Opinion: Retail leap brings hope for Chilean salmon

Last May, I wrote in this post about the unprecedented market instability occurring in the US. At that time, the entire world was unstable due to Covid-19. Instability and ambiguity were the new normal. It was a very difficult time. 

Today, I am writing to share what we have learned over the past three months and to offer additional information. While challenges remain, we are beginning to see those that may turn into some long-term benefits.

As Covid-19 gripped the US market, our industry struggled to adjust to the loss of food service customers and distributors - a loss we continue to suffer. 

Bankruptcies

Restaurant bankruptcies had started in May and have accelerated since then. Restaurant ventures such as California Pizza Kitchen, famed New York bakery Le Pain Quotidien, and gourmet retailer Dean & Deluca all failed.

Even major organisations like Lord & Taylor, Nieman Marcus, and J. Crew have filed for bankruptcy. The world famous Cirque du Soleil is now bankrupt. 

The National Restaurant Association of America predicts a decline in restaurant sales of more than $240 billion. 

The industry is in deep trouble but was beginning to recover slightly in August as companies switched to outdoor seating, expanded delivery options, and takeout.

Then last week, the US Centers for Disease Control (CDC) released a report suggesting a link between exposure to Covid-19 and dining indoors in restaurants that haven't adjusted seating to accommodate to social distancing and other health controls. 

Devastating

This news from the CDC is devastating and added fuel to the fire. The US restaurant industry continues to burn.

The loss of food service and the continued collapse of other major companies caused a decline in demand and a subsequent disruptive and painful oversupply of salmon to the US market that affected many source countries, including Chile. 

Starting in May, we also noticed another unusual trend: a dramatic increase in demand for retail salmon. Although increased demand in retail did not absorb all the salmon we planned to sell to food service, the growth in demand was and continues to be unprecedented.

In my 30-year career, we have never seen such rapid and dramatic change. The change in the US market required us to modify CSMC's strategy for 2020 and raised many questions. 

One of the most important questions was, ‘Where is the US retail market headed?’ In early June, we had a list of questions and a plan to engage retailers and determine where the market is headed.

Select group

To answer the question, CSMC worked with a leading US grocery publication to administer a survey of commercial seafood buyers for retail and a select group of seafood retail managers. 

We wrote a complete survey and sent it electronically to 137 participants. A total of 37 qualified participants completed our survey and with this data we were able to answer several key questions. 

Our results indicate that, as a direct result of Covid-19, salmon sales are experiencing a dramatic increase in retail supermarkets. CSMC member companies noticed this months ago, this is not new news. Hearing it directly from retailers was helpful and confirmed our assumptions.

After the survey was completed, we contacted a handful of major US retailers and spoke to their seafood/salmon category managers by phone. These conversations allowed us to better understand the direction the salmon is moving. 

Although we cannot share the names of the retailers, we learnt that some of the largest US retailers have seen significant increases in salmon sales, in some cases exceeding 30% year-over-year (on average). 

Amazing

This is amazing. In addition, it appears that consumers are buying a wider range of salmon forms, with whole fillet sales at retail growing faster than planned. Consumers are buying more salmon than ever and remain open to new large-format packaging.

As we explore why consumers are buying larger quantities of salmon and moving to larger packages, the data suggests that salmon is indeed the US's favourite finfish, and that consumers continue to crave our product. 

They have no choice but to start cooking salmon at home due to the widespread loss of the food service option and it seems they are more willing to try new forms of products and recipes. 

People who never bought salmon are willing to try it. Consumers are not only cooking more salmon, we are also gaining new customers.

Here are the insights gained from our research and from talking to major retailers:

• Salmon is the favourite fish;
• Salmon is considered a ‘super food’ and is valued for its health benefits;
• A high percentage of consumers love the taste of salmon;
• Low retail prices have led to increased sales.

The rest of 2020 will be challenging, but it seems like the prediction I made last May has come true: that there is a long-term benefit in hand as more consumers try our products and incorporate salmon into a healthy lifestyle. Better days await us if we can survive these short-term challenges.

This article first appeared in Fish Farming Expert’s sister title, Salmonexpert.