Our 2016 Outlook For Oysters

As more consumers become acquainted with oysters, more restaurants are taking advantage of the trend. Oysters are becoming more ubiquitous than ever, and it shows no signs of stopping. These days, they’re no longer making a comeback. Instead, they’re taking center stage. So what’s next for the oyster in 2016?

MARKET TRENDS

The growing petite oyster market

Over the last three years, the demand for oysters has accelerated noticeably. This trend can be attributed to a number of reasons, but a main one is the popular use of oysters during Happy Hour. More restaurants are employing this tactic to draw customers in or drive alcohol sales. These “Dollar Oyster” deals can now be found at the local pub or even the neighborhood pizza joint.

In the past, Dollar Oyster selections were typically commodity oysters like Blue Points, Chesapeakes, or Malpeques. The cost of these oysters allow the dollar deal to be worthwhile. However, as diners become more oyster-saavy, restaurants are looking to make Happy Hour selections more exciting, thus creating a market for petite oysters.

Petite sizes cost less than their Select counterparts, so with this lower cost option, restaurants can offer premium varieties like a Cape Cod oyster during Dollar Oyster happy hours. Aside from happy hour use, this option has also created an opportunity for restaurants that are more cost-sensitive to have quality oysters on their menu. There seems to be a growing preference for smaller oysters too, which could be driven by newer oyster eaters uncomfortable with larger meats.
 

2016 IMPLICATIONS

Growers have definitely taken advantage of the petite market because it allows them to sell their oysters sooner, sometimes too soon. Depending on the farm, this could mean less Select sized product or running out of oysters before their fall peak when quality is best. It is illegal to serve petite East Coast oysters in certain states like Massachusetts, so please check your local regulations. The petite oyster market is here to stay, and we will probably see more customers shift to this lower cost option with rising freight costs and more pervasive dollar oyster deals.

The spread of oyster aquaculture to the South

PHOTO BY RUSH JAGOE FOR CNN.COM

PHOTO BY RUSH JAGOE FOR CNN.COM

With wild oysters on the decline, southern regions have looked to oyster aquaculture as an option to bring oysters back. In the Chesapeake Bay, oyster aquaculture thrived in Virginia because it was fairly straightforward to obtain a private lease. So, when Virginia’s oysters were depleted, watermen were able and open to adopting aquaculture. In Maryland, however, it was not until the last few years when leasing was finally streamlined. Since then, “[Maryland] has issued 111 oyster farming leases across 2,240 acres of waters.” This rapid growth of oyster farms has caused conflict with Maryland’s watermen, who argue farms limit the areas they can access, and with residents of waterfront homes, who find the oyster cages to be unappealing.

In the Gulf, the first oyster farm was started in 2009. Point aux Pins Oysters of Grand Bay, Alabama is now the largest Gulf off-bottom oyster operation. More watermen are now exploring aquaculture and trying to figure out how to distribute their oysters to the half-shell market, a market opposite of Gulf oyster culture where oysters are seen as commodities. The first major Gulf oyster hatchery also opened this year, which will provide more opportunities to explore aquaculture in the region.

2016 IMPLICATIONS

We will most likely begin to see more half-shell friendly oysters from the southern states. Regions with wild fisheries will transition more to oyster aquaculture despite conflicts that will need to be resolved by state regulators. Demand for southern oysters in the Northeast will remain very limited, but the south may see a shift in the commodity oyster culture in the near future.

chesapeake brand 4.png

New oysters and brands will continue to come on to the market. Marketing will be key for farms to carve out a niche position in a saturated space, and to attract loyal consumers and chefs.

SUPPLY TRENDS

East Coast supply potentially very limited in winter and spring

In 2015, we saw one of the worst winters in New England. Unfortunately, this caught a number of farms off guard. Some oyster growers had to endure significant losses while others had to deal with winter kill in the spring. These lost oysters would have been sold as markets in the fall that usually create a fall glut. There doesn't seem to be as much around as usual this time of year, which could be a sign that growers have lower inventories.

icebergs on the beaches of cape cod. Photo by Dapixara via the washington post

icebergs on the beaches of cape cod. Photo by Dapixara via the washington post

2016 IMPLICATIONS

With less to sell, growers will run out faster earlier in the year. This scarcity will become noticeable in the spring and summer when demand is outpacing supply and growers are either sold out or waiting on their seed to reach market size. Any seed lost this past winter will also affect the amount of supply in fall 2016. East Coast supply outside of New England will depend on the weather. If bad winter weather immobilizes areas like the Canadian Maritime or the Chesapeake, we will see a significant shortage again this coming winter.

More potential West Coast closures and stricter regulations

Warm water temperatures caused many area closures on the West Coast this past summer, which limited Pacific oyster supply. If areas were not closed, oysters showed signs of spawn and quality was not ideal. In British Columbia, illegal sales of shellfish caused a high reported number of shellfish illnesses. New England had a fairly quiet summer season aside from the closures in Katama and Duxbury.

2016 IMPLICATIONS

If the global warming trend continues, water temperatures will also continue to rise causing more area closures and triggering oysters to spawn earlier. West Coast supply will be limited again during the summer. Proposed protocols and regulations to test oysters might be implemented in regions like British Columbia, but the process could be cumbersome, potentially limiting product coming out of those areas. In Katama and Duxbury, new vibrio regulations are being discussed like a one-hour harvest window. Again, these rules will make it harder for growers to harvest and supply the growing demand during the busy summer months.


And that's a wrap on 2015! We hope Mother Nature is kind to us next year, but we'll just have to wait and see. Aside from all the oyster and shellfish talk, though, there's one important thing we have to acknowledge: our growing and amazing community.

