Howard M. Johnson · increase sharply, primarily in fresh fish species China will need to import more seafood to sustain demand Entry into WTO will end tariffs by 2007 China: Demand

1

Market OpportunitiesMarket Opportunities

ForFor

Shellfish AquacultureShellfish Aquaculture

Shellfish AquacultureShellfish AquacultureConferenceConference

Anchorage, AlaskaAnchorage, AlaskaDecember 3, 2004December 3, 2004

Howard M. JohnsonHoward M. JohnsonH.M. Johnson & AssociatesH.M. Johnson & Associates

Howard M. JohnsonHoward M. Johnson

[email protected]@hmj.com

www.hmj.comwww.hmj.com

www.fishjobs.comwww.fishjobs.com

30+ years in the30+ years in theseafood industryseafood industry

15+ years in seafood15+ years in seafoodconsulting and marketconsulting and marketresearchresearch

Shellfish Marketing AgendaShellfish Marketing AgendaThe view from 30,000 feetThe view from 30,000 feet

World seafood supply demand trendsWorld seafood supply demand trendsForecast world demandForecast world demand

JapanJapan

ChinaChina

EuropeEurope

United StatesUnited States

World cultured shellfish productionWorld cultured shellfish production

U.S. shellfish culture issues/opportunitiesU.S. shellfish culture issues/opportunities

Marketing opportunities for AlaskaMarketing opportunities for Alaska

2

Forecast World Seafood DemandForecast World Seafood Demand

Million Tons

Source: Int’l Food Policy Research Inst.

32

Millio

n T

on

sJapan

Japanese Seafood SupplyJapanese Seafood SupplyTrending LowerTrending Lower

0

2

4

6

8

10

12

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003e

Imports

Aquaculture

Fisheries

Million Metric Tons

3

Japan: Supply/Demand TrendsJapan: Supply/Demand Trends

Japanese population approaching zeroJapanese population approaching zerogrowth will then shrinkgrowth will then shrink

Per capita seafood consumption decliningPer capita seafood consumption declining

Household seafood spending decliningHousehold seafood spending declining

Still a major shellfish importerStill a major shellfish importer18,770 MT of clams in 200318,770 MT of clams in 2003

8,192 MT of oysters8,192 MT of oysters

Japan 2020Japan 2020A Shrinking MarketA Shrinking Market

7.507.607.707.807.908.008.108.208.308.408.50

2000 2020

Million Tons Round Weight

China

4

China Seafood SupplyChina Seafood Supply

0

10

20

30

40

50

60

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003e

Imports

Aquaculture

Fisheries

Million Metric Tons

China 2020China 2020StrongStrong Future DemandFuture Demand

20

25

30

35

40

45

50

55

2000 20202000 Total Additional Tons Required

Million Tons

18 Million

Tons

Source: International Food Policy Research Institute

ChinaChina’’s urban households consume less staple food and mores urban households consume less staple food and morepoultry, seafood, oils and dairy productspoultry, seafood, oils and dairy products

NumberNumber

8229Refrigerators owned per 100 households

2611Dairy Products

1813Vegetable Oil

2218Fish and Shrimp

3524Poultry and Eggs

4249Red Meat

256306Vegetables

176289Grain

Pound Per CapitaPound Per Capita

20011990Food Item

Source: China Statistical Yearbook

5

ChinaChina’’s rural households still rely on stapless rural households still rely on staples

Pounds Per Capita (2001)

Number (2001)Number (2001)

8214Refrigerators owned per 100households

263Dairy Products

1812Vegetable Oil

228Fish and Shrimp

3517Poultry and Eggs

4232Red Meat

256240Vegetables

176524Grain

Urban ResidentsRural ResidentsFood Item

Source: China Statistical Yearbook

China:China: Supply Trends Supply Trends

““Zero growthZero growth”” policy for coastal fishing policy for coastal fishing

Aquaculture production will continue toAquaculture production will continue toincrease sharply, primarily in fresh fish speciesincrease sharply, primarily in fresh fish species

China will need to import more seafood toChina will need to import more seafood tosustain demandsustain demand

Entry into WTO will end tariffs by 2007Entry into WTO will end tariffs by 2007

China: China: Demand TrendsDemand TrendsUrban consumer market increasingUrban consumer market increasing

Growth (and consolidation) of retailGrowth (and consolidation) of retail

Growth in middle class (with disposableGrowth in middle class (with disposableincome)income)

Demand for upscale seafoodsDemand for upscale seafoods•• ShrimpShrimp•• LobsterLobster•• Live fishLive fish

6

Europe

European* Seafood SupplyEuropean* Seafood Supply

0

2

4

6

8

10

12

14

16

1994 1995 1996 1997 1998 1999 2000 2001 2002p

Net Imports

Aquaculture

Fisheries

Million Metric Tons

*EU 15 + Iceland and Norway (Trade + product weight)

