Seafood Marketing (Shrimp) IntroductionIntroduction Hundreds of species of salt water shrimp in the...

Seafood Marketing Seafood Marketing (Shrimp)(Shrimp)

Seafood Marketing Seafood Marketing (Shrimp)(Shrimp)

IntroductionIntroductionIntroductionIntroduction Hundreds of species of salt water Hundreds of species of salt water

shrimp in the world; however, industry shrimp in the world; however, industry divides them into two cateogories: divides them into two cateogories: coldwatercoldwater/northern (F. Pandalidae)/northern (F. Pandalidae) warmwaterwarmwater/tropical (F. Penaeidae)/tropical (F. Penaeidae)

8 species dominate U.S. market8 species dominate U.S. market product mix changes when aquaculture product mix changes when aquaculture

changeschanges

How are shrimp sold?How are shrimp sold?How are shrimp sold?How are shrimp sold? Typically Typically counts per lbcounts per lb or or counts per kgcounts per kg Example: 16-20 means there are 16 to 20 Example: 16-20 means there are 16 to 20

shrimp per poundshrimp per pound Range goes from under 10 (giant or Range goes from under 10 (giant or

colossal) per lb to over 300-500 (canned)colossal) per lb to over 300-500 (canned) Little species difference in packing or Little species difference in packing or

productsproducts we will focus on warmwater shrimp we will focus on warmwater shrimp

Shrimp Shrimp FormsForms

Shrimp Shrimp FormsForms

Most common: raw, Most common: raw, head-off (head-off (green green headlessheadless) with the shell ) with the shell onon

Heads-onHeads-on: : cephalothorax included, cephalothorax included, appearance is that of appearance is that of entire shrimp (known as entire shrimp (known as “enteros” in Spanish)“enteros” in Spanish)

raw shrimp without raw shrimp without shells are “shells are “peeledpeeled””

Peeled Shrimp Peeled Shrimp FormsForms

Peeled Shrimp Peeled Shrimp FormsForms

PUDPUD: peeled, undeveined : peeled, undeveined (vein or digestive tract (vein or digestive tract remains intact, vein varies in remains intact, vein varies in color from dark to light)color from dark to light)

P&DP&D: peeled and deveined: peeled and deveined PDIPDI: peeled, deveined, : peeled, deveined,

individually-packedindividually-packed Tail-onTail-on: peeled, but the tail : peeled, but the tail

fin and an adjacent shell fin and an adjacent shell segment are left onsegment are left on

Tail-on roundTail-on round: tail-on, : tail-on, undeveinedundeveined

Various Various Forms Forms

of of ShrimpShrimp

Various Various Forms Forms

of of ShrimpShrimp

Peeled Shrimp FormsPeeled Shrimp FormsPeeled Shrimp FormsPeeled Shrimp Forms butterfliedbutterflied: shrimp has been cut : shrimp has been cut

along the vein (split or fan-tail; along the vein (split or fan-tail; split thru first 4 segments = split thru first 4 segments = “Western-style”)“Western-style”)

cookedcooked: usually sold IQF : usually sold IQF (individual quick-frozen); varieties (individual quick-frozen); varieties include P&D tail-on, P&D tail-off, include P&D tail-on, P&D tail-off, and shell-onand shell-on

Other formsOther forms: minced, canned, : minced, canned, dried, value-added (e.g., dried, value-added (e.g., marinated, flavored, breaded)marinated, flavored, breaded)

U.S.D.O.C.U.S.D.O.C. has established has established standards for green headless and standards for green headless and

breaded shrimpbreaded shrimp

Breaded ShrimpBreaded ShrimpBreaded ShrimpBreaded Shrimp Breading consists of two components:Breading consists of two components:

wet, adhesive batterwet, adhesive batter dry, crunchy breadingdry, crunchy breading

percentage breading (by weight) is percentage breading (by weight) is critical, regulated by FDAcritical, regulated by FDA

labeling standardslabeling standards breadedbreaded shrimp (>50% shrimp) shrimp (>50% shrimp) lightlylightly breaded (65% shrimp) breaded (65% shrimp) imitationimitation breaded (<50% shrimp) breaded (<50% shrimp)

