Once stymied by China tariff, lobster dealer finds a workaround
Courtesy / U.S. National Oceanic and Atmospheric Administration
Maine Coast, the lobster wholesale company based in York, has found a way to make up for revenue lost when tariff's cut into China lobster exports.
Tom Adams, CEO of Maine Coast lobster wholesale company in York, said he’s found ways to make up revenue that was lost when a 25% tariff was implemented last July on imports of lobster to China.
The tariff has taken a bite out of his company’s sales, Adams said. Previously, China had been Maine Coast’s fastest growing market, but the tariff eliminated 80% of Maine Coast’s sales to mainland China.
Overall, the value of live Maine lobsters exported to China dropped 64% in July 2018, compared with July 2017, industry experts said last year.
China now gets most of its lobster from Canada.
Adams told Mainebiz an aggressive marketing campaign has resulted in significant sales increases in other parts of Asia and in the U.S., and in retention of European sales even though that market was also disadvantaged by an 8% tariff over Canadian competitors. Other Asian countries include Hong Kong, Korea, Vietnam, Singapore, Taiwan and Malaysia.
"While we are able to make up a lot of that sales volume in different markets, it was challenging,” Adams said.
“We’re shipping to quite a few destinations now,” he said. “And we had been. But about half of our sales to Asia had been going to mainland China, and the other half to all other Asian countries. So we grew sales into the other countries.’”
Maine Coast began shipping to mainland China in 2013 and increased sales every year since. In 2017, about 1.5 million pounds, comprising about 22% of his overall volume, went there.
By early 2018, in the first six months before the tariff was imposed, “we were at some of our fastest growth for that year-over-year period,” he said. “So we were expecting a banner year in China.”
When the tariff was announced, he said, “We quickly huddled and said, ‘What do we do now? How do we remain profitable?’ The quick answer was, we’re going to have take our sales and marketing efforts and be very aggressive in markets where we’re not disadvantaged due to tariffs. So we were able grow our sales dramatically in all of the other places we were selling.
Attacking it from several angles
Marketing strategies have included deploying his sales team.
“We asked them to focus their efforts in a more aggressive way in the other Asian countries,” he said. His team also increased the number of sales trips over the past year.
“I don’t necessarily travel on every trade show or mission. But this year I traveled more through Europe and multiple Asian countries,” he said.
He stressed that Maine Coast has also maintained attention to the China market.
“We haven’t foregone our Chinese customers,” he said. “We’re still in constant contact. They still want to work with us and we want to work with them. We’re hopeful and positive that the tariff will lift at some point. It’s a matter of when. And when they do, we want our Chinese customers to be thinking of us.”
Communications on a weekly basis include phone mail and social media, and continuing to make trips to China.
“We still exhibited at the Chinese seafood exhibition last fall,” he said. “And we’ve made other trips to mainland China since the tariff was put in place. It was and will be an important market.”
Maintaining those relationships “is incredibly important,” he continued. “You can do business from afar with each other through technology, but the value of meeting with someone face to face gives both parties the ability to work together more closely. It’s invaluable to have these interchanges. And we love for them to visit us.”
Maine Coast frequently hosts visitors from all over the world, he added.
“We encourage all our customer to visit,” he said.
Regaining the market share
Adams said he’s optimistic about regaining market share once the tariff is lifted, even though it will be challenging.
“Infrastructure in Canada was quickly expanded to meet demand in China, and that infrastructure is not going away,” he said. Still, he said, “We have heard from our Chinese customers that they want to do business with us. We have better logistics out of the U.S. We’re more experienced than newer Canadian shippers at worldwide exporting of live, perishable lobsters. But it won’t be without challenges and I’m sure a percentage of what used to be our sales will remain in Canada.”
Maine Coast continues to have a strong focus on domestic markets, too.
“I began in this company selling primarily to domestic markets,” he said. “We’ve never taken our eyes off the domestic market. The U.S. is still the biggest user of lobster products.”
Overall, Maine Coast ships to 29 countries. In 2017, the company sold 7.3 million pounds. In 2018, because of new marketing strategies, the company was able to maintain strong sales, selling almost 7 million pounds, he said.
“There’s a finite number of lobsters caught, and every year they’re sold somewhere. So this is a reallocation of who’s shipping where,” Adams said. “We as a company try not to think of our business in terms of months. We try to look toward the future and plan for years out. So our overall plan hasn’t changed. We’re bullish on the market. We think we have future growth potential both as an industry and an individual company.”
Adams, who founded Maine Coast in 2011, opened a live lobster storage area on the Boston Fish Pier in 2016. The 5,000-square-foot leased site has the capacity to hold up to 30,000 pounds of lobsters as a complement to the 150,000 pounds of lobster stored in four holding tanks at Maine Coast's York headquarters.
Maine Coast is a global distributor of North Atlantic live lobster headquartered in York. Operations in York and on the Boston Fish Pier provide rapid-ship delivery worldwide. Maine Coast has holding capacity for 180,000 pounds of live lobster, employing 50 people. The company has received numerous awards in the past few years including the 2015 US Small Business Administration's Small Business Exporter of the Year for Maine, 2016 Mainebiz Fastest Growing Mid-Sized Company, 2017 Inc. 5000’s Fastest Growing Private Companies and 2018 Maine International Trade Center's Exporter of the Year.
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