Forecast European DemandForecast European Demand

13.00

15.00

2000 2020EU15 + Norway & Iceland EU+10

Million Tons Round Weight1.3 Million

Tons

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World Shellfish CultureWorld Shellfish Culture

World Cultured Oyster ProductionWorld Cultured Oyster Production

Metric Tons Live Weight

Source: FAO FishStat

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000

World Cultured Clam ProductionWorld Cultured Clam Production

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000



8

World Cultured Mussel ProductionWorld Cultured Mussel Production

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000



World Cultured Scallop ProductionWorld Cultured Scallop Production

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000


Metric Tons

U.S. Shellfish Market

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U.S. Cultured Shellfish ProductionU.S. Cultured Shellfish Production

0

10000

20000

30000

40000

50000

60000

70000

80000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Oysters

Blue mussel

Clams


Source: FAO

U.S. Molluscan AquacultureU.S. Molluscan Aquaculture

StrengthsStrengths

Farmed mollusks are “ocean friendly”

Farmed Mollusks Rate High withFarmed Mollusks Rate High withEnvironmental GroupsEnvironmental Groups

Blue Ocean Institute – “Farmed clams,mussels, oysters and bay scallops…topchoice.”

Monterey Bay Aquarium – “Farmed clams,oysters and mussels…best choice.”

Environmental Defense – “Farmed abalone,clams, mussels and oysters…best choices.”

10


StrengthsStrengths

Farmed mollusks are “ocean friendly”

Mollusks have good nutritional profiles

Mollusk prices are generally stable


WeaknessesWeaknesses

Negative publicity regarding toxins

Strong reliance on ethnic markets

Some growing areas “anti-aquaculture” or polluted

Some products not “consumer friendly”

Production data not readily available


OpportunitiesOpportunitiesU.S. Seafood market is growing

11

Scallops Scallops –– 0.314 0.314

Crab Crab –– 0.327 0.327

Salmon Salmon –– 0.433 0.433

Catfish Catfish –– 0.60 0.60

Clams Clams –– 0.612 0.612

Flatfish Flatfish –– 0.619 0.619

Alaska Pollock Alaska Pollock –– 1.18 1.18

Cod Cod –– 1.71 1.71

Shrimp Shrimp –– 2.40 2.40

Canned Tuna Canned Tuna –– 3.5 Lbs 3.5 Lbs

1988 – 15.2 Lbs

-62.6.%-62.6.%Cod Cod –– 0.64 0.64

+90.0%+90.0%CatfishCatfish –– 1.14 1.14

+44.9%+44.9%Alaska Pollock Alaska Pollock –– 1.71 1.71

+5.1%+5.1%ScallopsScallops –– 0.33 0.33

-13.4%-13.4%ClamsClams–– 0.53 0.53

nnTilapiaTilapia–– 0.54 0.54

+86.5%+86.5%CrabCrab–– 0.61 0.61

+412.7%+412.7%SalmonSalmon –– 2.22 2.22

-2.8%-2.8%Canned Tuna Canned Tuna –– 3.4 3.4

+66.7%+66.7%ShrimpShrimp –– 4.0 Lbs 4.0 Lbs

% Change2003 – 16.3 Lbs

Source: National Fisheries Institute from NMFS data

Top 10 Seafoods ConsumedTop 10 Seafoods ConsumedAquaculture now driving consumptionAquaculture now driving consumption

U.S. Population 1950 Versus 2020U.S. Population 1950 Versus 202070+ Million Americans Over Age 60 by 202070+ Million Americans Over Age 60 by 2020

-3

2

7

12

0-4 5-9 10-

14

15-

19

20-

24

25-

29

30-

34

35-

39

40-

44

45-

49

50-

54

55-

59

60-

64

65-

69

70-

74

75-

79

80+

Age Group

1950

2020

% of Population

Protein Consumption 2000 vs 2020Protein Consumption 2000 vs 2020Per Capita Beef, Pork Consumption DropPer Capita Beef, Pork Consumption Drop

Seafood Increases by 6.58 PercentSeafood Increases by 6.58 Percent

Source: USDA ERS

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Future U.S. Seafood DemandFuture U.S. Seafood DemandPopulation growth and changing demographics alone will require an additionalPopulation growth and changing demographics alone will require an additional

3.3 billion pounds (round wt.) by 2020. Greater supply and low prices could push3.3 billion pounds (round wt.) by 2020. Greater supply and low prices could push

demand even higherdemand even higher

Billion Pounds Round Weight

10

12

14

2000 2020

2000 Total Population Demographics

U.S. Seafood Demand in 2020U.S. Seafood Demand in 2020How much more supply needed?How much more supply needed?