Forms of Breaded Forms of Breaded ShrimpShrimp

Forms of Breaded Forms of Breaded ShrimpShrimp

whole breadedwhole breaded: tail-on or tail-off, usually headless : tail-on or tail-off, usually headless (although called “whole”), deveined if less than 70 (although called “whole”), deveined if less than 70 countcount

butterfly breadedbutterfly breaded: split partway on vein side (dorsal) : split partway on vein side (dorsal) and spread openand spread open

split breadedsplit breaded: completely bisected (“western” or : completely bisected (“western” or “cowboy” style)“cowboy” style)

hand-breadedhand-breaded: labor intensive, expensive, more : labor intensive, expensive, more attractive, tail-onattractive, tail-on

machine-breadedmachine-breaded: tail-on or -off; if tail remains, it may : tail-on or -off; if tail remains, it may or may not be breaded (not breaded = “pinched”)or may not be breaded (not breaded = “pinched”)

Product PackingProduct PackingProduct PackingProduct Packing Green headless: Green headless: 5lb (net weight) block5lb (net weight) block; add ice ; add ice

+ box = 6-7 lbs.+ box = 6-7 lbs. 2.0 kg packs2.0 kg packs (0.6 lbs lighter, so buyer be ware!) (0.6 lbs lighter, so buyer be ware!) blocks packed in two styles:blocks packed in two styles:

layer or finger-packedlayer or finger-packed

randomrandom, jumble or shovel pack, jumble or shovel pack IQFIQF: individual quick-frozen, usually in bags (1-: individual quick-frozen, usually in bags (1-

30 lbs), labeled to net weight, without glaze30 lbs), labeled to net weight, without glaze Breaded shrimp packed in boxes with moisture-Breaded shrimp packed in boxes with moisture-

resistant barrier, completely sealedresistant barrier, completely sealed

Product PackingProduct PackingProduct PackingProduct Packing

Chemical AdditivesChemical AdditivesChemical AdditivesChemical Additives Usually dipped in solutions to either add weight Usually dipped in solutions to either add weight

or as a preservativeor as a preservative sodium tripolyphosphatesodium tripolyphosphate (STP): on peeled and (STP): on peeled and

breaded shrimp to reduce drip loss (keeps weight breaded shrimp to reduce drip loss (keeps weight up); labels must advise of thisup); labels must advise of this

sodium bisulfitesodium bisulfite: used primarily for shell-on : used primarily for shell-on shrimp to prevent melanosis (“black spot”); limit shrimp to prevent melanosis (“black spot”); limit is 100 ppm, higher in Europeis 100 ppm, higher in Europe

““Ever-Fresh”Ever-Fresh” (4-hydroxyresorcinol), naturally- (4-hydroxyresorcinol), naturally-occurring, GRAS, but expensiveoccurring, GRAS, but expensive

Typical Shrimp Species Typical Shrimp Species TradedTraded


Chinese whitesChinese whites: : Fenneropenaeus orientalisFenneropenaeus orientalis, , mandarin whites, medium-mandarin whites, medium-sized, sell for less, softer sized, sell for less, softer tissuetissue

Gulf brownGulf brown: : Farfantepenaeus aztecusFarfantepenaeus aztecus, , shell color varies shell color varies extensively, popular in extensively, popular in Texas (50% of wild harvest), Texas (50% of wild harvest), usually a little cheaper than usually a little cheaper than whites, caught offshorewhites, caught offshore



Gulf pinkGulf pink: : Farfantepenaeus Farfantepenaeus duorarumduorarum, very sweet, firm , very sweet, firm flesh, tails turn red when flesh, tails turn red when cooked, most packed shell-cooked, most packed shell-onon

