Lobster Dealer Maintains Strong Sales Despite China Tariff

by Laurie Schreiber

Maine Coast Lobster Co. in York has come up with strategies to maintain strong sales despite a 25% tariff implemented last July on imports of lobster into China.

CEO Tom Adams said he began shipping lobsters to mainland China in 2013 and increased sales every year since. In 2017, about 1.5 million pounds, comprising about 22% of his overall volume, went there.

By early 2018, in the first six months before the tariff was imposed, “we were at some of our fastest growth for that year-over-year period,” he said. “So we were expecting a banner year in China.”

Since then, he said, the tariff eliminated 80% of his company’s sales to mainland China, compared with 2017.

“While we are able to make up a lot of that sales volume in different markets, it was challenging,” he said.

When the tariff was announced, he said, “We quickly huddled and said, ‘What do we do now? How do we remain profitable?’ The quick answer was, we’re going to have take our sales and marketing efforts and be very aggressive in markets where we’re not disadvantaged due to tariffs. So we were able grow our sales dramatically in all of the other places we were selling.”

Aggressive marketing has resulted in significant sales increases in other parts of Asia and in the U.S., and in retention of European sales even though that market was also disadvantaged by an 8% tariff over Canadian competitors. Other Asian countries include Hong Kong, Korea, Vietnam, Singapore, Taiwan and Malaysia.

“We’re shipping to quite a few destinations now,” he said. “And we had been. But about half of our sales to Asia had been going to mainland China, and the other half to all other Asian countries. So we grew sales into the other countries.’”

Marketing strategies have included deploying his sales team.

“We asked them to focus their efforts in a more aggressive way in the other Asian countries,” he explained. He and his team also increased the number of sales trips over the past year.

“I don’t necessarily travel on every trade show or mission. But this year I traveled more through Europe and multiple Asian countries,” he said.

He stressed that Maine Coast has also maintained attention to the China market.

“We haven’t foregone our Chinese customers,” he said. “We’re still in constant contact. They still want to work with us and we want to work with them. We’re hopeful and positive that the tariff will lift at some point. It’s a matter of when. And when they do, we want our Chinese customers to be thinking of us.”

Communications on a weekly basis include phone mail and social media, and continuing to make trips to China.

For example, “We still exhibited at the Chinese seafood exhibition last fall,” he said. “And we’ve made other trips to mainland China since the tariff was put in place. It was and will be an important market.”

Maintaining those relationships “is incredibly important,” he continued. “You can do business from afar with each other through technology, but the value of meeting with someone face to face gives both parties the ability to work together more closely. It’s invaluable to have these interchanges. And we love for them to visit us.”

Maine Coast frequently hosts visitors from all over the world, he added.

“We encourage all our customer to visit,” he said.

China is now getting more lobster from Canada, he said. But Adams said he’s optimistic about regaining market share, once the tariff is lifted, even though it will be challenging.

“Infrastructure in Canada was quickly expanded to meet demand in China, and that infrastructure is not going away,” he said. Still, he said, “We have heard from our Chinese customers that they want to do business with us. We have better logistics out of the U.S. We’re more experienced than newer Canadian shippers at worldwide exporting of live, perishable lobsters. But it won’t be without challenges and I’m sure a percentage of what used to be our sales will remain in Canada.”

Maine Coast continues to have a strong focus on domestic markets, too.

“I began in this company selling primarily to domestic markets,” he said. “We’ve never taken our eyes off the domestic market. The U.S. is still the biggest user of lobster products.”

Overall, Maine Coast ship to 29 countries. In 2017, the company sold 7.3 million pounds. In 2018, due to new marketing strategies, the company was able to maintain strong sales, selling almost 7 million pounds, he said.

Overall, he said, “There’s a finite number of lobsters caught, and every year they’re sold somewhere. So this is a reallocation of who’s shipping where.”

He added, “We as a company try not to think of our business in terms of months. We try to look toward the future and plan for years out. So our overall plan hasn’t changed. We’re bullish on the market. We think we have future growth potential both as an industry and an individual company.

Adams founded Maine Coast in 2011 and opened a live lobster facility on the Boston Fish Pier in 2016.

This article originally appeared in Mainebiz.