0 5 10 15 20 25

2020 UnlimitedSupply

2020 Demographics

2020 Population

2000 Base Case

20 pounds per capita




+

+

+

Billion Pounds Round Weight

1.8 Billion

Pound

Increase

9 Billion

Pound

Increase

3.3 Billion

Pound

Increase



Away-from-home seafood growth willoutpace other proteins

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Future U.S. Seafood DemandFuture U.S. Seafood DemandGrowth in both Retail and FoodserviceGrowth in both Retail and Foodservice

0 5 10 15 20 25 30 35

Beef

Pork

Poultry

Seafood

Growth % 2000 vs 2020

Away fromhomeAt home

Source: USDA ERS




Good export markets

U.S. Mollusk Exports 2003U.S. Mollusk Exports 2003

192

607

2643

4565

$6,400

$1,664

$12,909

$26,766

0 5000 10000 15000 20000 25000 30000

Abalone

Mussels

Oysters

Clams

Metric Tons $'000

14




Good export markets

Processing/packaging technology willprovide added safety

U.S. Oyster ConsumptionU.S. Oyster Consumption

0

0.05

0.1

0.15

0.2

0.25

0.3

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Pou

nds

Per

Cap

ita

(Edi

ble

Wt.

)

U.S. Oyster MarketU.S. Oyster MarketReported U.S. per capita consumption .20 lbsReported U.S. per capita consumption .20 lbs

2002 ex-farm value of $53.5 million2002 ex-farm value of $53.5 million

Consumption likely under-reportedConsumption likely under-reported

15% of consumers eat 85% of total*15% of consumers eat 85% of total*

Average consumer 18-49 male in coastal area*Average consumer 18-49 male in coastal area*

10% drop in price raised demand by 25%*10% drop in price raised demand by 25%*

*University of Florida consumer survey 2001

15

U.S. Clam ConsumptionU.S. Clam Consumption

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Pounds Per Capita (Edible Weight)

U.S. Clam MarketU.S. Clam Market

Total U.S. consumption of 156 millionTotal U.S. consumption of 156 millionpounds (edible weight) in 2003pounds (edible weight) in 2003

2002 reported cultured production of 102002 reported cultured production of 10million pounds (meat weight)million pounds (meat weight)

Reported ex-farm value of $10 millionReported ex-farm value of $10 million

Cultured geoduck a high-value exportCultured geoduck a high-value export

U.S. Scallop ConsumptionU.S. Scallop Consumption

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Source: NMFS

Pounds Per Capita – Edible Wt.

16

Some Fearless ForecastsSome Fearless Forecastsfor Shellfish Growersfor Shellfish Growers

Demand for oysters, mussels, clams and scallopsDemand for oysters, mussels, clams and scallopswill growwill grow

Technology applied to shellfish safety willTechnology applied to shellfish safety willmitigate trade/consumer fearsmitigate trade/consumer fears

Retail products will need to be case readyRetail products will need to be case ready

Central processing facilities need to achieveCentral processing facilities need to achieveeconomies of scaleeconomies of scale

Contract growersContract growers

Co-op processing/marketingCo-op processing/marketing

ConclusionsConclusions

Strong demand for seafood in generalStrong demand for seafood in generalshould help mollusksshould help mollusks

Mollusks are undermarketedMollusks are undermarketed

Need new trial among younger populationNeed new trial among younger population

Niche markets, niche products (value-Niche markets, niche products (value-added) neededadded) needed

Alaska Shellfish AquacultureAlaska Shellfish AquacultureAdvantages/OpportunitiesAdvantages/Opportunities

Greater siting opportunities than lower 48• Unpolluted

• Fewer “view” issues

Utilization of processing infrastructure

Sales synergy with established companies

Capitalize on “Alaska” and local branding

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Alaska Shellfish AquacultureAlaska Shellfish AquacultureAdvantages/OpportunitiesAdvantages/Opportunities

Development of contract growing, co-op orintegrated models

Small-scale “family” businesses

Become world leader in red crab culture

Proximity to Asia via air cargo

Alaska Shellfish MarketingAlaska Shellfish MarketingOpportunitiesOpportunities

Local marketsLocal markets

National marketsNational markets

Niche marketsNiche markets

Export marketsExport markets

Take market shareTake market sharefrom Canadafrom Canada

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Market Studies on the NetMarket Studies on the Net

New Brunswick Oyster Aquaculture Industry MarketNew Brunswick Oyster Aquaculture Industry MarketStudyStudy www.acoa.ca/e/library/reports/Shellfish/shellfish.pdf

Marketing Opportunities for Pacific Oysters Marketing Opportunities for Pacific Oysters –– PCSGA PCSGAStudy Study www.ams.usda.gov/tmd/FSMIP/FY2000/WA0300.pdfwww.ams.usda.gov/tmd/FSMIP/FY2000/WA0300.pdf

Clams Market Research Focus Group ReportClams Market Research Focus Group Report

www.fl-seafood.com/industry/reports/clams_rep9-16.pdfwww.fl-seafood.com/industry/reports/clams_rep9-16.pdf

Thank youThank you

Documents

Howard M. Johnson · increase sharply, primarily in fresh fish species China will need to import more seafood to sustain demand Entry into WTO will end tariffs by 2007 China: Demand