Gulf whitesGulf whites: : Litopenaeus Litopenaeus setiferussetiferus, often confused , often confused with brown shrimp (browns with brown shrimp (browns have groove in last tail have groove in last tail segment), flesh often segment), flesh often colorless, good flavor, pink colorless, good flavor, pink when cookedwhen cooked



Pacific white shrimpPacific white shrimp: : Litopenaeus vannameiLitopenaeus vannamei, , mainly imported from South mainly imported from South America, Central America, America, Central America, Mexico, similar to Gulf Mexico, similar to Gulf whites, seasonalwhites, seasonal

black tigersblack tigers: : Penaeus Penaeus monodonmonodon, dark dorsal/lateral , dark dorsal/lateral stripes, usually peeled, some stripes, usually peeled, some adversity to stripes, small adversity to stripes, small ones = WSSV, big Japanese ones = WSSV, big Japanese market heads-onmarket heads-on

Shrimp as a CommodityShrimp as a CommodityShrimp as a CommodityShrimp as a Commodity Traded daily as a commodity by many Traded daily as a commodity by many

exportersexporters developing nations to industrializeddeveloping nations to industrialized similar commodity characteristics:similar commodity characteristics:

price cycles, fluctuating supply/demandprice cycles, fluctuating supply/demand marginal producersmarginal producers capital requirementscapital requirements contracts, futurescontracts, futures fluctuating exchange ratesfluctuating exchange rates short/long positionsshort/long positions overproduction, speculationoverproduction, speculation

shrimp actually considered a medium for shrimp actually considered a medium for foreign exchange! Shrimp instead of clams??foreign exchange! Shrimp instead of clams??

Shrimp as a Shrimp as a CommodityCommodityShrimp as a Shrimp as a CommodityCommodity

Early development was the result of Japanese Early development was the result of Japanese trading companies and American importers trading companies and American importers urging developing nations to go for it in the urging developing nations to go for it in the 50’s and 60’s50’s and 60’s

currently U.S. shrimp production only fills currently U.S. shrimp production only fills one-third of the demandone-third of the demand

increase in demand is 3x faster than all increase in demand is 3x faster than all meatsmeats

downturns in price are usually 4-year cycledownturns in price are usually 4-year cycle

Price CyclingPrice CyclingPrice CyclingPrice Cycling Shrimp is a world-traded commodity, principally Shrimp is a world-traded commodity, principally

in U.S., Japan and Europein U.S., Japan and Europe Not considered solely as a commodity due to 1) Not considered solely as a commodity due to 1)

marketed by brand; 2) packaged at source of marketed by brand; 2) packaged at source of production in the container in which it will be production in the container in which it will be finally soldfinally sold

Also: number of colors, sizes, species set Also: number of colors, sizes, species set shrimp apart from customary commoditiesshrimp apart from customary commodities

difficulty lies in delivering a uniform product difficulty lies in delivering a uniform product against futures contractsagainst futures contracts

Shrimp Price CyclingShrimp Price CyclingShrimp Price CyclingShrimp Price Cycling Shrimp prices, as mentioned, are cyclical and Shrimp prices, as mentioned, are cyclical and

subject to a variety of influences (as with any subject to a variety of influences (as with any commodity)commodity)

prosperous and recession years match shrimp prosperous and recession years match shrimp pricesprices

really based on consumer discretionary really based on consumer discretionary incomeincome

price breaks follow sizeable accumulation of price breaks follow sizeable accumulation of secondary and substandard quality productsecondary and substandard quality product

better quality control will reduce extent of better quality control will reduce extent of cyclingcycling

International International MarketingMarketing

International International MarketingMarketing

Shrimp is the most important seafood species Shrimp is the most important seafood species entering international trade - about 20% of the totalentering international trade - about 20% of the total

about one-third of its production enters the intn’l about one-third of its production enters the intn’l tradetrade

Global production ~ 3 billion MTGlobal production ~ 3 billion MT 40 countries produce (15 produce 80% of total)40 countries produce (15 produce 80% of total) principal nationsprincipal nations: India, China, U.S., Indonesia, : India, China, U.S., Indonesia,

Thailand, Taiwan, MexicoThailand, Taiwan, Mexico U.S., Japan, Europe consumes over 50% of final U.S., Japan, Europe consumes over 50% of final

product (what is common among these?)product (what is common among these?)

