Future Price of Lobster Seen in Sustainability, Value Added, Marketing
by Fishermen’s Voice Staff
An example of lobster meat with shell removed by Shucks Maine Lobster at the Boston Seafood Show 2011. The technology used enables high efficiency, high speed separation of quality meat. Fishermen’s Voice Photo.
The historic low boat price of lobster in the summer of 2012 has brought national attention to the economics of the lobster industry in Maine. Some observers say, regrettably the attention has been focused on the low price of lobster at the market rather than on structural problems in the industry.
Warm weather led to an early and extended appearance of soft shell lobster season. For the first time in memory, the season began before the Canadian spring season ended. The early season combined with high volume punched a hole in the boat price. But, as is often the case, there is also good news. The high landings of Maine lobster is a positive statement about the condition of the resource.
John Hathaway of Shucks Maine Lobster, a lobster processor in Richmond, Maine, thinks that is the strong suit in the generally good hand of the lobster resource. He believes the good health of the lobster resource is the result of strong conservation management and the sustainable fishing practices of Maine lobstermen.
The plunge of lobster prices to a 30 year low of $1.50/lb., a low compounded by the value of the dollar 30 years ago, has been a bitter reward for years of nationally recognized lobster resource management. However, Hathaway points out that Maine lobster is a very desirable high-end food product but it is currently being sold in the highest volumes at the lowest possible prices. In a supply and demand economy, the answer is to create more demand for Maine’s sustainable supply.
“About 60% to 70% of Maine lobster is shipped to Canada and comes back to the United States labeled as Product of Canada” said Hathaway. In the process, value added by Maine fishermen through sustainable fishing and resource management is stripped out of the product. “By shipping lobster to Canada we are essentially lending them the lobster, which they re-brand and sell back to us in the United States”, said Hathaway, “without creating any added value or jobs here in our state”.
Hathaway sees the certification process through organizations like the Marine Stewardship Council (MSC) to be a means of verifying in the minds of consumers that Maine lobster is sustainably fished. This certification should, Hathaway said, be a part the branding of Maine lobster, a product already recognized as a high end product. Such a certification will gain trust with Maine Lobster lovers that they are “doing no harm” environmentally when they choose Maine Lobster for their celebration. “Doing good” is a critical concern of seafood consumers he says.
Hathaway says that certification of sustainability is now expected by major retail and food service customers. Even WalMart has said all of it’s seafood products will be MSC certified by 2013. Many other large retailers have followed suit both in North America and the EU. Certification and branding elevate consumers’ trust in seafood products and lead to price point advantages. With MSC certification, new markets will open for Maine Lobster he believes. Without it, doors will be closed. And, creating more demand, with a sustainable resource as the foundation, is the path to a higher boat price Hathaway says.
Helping companies in Maine develop Maine lobster products is also important. “It’s expensive, for example, to develop packaging designs. Funding sources should be directed to professionals to help innovative companies cut the learning curve for packaging design and the use of modern marketing methods,” said Hathaway.
Protection of the Maine brand is also important. This would mean seriously challenging those who present “imposter” lobster as Maine lobster. Hathaway noted that around the world Maine lobster is often referred to as Boston lobster or North Atlantic lobster, but not Maine lobster. Even worse, in the United States several other species are advertised as “Maine Lobster”. Allowing this practice weakens our brand he said and needs to be addressed, noting that there are laws in place that could be cited in the intentional misidentification of seafood.
There has been a lot of talk recently about international markets for lobster, in particular Asian markets. However, Hathaway thinks the best markets for Maine Lobster are in the United States. The Maine brand is known and respected here and there are more than enough people here who can afford a high end product like Maine lobster. Only a small percentage of live Maine lobster can survive being flown to, say, Hong Kong or even San Francisco. The Canadian hard shell lobster has an advantage in these markets. Let them develop those markets. Maine Lobster should differentiate and compete where it has its own advantages.
The pricing problem is not due to the thirty percent of Maine Lobster that can withstand the rigors of shipment around Maine, the country, or the globe, he says. The issue is how to create profits from the remaining seventy percent of soft shell lobsters that are now sold in high volume at low prices to Canadian processors.
By keeping Maine Lobster in Maine rather than selling it at a discount to Canada, Hathaway says, we can add both value to the product and create jobs here in Maine. Those value added products, supported by a strong Maine brand that has as its foundation a “sustainable” certification, can then be marketed and easily transported to Maine Lobster lovers all over the world without having to worry about shrinkage.
Hathaway believes world markets, and particularly the United States, are waiting for convenient, innovative, value added Maine Lobster products.
Hathaway cited the experience of Alaska in the research and development of markets for wild salmon. The first thing the research revealed was what now seems fairly obvious: people don’t want to buy their salmon with the head on and bones still in. In order to raise the value of Alaskan salmon, they decided to make products people wanted and for which they would actually pay more money. Those efforts turned around the markets and the prices paid for wild salmon.
Its no different than the chicken industry. People no longer want to buy live chickens and chop their heads off. Today, there are restaurant chains based on little more than just chicken wings…a product never even contemplated a generation or two ago. He thinks something similar could be done for Maine lobster. Research and development for Maine lobster is needed. And, he points out, the recent proliferation of food trucks and urban “lobster shacks” now promoting Maine Lobster Rolls. The key, Hathaway believes, is that “the Maine Lobster industry needs to understand that we are in the food business, not the live animal business.
The potential for market development and price gains is in the numbers. While the fishery is landing over 100 million pounds a year, the actual “food” is only 25% of the whole lobster. With 25 million pounds of “food” (Out of the total 100 million pounds of “live animal”) on the market annually, Hathaway believes Maine Lobster marketing efforts should be primarily focused on the 350,000,000 people in the United States. “The U.S. market is huge”, said Hathaway, “the Maine brand is very strong here, the product itself is iconic and it is easier to do business here than anywhere else in the world. Let the Canadians go to Asia. Their live product can endure the trip. Live Maine Lobster is not going to get there in a quantity nor at a price that is going to change the game for the Maine Lobster industry”.
What is more important is the changing ways people buy, serve and eat a whole range of foods. The traditional lobster pot with lobsters tossed in and eaten by breaking the shells by hand doesn’t ship well in the modern, time starved urban and suburban markets.
Hathaway processes lobster with high tech equipment that allows the instant removal of raw lobster meat from the lobster’s shell using high pressure equipment and freezes the meat immediately. His product won the Prix d’Elite Awards at the Brussels International Seafood Exposition for both “Best New Seafood Product” and maybe more importantly, “Most Convenient New Seafood Product”. Customers simply pick up the vacuum sealed frozen raw tail and claw packs knowing what to expect and prepare it in a widening range of innovative ways. They cannot throw it live into a boiling pot, but in the current transformed marketplace, for many of the people in this country and the world this packaged product is rapidly becoming the norm more than the live product.
Getting good quality lobster to a lot of people who already know it to be a high-end food is the key to getting a high-end price. Reaching a lot of people means making lobster more accessible, which means making it easier and more manageable for restaurants and people at home to use.
Fresh frozen and vacuum sealed takes the long history of the steaming pot and the human feast out of the product, but it also takes out the enormous logistical problem of moving large quantities of live perishable food thousands of miles to markets in a world whose eating habits are rapidly changing.