Thank you for an awesome year. We wouldn't be able to do what we do without your support! Enjoy the holidays and we hope you get to ring in the new year with some oysters!
 

Why is there an East Coast oyster shortage?

As an oyster company, it's sad when we don't have oysters to sell. We don't like telling customers, "No, not today," or "I can only offer you one bag," but the reality is, this year's winter and spring East Coast oyster shortage has been more prevalent than years past. Everyone along the supply chain is feeling it -- the growers know it, we know it, our customers know it, and everyone is asking why. So what is causing the market's East Coast oyster shortage? What is different this year than years before?

There's always the weather

Every year, oyster supply tightens during mid-winter through early summer. When the waters get colder, the oysters slow their metabolism significantly because there is no food. Algae is least abundant in winter because cold water temperatures inhibit their reproduction and growth. Without food in the water, the oysters survive on their fat reserves to get through the winter.

Weather-related issues directly affect the oyster supply.

This year, weather played a huge role as the lead antagonist. The East Coast was barraged with snow, cold winds, rain, and even set some record lows in March, only a month away from spring! Weather-related issues directly affect the oyster supply. If there is ice, it can be difficult or dangerous to harvest (see our article on ice fishing); if there is strong wind, it is unsafe for fishermen to get out on the water; and if there is heavy rain, areas are subject to rain closures prohibiting harvests, which may last as long as 3-5 days.

frozen river.jpg

Cold water temperature is also an accomplice in this oyster melodrama. Algae thrives in warmer waters, and the late spring we are experiencing is delaying algae blooms that nourish the oysters to grow. In New England, this affects many farms because typically, growers decide to sell all their market ready product in the winter before the next batch of oysters reach market size. Low inventories in the spring lower labor costs and ensures a better yield by avoiding possible mortality on the farm. Since waters are not warming, growers are now out of last season's inventory and waiting on this season's oysters to grow.

Weather issues, however, is not new news. Yes, weather this year has been really bad (it's hard to ignore climate change), but we as an industry have been able to manage through tough weather in years past without setting off alarm bells across the market. What is different this year is added regional and market conditions that are also applying pressure to the market like a domino effect, further compounding the oyster shortage.

Gulf oysters are nonexistent right now

Just 4 years ago, the Gulf led the country in the production of oysters, accounting for 59% of the national total according to the EPA. Then, in the same year, the Deepwater Horizon oil spill happened and has been wreaking havoc on the oyster population since. Contrary to popular belief and media coverage of animals covered in oil, the oysters in the area are not dying because they are smothered in black residue. After the spill, floodgates in Louisiana were opened to prevent the oil from contaminating the estuaries and marshes. This was effective in keeping the oil at bay, but a ton of fresh water was released into the Gulf, affecting the salinity levels of the water. This fresh water is problematic, and it's causing oyster deaths and preventing recovery.

Ken Brown, a Louisiana State University biologist, said he and his colleagues haven’t seen any major effects from the oil on adult oyster mortality rates, but when fresh water dilutes salinity levels ‘below 10 parts per thousand, and especially if you get below 5 parts per thousand, then oysters have problems.’
— Nola.com, "Louisiana Seafood: In wake of BP spill and river diversions, oysters show strain"

In other parts of the Gulf, like Texas, public oyster season ended April 30th, and supply will be limited to private leases with historically low levels of production. An algae bloom found to cause toxins in shellfish forced area closures in March, and the three-year long drought is adding too little fresh water to dilute the high-salinity waters of the Gulf.

Supply needs to come from somewhere

So, the Gulf is out of oysters. Where does everyone turn to?

The north, of course! Colder waters mean less year-round closures; oyster farms are popping up left and right. The oysters may be slightly more premium, but hey, they're oysters, and they taste great!

Just like that, demand spiked overnight for oysters from the Chesapeake. This put pressure on the Mid-Atlantic oyster supply that caused more supply shortages. The oyster population in the Chesapeake is definitely recovering from implementing harvest regulations and numerous efforts to improve water quality, but like the Gulf, public oyster beds also closed March 30th in Maryland and April 30th in Virginia. The harsh winter and strong spring winds have limited Mid-Atlantic supply, and now, oyster production will need to rely on private leases.

What we are seeing at Pangea

Blue Point Oysters are a staple at Pangea Shellfish. Last fall, we saw an average of 30,000 Blue Point Oysters leave our shop each week. Since the oyster shortages in the south, we now sell an average of 80,000 Blue Points per week! The supply we're getting isn't even close to covering all our demand, but given the weather conditions and all the factors explained above, it's hard to come up with more oysters.

Prices are also at a record high. We have never charged as much as we have on Blue Points. A shake-up of a major producer in Connecticut caused prices to rise by putting more pressure on other producers in the state. We hate accepting price increases, too, but sometimes it's the difference between having product for our customers or no product at all.

Despite supply challenges, outlook is positive

Supply will steadily increase from now until fall... we will see the market flooded with market size oysters come September.

In our thirteen years of operation, this year was the first time we had a week without any Canadian oysters. Our inventory looked like shit. But the good news is, the Canadian oysters are now back, and it's a reminder that production will continue to improve as temperatures get warmer and spring growth happens. Supply will steadily increase from now until the fall, and because of the late spring, we will see the market flooded with market size oysters come September.

Demand is also at an all-time high as the oyster is experiencing a renaissance. We will continue to see demand pressures on supply during these mid-winter and spring months, but outside of these months, growing demand is great news for our industry. We appreciate your patience and understanding as we get through these tight months. And we promise you, oysters are coming. Yes, they are.

Special thanks to John Brock from Pappas Restaurants and Mike McGee from Chincoteague Shellfish for contributing to the research of this piece.