International Marketing of International Marketing of ShrimpShrimp


At least 25 species enter world tradeAt least 25 species enter world trade in Latin America, best prices are found for 21/25 - in Latin America, best prices are found for 21/25 -

41/50 (best are for 31/35 and 36/40)41/50 (best are for 31/35 and 36/40) prices depend on size of individual shrimp, quality prices depend on size of individual shrimp, quality

and sourceand source prices affected by the quality record of the prices affected by the quality record of the

producer/processorproducer/processor marketing complicated due to: number of marketing complicated due to: number of

countries involved, size ranges, species, product countries involved, size ranges, species, product forms, marketsforms, markets



Processor is the link between the producer and the Processor is the link between the producer and the marketmarket

70% originates developing countries and all must 70% originates developing countries and all must be processedbe processed

farmed or capture fisheries all processed the same!farmed or capture fisheries all processed the same! processing has two stages: 1) turning the shrimp processing has two stages: 1) turning the shrimp

into a form in which it can be traded as a into a form in which it can be traded as a commodity and 2) changing it from a commodity commodity and 2) changing it from a commodity into a product form that can be market-driven (e.g., into a product form that can be market-driven (e.g., peeled, cooked, IQF)peeled, cooked, IQF)



Most processors are now covering both Most processors are now covering both steps (in the past Step 2 was a steps (in the past Step 2 was a U.S./Japan/European task)U.S./Japan/European task)

Step 2: value addingStep 2: value adding packaging is now improving in packaging is now improving in

developing nations and refrigerated developing nations and refrigerated vessels are availablevessels are available

air shipments of fresh and live product air shipments of fresh and live product are becoming more noticeableare becoming more noticeable



International trade almost exclusively takes place International trade almost exclusively takes place between importer and exporterbetween importer and exporter

financing provided by the importer who opens an financing provided by the importer who opens an irrevocable letter of credit (LC) in favor of the irrevocable letter of credit (LC) in favor of the exporterexporter

importers are marketers themselves and usually sell importers are marketers themselves and usually sell to wholesalers, distributors, re-processors , to wholesalers, distributors, re-processors , restaurant chains and supermarket chainsrestaurant chains and supermarket chains

financing within the producing country is often financing within the producing country is often provided by the exporter who finances the provided by the exporter who finances the processor, who finances the farmerprocessor, who finances the farmer

all told, major burden falls on importerall told, major burden falls on importer



Exporter may be a processor or a farmer or an Exporter may be a processor or a farmer or an independent third party who takes financial independent third party who takes financial responsibility and communicates with importerresponsibility and communicates with importer

many governments require that prices be set many governments require that prices be set before shipmentbefore shipment

others set minimum sales prices and often quality others set minimum sales prices and often quality parametersparameters

all shrimp move through the same subsequent all shrimp move through the same subsequent channels of distribution to major markets: import channels of distribution to major markets: import function is the same in all marketsfunction is the same in all markets



Importer may purchase shrimp from foreign traders Importer may purchase shrimp from foreign traders on an outright basis, paying for the purchase at full on an outright basis, paying for the purchase at full invoice value either at the time of shipment or upon invoice value either at the time of shipment or upon passage by the FDApassage by the FDA

may work on a consignment arrangement whereby may work on a consignment arrangement whereby an advance is made to the exporter by means of an an advance is made to the exporter by means of an LC (letter of credit)LC (letter of credit)

in some cases the importer acts as a sales agent in some cases the importer acts as a sales agent (broker) for the exporter and collects a commission(broker) for the exporter and collects a commission

importers can also make pre-season advances to importers can also make pre-season advances to producers (therefore tying up their production)producers (therefore tying up their production)

it is by this means that the Japanese typically it is by this means that the Japanese typically maintain a strong grip on Asian sourcesmaintain a strong grip on Asian sources

