Wal-Mart's domestic shrimp sales jump 60%

"Wal-Mart's domestic shrimp sales will rise 60 percent this year and a company executive told trade officials last week that, despite its efforts to market American-cauht wild shrimp, there simply isn't enough domestic shrimp to meet consumer demand.

Peter Redmond, Wal-Mart's vice president and divisional merchandise manager for seafoof and deli products, testified before the International Trade Commission, which is trying to determine whether the domestic shrimp industry in the southern United States is injured or threatened with injury by the dumping of imported product on the U.S. market.

"We are taking advantage of the consumer's natural desire to purchase good with which he or she is familiar and wants to support," Redmond said. "By the end of 2004, I expect that our domestic shrimp sales will have increased 60 percent over our 2003 sales as a result of this new marketing program."

Wal-Mart's wild shrimp promotion program is so successful Redmond said the product is "flying out of the stores," even though there is about a 30 percent cost differential between farm-raised and wild-caught shrimp.

"One problem we are encountering with the domestic shrimp marketing program is that we cannot nearly get enough of the shrimp that we need. We only have one supplier for domestic shrimp,and even this supplier is having trouble providing us with the size counts that we order from him," said Redmond, who supervised Wal-Mart's purchases for seafood in the U.S. for the supercenter division, approximately 1,800 stores. Wal-Mart is the world's biggest retailer.

"We originally sought the supplier out to help us with our Gulf coast and state bags," he testified. "He did not seek us out. And we have never been approached by any domestic shrimp processor seeking our business or offering a program which would help us help them to sell their product. So it cannot be the price that we might offer to pay that is keeping companies from trying to do business with us."

Even if domestic plants were brought up to date, they still could not supply our largest-volume product, cooked shrim, he said. Shrimp rings are the company's biggest-selling, cooked shrimp item. A shrimp ring is a ring of shrimp that usually encircles a plastic bowl and contains a portion of cocktail sauce in the middle.

"There is no real U.S. production of this item," he said. "Therefore, imposition of antidumping duty on shrimp is going to increase the cost and our customer's cost of cooked shrimp without providingany benefit."

In 2004, Wal-Mark sold about $98 million of cooked shrimp alone, close to 2 million pounds. The company's total shrimp ring business in 2004 will be $26 million, Redmond said,. "We are not aware of any domestic capability," he said. "We need four million units. We doubt we can get 400. So then, I ask you, where will we get this product? If we put a tariff on this product --there is no domestic equivalent for it -- the only thing that will happen is the price of the item will go up. Therefore, the price that the consumer pays will go up."

Redmond says that Wal-Mart sympathizes with southern shrimpers, the company sells its products across the country and there are people in other states who will be impacts by any tariffs. "Those consumers, over time, have gotten very used to this product. People on fixed incomes buy shrimp that couldn't have done it seven years ago," he said.

Wild-caught shrimp can earn a premium if it is properly processed, handled, and marketed, he said. "Our customers are proving this to us every day, but we are only in the very early states of being able to take full advantage of the preference for wild-caught shrimp," he said. "Too many processors seem uninterested in taking advantage of this opportunity. Many others just cannot meet the quality standards that we and other retailers are insisting upon. That is a shame because there is a terrific opportunity out there for the domestic shrimp industry."

Wal-Mart always sold domestic shrimp, but for years it wasn't a very exciting item and it didn't appeal to very many customers, Redmond testified. "We thought about what the problem was, and we figured out that what we had to stress was the local nature of the product," he said.

In May 2003 the retailer started using a special plastic bag with a label that prominently read "Gulf shrimp" emblazoned across the front of it. Then over the clear portion on the front of the bag where you can see the actual shrimp was an outline of the United States.

"We marked "Made in the USA" across the front of it, and now you can find this package in 1,600 of our stores right now, clearly emphasizing the fact that it's Gulf hrimp," he said. "Once we saw how well this product was doing, we created new bags to separately feature Florida pink shrimp, Louisiana shrimp and Texas sized-shrimp."

"They've also put hte flags of Texas and Louisiana on their bags; for Florida they use a flamingo, a palm tree and a sun to help catch the customer's eye.

"In each of these three state bags, we are packing shrimp caught only in the waters of this state," he said. "These packages are found in many of our stores in each of these three states, and, once again, demand has risen considerably for hte shrimpnow that we are emphasizing its local origin."

The emphasis on doestic product also is helping the chain sell wild Alaska salmon. Redmond says Wal-Mart also should double its sales of Alaska salmon this year.

"The major difference insalmon marketing and our shrimp marketing is that the Alaska Seafood Marketing Institute, better known as ASMI, which the state of Alaska established, is putting promotional dollars behind this product," he said. "We have in-store promotions, we have signage, and we have advertising, things that draw attention to the consumer, point out the difference, and the customer is identifying with it."

from The Wave, December 7, 2004