Ask anyone from Tucson to Trenton what comes to mind when they hear “Maine” and the next word out of their mouth is bound to be “lobster.”
Maine lobster as a brand evokes the quality, purity, and traditional livelihood people associate with Maine’s quality of life more than any other marketing tool. Yet research by the Maine Lobster Promotion Council indicates that this mainstay industry is not doing as much as it can to protect that brand.
As much as 70 percent of lobsters landed in Maine are heading to Canada, where they are being processed and shipped back to the U.S. as Canadian product. And purveyors of lobster products everywhere are benefiting from Maine’s cachet, even if the product isn’t Maine lobster. Adding to the problem, the Maine lobster industry’s marketing efforts over the past decade have generally failed to recognize the needs of both the market and the industry’s own structure.
The news isn’t all bad, though. Industry, economic development agencies and government all see the urgency in stopping the hemorrhage of lobsters going to Canada and are working on a strategy to turn things around. Meanwhile, the secure future of “Maine Lobster” as a brand teeters in the balance.
Without a Bib
It may be difficult to see from the vantage point of a shore-dinner restaurant that only a fraction of lobster buyers actually like hammering away at a hard shell, or having to suck meat from the skinny legs until they’re blue in the face. Market research conducted by the Maine Lobster Promotion Council indicates most of today’s lobster consumers prefer convenience – they want the sweetness and succulence of fresh lobster, but without the pliers and bib. In the fast-paced era of working households, convenience rules.
The same is true for restaurants, where the requirement for high volumes of quality lobster meat isn’t efficiently met by in-house picking of meat from shell.
Maine produces just three or four million pounds of processed product annually at two processing facilities, Cozy Harbor and Portland Shellfish Co. The bulk of Maine’s lobster product is high-volume, live lobster shipped in crates, where profit margins are slimmest. Some are shipped domestically and overseas, but the majority of those crates are trucked to Canada.
Fifteen years ago, only one percent of Maine lobster went to Canada. Even with dramatic increases in domestic landings since 1990, that figure has risen to 70 percent today.
Maine dealers tend to keep hard shells to sell in the U.S. mostly, live, and ship the soft shells, or shedders, to Canada for processing. Meanwhile, Canada, with twice the lobster landings of Maine, also ships hard shells into this country. Between processed meat and live hard shells, Canada is the 800-pound gorilla in the industry. But “Maine” is still the preferred brand. How long that can last is a good question.
“We estimate that seven out of every eight lobsters sold live in the U.S. are Canadian,” says Kristen Millar, executive director of the Maine Lobster Promotion Council. “In fact, when people walk into the grocery store and see “Live Lobster, Product of Canada,” they’re going to say, ‘Huh, Who knew? Wow.’ Enter the competition, and potentially our brand loyalty drops.”
The real value is in the processing. Lobster meat is coming back home stamped “Product of Canada” in accordance with country-of-origin food labeling requirements coming into effect last April. By the Maine Lobster Promotion Council’s estimate, Canada’s processed lobster sales were $211 million in 2003. How long will it be before consumers notice that they are enjoying Maine lobster from Canada?
Third World economics
Whether the cargo leaving Maine contains live lobster or yellow birch logs, when Maine ships its natural resources away in their lowest-price, raw form to be finished elsewhere it’s what economists call “Third World economics.” Why ship raw materials away and let others make the conversion to high value end product?
“We’re not the first people to tackle this issue,” says Jack Cashman, Commissioner of the Maine Department of Economic and Community Development (DECD). “All over America, industry is facing the same issues. They can’t compete with Third World labor prices. If we don’t have advanced technology and innovative ways to produce product, we will be out-competed by cheap labor. The only way we’re going to compete is having the best technology.
“We used to have seafood processing plants up and down the coast,” Cashman recalls. “Until I came here (DECD) I had no idea how far we’d sunk in terms of processing fish and lobster. It’s disturbing. What has happened to groundfish processing is also true for lobster: we are losing our shoreside processing capability.” Add to the mix the heated competition from Canada, and Maine’s lobster industry has an uphill fight.
How did this go undetected? One explanation might be the fragmented nature of Maine’s lobster industry, which is characterized by small businesses and individuals, not large international companies that control the market. Small business people have been making reasonable money and taking care of their families and communities. But no one was overseeing the big picture.
Another reason trucks have been heading to Canada is that dealers say they can’t find a market here for shedders, while Canadian processors open their doors. Maine processors claim they are at a competitive disadvantage because Canada has smaller size limits than Maine lobster – that is, Canadians are permitted to catch and process what in Maine would be considered “shorts” – lobsters too small to legally possess and process here.
