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Hampered by Trump's tariffs, Maine Coast targets emerging markets outside of China

The loss of the Chinese market to 25% tariffs on US sourced shellfish has forced the company to work extra hard over the past year to plug the gap and drive growth.

Live lobster supplier Maine Coast is targeting sales growth this year despite the body blow of losing the Chinese market to 25 percent tariffs on US-sourced shellfish and crustaceans.

"That's the goal. I'm pretty bullish on it, but I guess I won't know until December 31," Maine Coast Vice President of Sales and Marketing Sheila Adams told IntraFish. "We are trending towards it, which gives us great optimism."

Adams said Maine Coast is entering new markets that the company historically hasn't focused on, but the strategy is challenging given other US producers are also scrambling for new markets in the wake of the China shut out.

Since US President Donald Trump opted to take action a year ago to redress what he cited as unfair Chinese dealings in breaching his country's intellectual property rights and a massive imbalance in trade with China, the trade war has escalated, sucking in various non-related industries, including seafood.

Tariffs imposed by the Beijing government drove Chinese customers toward Canadian suppliers, who effectively were offering at a 25 percent discount.

Growth or contraction

"We had a choice to make; we could contract or we could say nope we're going to still focus on growth, and we chose the latter to focus on growth," Adams said.

The company has seen consistent growth from other Southeast Asian countries. Other emerging markets such as the Middle East are also developing.

Adams said it takes a lot of work to reduce the impact of the loss of one major market, because there is a need to make many more contacts and drive more growth across a much bigger customer base.

"Emerging markets take a while because cold-chain storage is expensive and they have to implement it on their side, and then certainly we are driving a lot of growth here domestically," Adams said.

Year-round business

Maine Coast, with sales of $57 million (€51.3 million), is headquartered in York, Maine, and has operations in Boston. On average, Maine Coast sells around 7 million pounds of live lobster annually.

Adams said her company's success has been built on a fast network of suppliers across the US and Canada.

The US lobster fishery tends to operate April to January and the Canadian fishery from November to June, allowing the company to offer product to customers all year round, which has helped to underpin growth.

Maine Coast gets around 60 percent of its business from exports to 29 countries. Of that, 40 percent goes to Southeast Asia. From that, 20 percent went to mainland China. The remaining 40 percent of Maine Coast's business comes from the US and Canadian markets combined.

On the export front, Maine Coast tends to work through brokers or other large importers-wholesalers distributors who then sell on to retailers.

"This is about volume and their ability to manage cold-chain storage," Adams said. "Our customers on the other side tend to look a little bit like us except they might do many products not just lobster."

Domestically it's a different mix for Maine Coast. About 75 to 80 percent of product sales are split roughly equally between wholesalers, distributors and foodservice operators. As much as 25 percent may find its way into large retailers, luxury hotels, casinos and resorts.

Adams said she is confident that sooner or later, the tariff situation will be resolved, and Maine Coast has done everything within its control to restart those business relationships in China once that happens.

But for the moment this may have to wait. Earlier this month,President Trump ratcheted up tensions further by indicating he could impose tariffs on Alaska salmon, pollock and cod amid frustration over US-China trade negotiations.

Speculation has swirled that the Chinese government may try to drag out the trade dispute, given there is a prospect of dealing with a new US administration in the not-too-distant future with an election scheduled for November next year.

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