This has been a crazy year for lobster. All commodities, lobster included, have their ups and downs, and we have certainly had our ups and downs this past year. Right now, we are seeing historic highs for live lobster and lobster products, partly because of an the increased demand, but mostly because of limited supply. We don’t have a lot of lobster to make it through the ‘off-season’ and we want to be sure to be upfront with our customers about where things stand.
Almost exactly a year ago I wrote to you about the effects of the COVID-19 pandemic, and the tariffs effect on the lobster industry. It was substantial. Business and trade all but stopped, and lobster products that had been stored for Chinese New Years festivities flooded the market with live lobster and lobster products. Prices plummeted to historic lows. Restaurants weren’t buying. Cruise ships, with their massive ‘all-you-can-eat’ lobster tail buffets, weren’t sailing. There was concern in the industry about where product was going and what would be the impact on pricing.
When prices reached historic lows in May and June, retailers and other buyers seized the opportunity to sell premium-quality lobster at a reasonable price point. Those customers who had a craving for seafood could buy Maine lobster products that were easy to prepare for that ‘fine-dining at home’ experience during COVID. Grocery stores started selling more lobster products, and small ‘summer’ lobster shacks saw huge growth in the ‘fast-casual’ sement across the country. Prices went up in August based on retail sales and the fast-casual lobster shacks.
There was plenty of demand through the summer based on the new breed of buyers, then, in September, the Asian market came roaring back. When the tariffs were removed, it was the first time in two years the Chinese could buy Maine lobster without a 32% tariff. That pent up demand fueled sales through the balance of the year and producers and suppliers sold as fast as they could because they were worried about the risk of holding inventory. One new COVID 19 ‘variation’ could shut down the world again and no one was willing to take the risk. There were no pounds, tubes or freezers being filled to sell in the off-season. It was being sold as soon as it was caught because no one was willing to place the bet and lose their shirt (again). Couple that with a very busy Chinese New Year and we are left with very little product in the marketplace. No one has any product. We can usually buy product at a higher price when we need it, but that is not the case right now. We are rationing with our customers to keep them supplied until the fishing starts up in the Spring.
So once again this is a ‘perfect storm,’ which always seems to be the case with commodities. We are making bets on supply and demand, and trying to figure out where the price is going and trying to keep up. Normally we have enough product to last us through the winter, or can at least buy more at a high price to keep our customers satisfied. But due to the limited winter fishing, fears of holding inventory and the return of the Chinese demand, we are left with very little product and not a lot of options.
We are doing all we can to keep our customers supplied but wanted to make sure all understood the market forces we are currently navigating. Thanks for your understanding and we will work with you to figure out the best way to move forward.
