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 SCALLOP MARKET OVERVIEW
Scallop Market Analysis
As the only producer of cultured scallops on the west coast of North America, ISL has the ability to supply fresh scallops of a predictable quality and quantity throughout the year. Although the supply of scallops has fluctuated in the past, consumer demand has always absorbed the available supply.
A primary factor for increased consumption is the increasing health consciousness amongst consumers. Scallops are low in saturated fats and cholesterol and high in protein. All parts of the scallop body are edible; however, different parts tend to be consumed in different regions of the world. In North America, the adductor muscle is traditionally the only part eaten, with the rest of the body discarded. In Europe, Australia and Tasmania, the adductor muscle is usually marketed and eaten with the gonad attached. Japan utilizes the whole animal, and most of the product there is cooked in the shell prior to sale. Any body parts not sold for human consumption can be used as bait, or in poultry feed and fertilizer. In general, a summary of the product forms that marketed scallops take are as follows:
- Whole-live (shelf life of seven days);
- Whole dried;
- Eviscerated whole;
- Shucked fresh (shelf life of about 15-20 days);
- Shucked frozen (shelf life of about a year); and
- Value added forms (smoked, breaded, canned).
Scallop Wholesale Marketplace
The shucked product form is the most significant form for North American markets. A whole-live product form is the most desirable from the aquaculturalist's point of view, as processing costs are minimal. ISL previously developed a market for whole live scallops, which exceeds 5,000 lbs. per week into Vancouver. In previous years, ISL distributed through specialty wholesalers with particular expertise in selling to restaurants. In Vancouver these included, but were not limited to, Albion Fisheries, Tri-Star Seafood Supply, Pacific Rim Shellfish, Sea World Fisheries and Teamway Fisheries.
Traditional Scallop Distribution Channels
The traditional distribution channel for scallops in North America typically involves two to three stages. The most frequent channel is the scallop fisherman, who harvests wild scallops, selling product directly to a fish processor. The processor will then process the scallops and sell various products to restaurants, retail outlets, or brokers. Channel members maybe bypassed if a fisherman sells directly to a store; however, this happens very infrequently.
The type of channel used is typically a function of the proximity of the fisherman to the market, the market resources, and the quantity of scallops available from one source. If the fisherman is far from the market and has limited marketing resources, then this supplier would be prone to sell to a fish processor instead of directly to the market.
The availability of marketing resources is also a key consideration on whether a processor uses a broker. A further factor influencing the distribution channel is the relationship between the type of purchaser of scallops and the quantity produced. For instance, a small producer will be more likely to use a broker to sell to large food stores and less likely to use a broker to sell to a local restaurant that does not require a large supply. A large producer will be less likely to use a broker when selling to a food chain because it will be able to fulfill the store's supply needs directly.
Taylor Agreement
Traditionally, as described above, we have sold live scallops within the Pacific Northwest market. We recently received a $2.0 million order with Fanny Bay Oyster Co., a division of Taylor Shellfish Farms of Shelton, Washington (an international seafood distributor and the largest shellfish company on the West Coast). The order includes live scallops, fresh scallop meat and frozen scallops to be farmed in Edgewater Foods' Qualicum Beach, British Columbia, operation, and packaged and delivered in various scallop products (including live in-the-shell, frozen half-shell and fresh meat). As a result of this order, Fanny Bay will become the effective exclusive distributor of our scallops outside the European market. We believe this order will reduce cost and encourage additional wholesalers within the Taylor network to carry our scallops. In addition to the Taylor sales agreement, we also recent finalize an order to provide frozen scallop meat with roe to the European market. We believe that this strategic relationships with enable us to capitalize on the large European demand for quality seafood products.
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 SCALLOPS  MARKETING OVERVIEW BLACK COD GENERAL FISHERIES |
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