Two solutions are often proposed. One would be to adapt Canada’s standards and allow Maine processors to possess shorts, even changing Maine’s minimum size gauge to match Canada’s. The other would maintain the strict size and processing standards that distinguish Maine from the competition, and give Maine’s lobster fishery its reputation as a model of sustainability and self-governance. Advocates of this second perspective suggest that allowing shorts to enter Maine’s supply stream is sinking to a lower common denominator, and diminishing the image of quality and integrity people currently associate with Maine Lobster as a brand.
“Maine has a certain cachet, of industrious, hard working people and a pristine state environment,” says Cashman. “We ought to take advantage of that with our products.”
Defending Maine Lobster
Processing is one part of the problem; branding is another. Go anywhere outside of New England and you’re bound to find restaurants and markets selling “Maine lobster.” But 90 percent of the time it’s not from Maine and the seller doesn’t know where it’s been caught or processed.
“It’s a situation we’d like to correct,” says Cashman. “We want to protect our brand, not homogenize what we catch here with lobster caught elsewhere. To protect the Maine brand we want to increase processing here so that we are shipping ‘Maine caught and processed’ lobster and others are no longer able to make that claim.”
John Hathaway is the principal of a groundbreaking venture that will adapt new food processing technology to lobster. Hathaway and the Town of Richmond have received a $400,000 jump-start from the federal department of Housing and Urban Development, in the form of a Community Development Block Grant, to convert the old Etonics shoe factory into a state-of-the-art lobster processing plant that will eventually employ 20 people. Fortunately things have developed quickly in this venture, since a Canadian competitor is bringing similar technology online as well.
The process of forming a new company has “a lot of moving parts” says Hathaway – equipment to buy, building renovations to make, engineering, leases, paperwork, developing a marketing plan with logos. Hathaway’s venture is new enough that by mid-October he hadn’t fixed on the right name for it.
“We know people around the world love Maine lobster,” says Hathaway. “It’s the most prestigious brand in the world. We want to add value to it in Maine, and hopefully find market penetration around the world.”
Currently, the only processed lobster available on the market is cooked and shelled. The process Hathaway uses is hydrostatic – it employs water pressure to separate meat from shell. The technology is not new, but its application to the lobster industry is. It has been used for oysters and on several other foods (avocados, chicken, lunch meats). There is no heat, nor any Pasteurization or additives, and because the process kills bacteria, the end product is fresh, raw lobster with a 45-day refrigerated shelf life.
“You can’t find raw, fresh lobster now. If you want meat, it’s cooked and probably frozen,” says Hathaway. He’s staking his fortune on the notion that chefs and food service companies will prefer his product to pre-cooked or frozen. The new facility will be able to process 2,000 pounds of live lobster an hour. (“We are thinking of ways to use shells – got any ideas?” says Hathaway, only half joking.) At that capacity the plant could technically handle a lot of Maine’s lobster product. Whether it actually does depends on how much the company can sell on the other end. “We have to do a good job of marketing a new product that will revolutionize the way the world eats Maine lobster,” says Hathaway.
Last year, Maine landed 70 million pounds of lobster, but this year’s season probably will fall short of that. “I don’t make predictions until the last day of the season, but clearly we aren’t going to be at 70 million pounds again,” offers George Lapointe, Commissioner of the Maine Department of Marine Resources. Lapointe adds hypothetically, “If the catch goes from 70 to 50 million pounds (which is still twice the long-term average), that’s $100 million out of Maine’s coastal economy. So if this [Hathaway’s] processing venture can boost it back up in value-added – if you can process 10 million pounds and make $8 instead of $5 a pound – that makes a huge difference. And from a world market perspective, it modernizes a sector of the industry that has been overlooked.”
Processing represents one part of the total picture, however. Maine’s lobster industry is facing changes from every direction. There are threats from competition, from entry into the fishery, and consolidation at the dealer and processor levels. The good news is that the major problems are now known, and direct measures are being taken to address them.
John Hathaway credits Kristen Millar with getting the ball rolling. “She was the first person to ask the two key questions, ‘Who do we sell to, and what does the customer want?’ Nobody asked that before.”
It won’t be easy to shift 6,000 lobstermen and 300 dealers who have grown accustomed to doing things the same way for 100 years. But information – even information that surprises everybody – is critical to the industry’s survival. Now with the right information finally in hand and the spotlight focused on where to stop the bleeding, Maine’s lobster industry is on course to meet the challenge, with ventures like Hathaway’s well under way. If things proceed on track, the future looks bright. The alternative is for Maine Lobster – the premium product famous for its origins, quality, and value – to go the way of the Maine potato.