US retailer Hy-Vee is struggling to get its hands on shrimp, despite its diversified sourcing strategy, reports Jeanine Stewart of Undercurrent News.
The company follows a domestic sourcing mission, aiming to source as much as possible from the Gulf of Mexico; but so far this year, sourcing more from the gulf is about as difficult as getting supply out of disease-ridden Asia.
“‘We’re not getting the amount of shrimp we need to sell,” Kurt Johnson, meat and seafood supervisor for Hy-Vee, told Undercurrent News. “It’s a problem that needs to get fixed…If the farming isn’t working, and the pressure turns towards the wild [domestic supply], those prices are going to skyrocket.”
Price pressure on wild-caught domestic shrimp comes not only from the global shortage but also supply issues of its own. NMFS reported May 2013 landings at 13.595 million pounds for the headless weight, which brings the cumulative total for the year to 13.7% below last year, at 23.57 million pounds.
“The biggest problem right now is the flood water in the Mississippi Delta,” Johnson said, adding that the situation is improving. “They’re going to start catching shrimp – it’s just a matter of time before they’re going to start catching them.”
But getting access to what is available is doubly hard due to problems in Asia, John Rohrs, seafood sales merchandiser for Hy-Vee buyer Perishable Distributors of Iowa (PDI), told Undercurrent.
“A lot of people are switching over to Gulf shrimp and eating local,” Rohrs said. “Prices are up and down — you talk to one person and they’re 50 cents higher, and you talk to another and it’s $1 higher. People are just constantly guying shrimp, and no one knows where it’s going to be.”
Not only is supply suffering, but so is consumer interest in shrimp due to inconsistency in product offerings.
Due to the down supply, Hy-Vee’s buyers — like all sources Undercurrent has spoken with — are searching out product from new suppliers. The inconsistency of suppliers is, in itself, a problem, said Johnson.
When shrimp comes in a different packaging and has a different look, it confuses customers, who tend to like to stick with a brand and develop a sense of trust in that brand.
“From our side it’s a hot mess,” Johnson said. “We find a supplier, and we run out of that, and we’ve got to switch to another one and switch to another one. From week to week, you don’t know what you’re going to get.”
Even though the quality tends to be consistent, customers are easily thrown off when they can’t find the product they’ve bought before, said Johnson.
The lure of meat
Of course, higher prices don’t help the situation, and in addition to the well-known increases on Asian shrimp this year, prices are increasing for the second year in a row on gulf shrimp.
According to Johnson, 16-20 count Gulf shrimp at the retail level is going for $10 to $13 per pound today. Those prices are a $1 to $2 increase from the price range last year of $9 to $11 and a sizeable jump from the $7 range prices hit in 2011.
Prices for Asian shrimp are typically $2 lower than Gulf shrimp, but this year Asian shrimp prices have gone so high that the gap is less, at $1 to $1.50, Johnson said.
Now is not a good time to test consumers’ love of seafood, he added.
“People are managing their dollars really tight, so it’s a poor time for shrimp prices to go up,” he said. “Demand is going to go down because people aren’t going to pay for it for long.”
Finding seafood substitutions for customers is not as easy as it is to steer them to chicken, he said. Although cod prices are down, they are still well above chicken; and besides, chicken tends to be a better substitution for shrimp than cod anyway when it comes to recipe substitutions, Johnson said.
Then, there’s the age-old problem with selling seafood in a price-sensitive food market like the US.
“Seafood for many people in the US is a choice, it’s not a staple,” he said. “You have so many things that are inexpensive – beef is a staple, chicken is a staple.”
Chicken never fluctuates much, and it is “extremely affordable” right now, at $3.99 per pound at the retail level.
Yet Johnson has not lost all hope for consumers’ interest in shrimp, and he expects to need more to sell by the time the holidays roll around. The only problem is, he might not be able to get it.
“We’re concerned about getting supply caught up by the holidays,” he said.