, for presentation in self-serve cases. The supplier is based 30 minutes from the company's distribution center, so stores get their orders promptly.

"We've seen double-digit increases in our sales in the last three years," White said. "We got into smaller amounts so the stores could have fresher turns on the products. The people we've aligned ourselves with are in the white-tablecloth business at restaurants. They fly it in all over the world. This allows stores to get delivery three times a week.

"The big thing to make [a case-ready program] work is to keep packages per case down so stores' liability isn't so high," White said. "Let them buy smaller cases."

Jack Perkins, vice president of sales and marketing for Isola, Miss.-based Consolidated Catfish Cos., has seen retailers go back and forth with their seafood departments, removing money-losing, full-service counters from their stores -- only to re-install them years later. Perkins thinks large, high-volume stores and upscale retailers will always feel compelled to have service counters, but lower-volume stores could benefit from stronger self-serve operations.

"Not many retailers have a good variety of prepackaged, case-ready fresh fish," said Perkins. "When stores can get six to eight packaged fresh items, they'll close the seafood shops."