3 Critical Mistakes Shrimp Buyers Make

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· Each country that produces shrimp has ideal buying windows throughout the year.

· Much of the product in the United States has excessive moisture content that may undermine quality, largely the result of open-ended specifications.

· Sizeable grocery and restaurant chains should develop program business to get the best product at the best price.

Americans consume more shrimp than any other type of seafood. And imported shrimp makes up over 90% of the U.S. market. In order to supply shrimp to their customers, seafood buyers at grocery stores and restaurant chains need to navigate a complicated global supply chain. Buying massive quantities of shrimp is complex, and there are several pitfalls to avoid.

Here are 3 common mistakes shrimp buyers make:

1. Buying at the wrong time

In order to get the best price, shrimp buyers need to have comprehensive knowledge of each shrimp producing country. Warm-water species like vannamei and black tiger shrimp are grown in countries like Indonesia, India, Thailand, Vietnam, and Ecuador. Typically, shrimp farms have two or three crop harvests per year. These harvest cycles dictate shrimp price and availability. Normally, when availability is high, price comes down. Shrimp is a volatile commodity, and each country has purchasing windows that align to their crop cycles.

Each shrimp-producing country is constantly in flux, as there are a wide range of factors that determine price and availability: weather patterns, exchange rate, disease, trade restrictions, feed price, shipping costs — just to name a few! When buyers do not have expert suppliers to purchase at the right time for them, they might be overpaying.

Case Study:

In February 2017, we received a pricing request from a restaurant chain in need of shrimp. If they ordered in February, the market price of the raw material in Thailand would have been 144 baht per kilogram, or about $4.60. When this restaurant chain purchased shrimp in the key buying window less than two months later, the price for the raw material was 105 baht per kilogram, or about $3.30. This case study shows the importance of having a trusted shrimp supplier to act as your expert adviser. Programs between suppliers and buyers are the only way to remove this pricing risk.

2. Open-ended specifications

Specifications are parameters given by a customer for product processing. They define important characteristics in shrimp including size, coloration, moisture retention, and taste. The biggest mistake shrimp buyers make with their specifications is that they are not precise enough, giving processors room for interpretation. So-called “loose specifications” can lead to non-uniform product and major quality problems for buyers.

One huge mistake that buyers make with their specifications is that they do not properly define moisture levels. Moisture content is influenced by the time, nature and intensity of the soak. A “soak” is a mixture of salt, phosphates or non-phosphates, and water that enhances flavor and retains moisture in shrimp. Most buyers are aware of what soaking is but cannot identify a lightly soaked shrimp vs. a highly soaked shrimp. In our nearly 20 years of experience, this is due to how prevalent oversoaked product is within the U.S. supply chain.

How to Identify Oversoaked Product

Highly soaked shrimp has translucent flesh when cooked. It may also have a slimy texture or be extremely crunchy, and can release retained moisture when cooked. Another way to tell if a shrimp is soaked is by looking at the telson (the pointed part of a shrimp tail). Soaking will inflate the muscle tissue but the telson will remain the same size; highly soaked product will look too big for its own tail. Only experienced buyers can ensure that customer quality expectations align with specific producers.

3. Buying shrimp the wrong way

There are three common ways to purchase shrimp — program business, spot buys, and street business:

· “Program business” is where grocery store and restaurant chain buyers forecast their demand and partner with quality shrimp suppliers on an annual or semiannual basis;

· “Spot buys” are where a buyer is offered containers of finished product by an importer; and,

· “Street business” deals with product that is already imported and is sold by the case.

For larger operators, program business is more strategic than spot buys or street business. Program business allows buyers to build a sustainable and predictable shrimp business with reduced price volatility, in addition to being better able to dictate the specification that is critical to predict the quality of the product: the farms the product comes from, the way shrimp are harvested, and how the shrimp are processed. Shrimp programs allows vertical suppliers to anticipate sales and fulfill the order by purchasing high-quality material when market conditions are ideal. Program business is also the best way to ensure the product is fully traceable.

Program business is not meant for small-scale retailers and restaurants; the typical minimum quantity for a custom program is a full shipping container, or between about 30,000 and 40,000 pounds of shrimp. Many smaller chains, however, rely on distributors when they would save money by developing a program with an integrated importer.

Conclusion

In order to buy high-quality product when market conditions provide the lowest price, grocery and restaurant chains should work with an expert diversified vertical supplier to develop a program business with solid specifications. As one of North America’s largest shrimp suppliers, we understand these common mistakes and want to work with you to avoid them.

Learn more at www.rubiconresources.com