Importance of Supply as it Importance of Supply as it Affects PriceAffects Price

Importance of Supply as it Importance of Supply as it Affects PriceAffects Price

Availability of supply determines the Availability of supply determines the direction shrimp markets will takedirection shrimp markets will take

level of supply determines prices level of supply determines prices prices as they relate to competing prices as they relate to competing

products, determine demandproducts, determine demand if not for aquaculture, world shrimp supply if not for aquaculture, world shrimp supply

would have, by now, levelled offwould have, by now, levelled off Question now:Question now: Can supply keep up with Can supply keep up with

demand?demand?

Importance of Supply as it Importance of Supply as it Affects DemandAffects Demand

Importance of Supply as it Importance of Supply as it Affects DemandAffects Demand

Major growth in demand is not in Major growth in demand is not in areas that produce shrimpareas that produce shrimp

major growth will come in major growth will come in aquaculture as capture fisheries aquaculture as capture fisheries become more cost-prohibitivebecome more cost-prohibitive

The Effect of Foreign The Effect of Foreign ExchangeExchange


Again the big markets for shrimp are: U.S., Japan and Again the big markets for shrimp are: U.S., Japan and EuropeEurope

Japanese and U.S. shrimp markets are Japanese and U.S. shrimp markets are interdependentinterdependent: : prices prevailing in one affect the otherprices prevailing in one affect the other

fluctuations in each country’s rates of exchange are bound fluctuations in each country’s rates of exchange are bound to cause a reaction in both markets and elsewhereto cause a reaction in both markets and elsewhere

even should the value of the U.S. dollar decline on the even should the value of the U.S. dollar decline on the foreign exchange market, it remains unchanged in buying foreign exchange market, it remains unchanged in buying power within the U.S.power within the U.S.

if the $ is strong, people want to sell shrimp thereif the $ is strong, people want to sell shrimp there

low $ and yen values favor Europelow $ and yen values favor Europe



If $ value is low and product flows to Europe, it must If $ value is low and product flows to Europe, it must be heads-onbe heads-on

increased flow to major markets (U.S., Japan, increased flow to major markets (U.S., Japan, Europe) means decreased supplies in minor marketsEurope) means decreased supplies in minor markets

result: prices stay firm in minorsresult: prices stay firm in minors because the U.S.$ is the world’s medium of because the U.S.$ is the world’s medium of

exchange, U.S. importers don’t worry about exchange, U.S. importers don’t worry about changing valueschanging values

Japanese continuously worry about foreign exchange Japanese continuously worry about foreign exchange markets, future valuesmarkets, future values

Marketing Shrimp in the Marketing Shrimp in the U.S.U.S.


Marketing of shrimp involves everything Marketing of shrimp involves everything (production (production consumption) consumption)

better price is reward for quality better price is reward for quality product, proper packaging, timely product, proper packaging, timely delivery, accurate sizing, honest weightdelivery, accurate sizing, honest weight

final selling price is the determinant of final selling price is the determinant of profit or lossprofit or loss



75% of shrimp is consumed outside the 75% of shrimp is consumed outside the homehome

current growing trend is eating in (at current growing trend is eating in (at home) = more packaging, different forms home) = more packaging, different forms of presentation (cooked, breaded, etc.)of presentation (cooked, breaded, etc.)

Where should the added value be done? Where should the added value be done? In the markets? Or at the source?In the markets? Or at the source?

For now, it’s in the marketsFor now, it’s in the markets target now: the supermarketstarget now: the supermarkets

Seafood Marketing (Shrimp) IntroductionIntroduction Hundreds of species of salt water shrimp in the...

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