Seafood Markets & Trends

John Pollock Director of Merchandising - Seafood SYSCO Corporation Houston, Texas, USA

U.S. Economy

% change vs. prior year

2.50% 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% CPI - All Goods CPI - Food at Home CPI - Food Away from Home

Source: Technomic

Aug Sep Oct Nov

Meals Prepared Away From Home 65 50 45 60 55

% of each food dollar to Foodservice % of each food dollar to Retail

40 35

Source: Technomic * Projected

CY02 Projection 50.2% 49.8%

Segment Growth Forecast

% nominal growth

2002 2003

• • • • • • •

Restaurants and Bars Retails Hosts Travel & Leisure Business & Industry Education Healthcare All Other

•

Total Foodservice 3.4% 2.5% -4.0% -2.0% 2.8% 0.3% 2.4% 2.4% 3.7% 2.5% -0.7% 0.0% 2.5% 0.4% 2.5% 33% Increase !

3.0%

Practical Exercise

• Thinking out of the box Is the glass half full or half empty?

Maybe it is simply the wrong size!

Current Situation and Trends

• Customers are looking for true Value Added benefits – Labor savings • Peeled, cooked, deveined, etc.

– Waste / shrink control • IQF, portion control, re-sealable containers, etc.

– Unique recipe ideas • Flavors, breading/batter, presentation, etc.

Current Situation and Trends

• Still significant sub-standard product sold – Mislabeled – Short-weight – Count not in range – Poor quality • Toughest competition is not seafood – Poultry & Pork prices are lowest in 10 years – Beef prices are significantly lower over past 18 months – Politicians attempting to protect their constituents through political rather than scientific trade restraints

Current Situation and Trends

• Questionable application of regulations – California Prop 65

“Nearly all fish and seafood contain some amount of mercury and related compounds . . .”

– State imposed trade restraints different than FDA (Louisiana chloramphenicol statute)

Current Situation and Trends

• Abuse of trade laws with no true industry benefit – Crawfish – Atlantic Salmon – Blue Crab – Domestic Catfish – Domestic Shrimp

Current Situation and Trends

• Press sends mixed / confusing messages PeTA.com

BusinessWeek January 27, 2003 TIME Mother Jones E Magazine EPA February 2003

Current Situation and Trends

• Proliferation of third party regulators

Bringing Seafood to Market

• Encourage responsible fishing practices – Promote sustainable & renewable resources – Conduct business with reputable companies – Resist the temptation of short-term economic gain • Vigorously extol the benefits of all seafood – Do not promote one sector as better than another – Consumers look at the industry as a whole, any defamation implicates all of us • Promote free and open trade • Listen to your customers

Questions

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