(IntraFish) As Maruha Nichiro subsidiary aims for a second year of growth, avoiding price hikes gets challenging.
Surimi supplier TransOcean saw its sales jump by 10.2 percent last year -- nearly double the 5.6 percent growth IRI data recorded for the $94 million US surimi indsutry, TransOcean Vice Presdient of Sales and Marketing Lou Shaheen told IntraFish.
That upward revenue trend may continue, but not for the reasons that producers like TransOcean would hope. Wholesale prices for surimi blocks are up 20 percent to 25 percent this year over last, Genuine Alaska Pollock Producers Program Director Pat Shanahan told IntraFish. European processors told a similar story to IntraFish in February.
“It will increase our costs by about half that,” Shaheen said. Surimi blocks make up about half of the end product, he explained. “So it’s a significant increase to any company, but we’ve seen larger increases than that in the past few years.” Shaheen said TransOcean, a subsidiary of global giant Maruha Nichiro, will try not to pass on costs to consumers.
“We will look at other avenues to reduce our costs so that we don’t have to pass them along,” he said. Contracts with retailers may make it difficult to pass on costs, he added.
Yet markets outside the United States could be willing to absorb higher prices, considering the high global demand for the surimi.
“The increased demand is due to a number of factors, including the tsunami last year in Japan, which destroyed some surimi inventory, and the lack of lower cost tropical surimi on the global market,” Shanahan said.
Southeast Asian fishermen who catch species used in surimi may not be fishing due to the high cost of fuel, she said.
“There is also growing demand for surimi seafood products in Europe and in developing markets such as India and China. In addition, large surimi producers and exporters, -- Thailand is a good example – are starting to consume an increasing share of their own production in the domestic market.”
However, whether Alaska surimi producers decide to tap into the higher demand for surimi is yet to be seen, considering pollock is also in high demand in fillet form, Shanahan said. Last year, pollock producers responded to a higher global demand by producing more surimi.