August 25, 2013

Why isn't lobster cheap?

"[T]he wholesale price of lobster has collapsed."

Studies have shown that people prefer inexpensive wines in blind taste tests, but that they actually get more pleasure from drinking wine they are told is expensive. If lobster were priced like chicken, we might enjoy it less....

Since most customers don’t know what’s been happening to the wholesale price of lobster, cutting the price could send the wrong signal: people might think your lobster is inferior to that of your competitors.... “A low price creates suspicion.” This helps explain one of the interesting strategies that restaurants have adopted to take advantage of the lower price for lobster: they keep the price of lobster entrées high, but add lower-priced items—lobster bisque, lobster mac-and-cheese, a lobster B.L.T—to the menu. That way, they can generate more business without endangering lobster’s exclusive image.

Lobster has also stayed expensive because it makes other menu items, particularly seafood dishes, look more reasonably priced.... So any restaurant that cuts lobster prices significantly runs the risk of making that sesame-crusted tuna look too pricey.

33 comments:

Will said...

If anyone knows how to take advantage of this wholesale collapse while living in Texas, please let me know.

RecChief said...

most likely market forces are at work. Does the magazine serve a clientele that isn't affected by high prices? Do they exclusively serve a market that hasn't noticed the state of the economy for the last 6 years?

Nice to see that they were able to work in global warming, even though there hasn't been any warming in 16 years (see wattsupwiththat.com). Gotta maintain the narrative though.

LarsPorsena said...

Meanwhile shrimp is way up.

Paddy O said...

Interesting! There's a local pub that closed and re-opened a month later, with new management, a new name, and changed menu items (smaller menu, with some dropped items, and some added).

When I would go before I would generally get one of two different entrees. Of course, both were in the list of items they dropped. So what to get? I'm a bit of a picky eater, not so picky I won't eat what is given to me, but picky enough that there's a narrow range of what I really enjoy.

I saw one of the new items was a lobster grilled cheese. Really? I said to myself. I thought lobster was expensive. But this sandwich wasn't expensive at all. About the same as other sandwiches. I ordered it. It was delicious. But how so cheap? Now I know.

Left Bank of the Charles said...

Interesting, lowering the retail price might help raise the wholesale price. The New Yorker, of course, manages to come up with a theory of why that won't wok.

Titus said...

Personally, I think lobster tastes much better than other seafood. It is sweeter and more fab.

I fricking love lobsta rolls.

And I live left of the charles! Want to meet at Alive and Kicking Left? I would even go to Dolphin Seafood with you. It would be interesting to meet some in this hood who isn't a major libtard.

Bart Hall (Kansas, USA) said...

This is happening with other crops as well. The wholesale price of apples is so low that orchards are being cut down in many areas. Yet retail apples are at the same price (or higher) than five years ago.

Part of the problem is that primary producers (farming, fishing, forestry, ranching, etc) are price-takers whereas everyone from there out to retail are price-makers, usually operating on margin or mark-up. Thus it is that at the lowest level, the market price for perishable products is profoundly elastic -- it does not require much surplus to drive the producer price down, hard.

When you get to the restaurant world, it's a different gig. For the last couple of years more restaurants have folded than started, leading (for the first time) to a y-o-y annual decline in aggregate store numbers. If you sell fish you really do want some sort of an "anchor" product to make your higher-margin down menu item to appear cheap at what (by comparison to the lobster, or the tenderloin) seems to be a good price point. Most restaurants are struggling.

As a final, personal note: My family began in the shellfish business in 1870. Dragging oysters with the boat your great-grandfather built a century earlier is a thrill beyond description. And my cousins were always ashamed to bring lobster to school in their lunch pails because it was "poor people's food". They wanted balogna and Kraft slices on WonderBread, because it showed your family could afford to buy your lunch ... instead of just hauling it out of the ocean.

Rusty said...

back in the early eighties, when I worked in Newfoundland, that's a province of Canada, I'd go down to the docks and take my choice @ $2.00 canadian a piece.

EDH said...

"Why isn't lobster cheap?"

Obviously, you've never gone on a date with a lobster.

Xmas said...

What's funny is that lobster used to be the food poor people ate.

On Cape Cod, for example, poorer children of the baby boomer generation would eat lobster all the time. Because that's what they could afford...

Bob Ellison said...

If chicken were priced like lobster, we would enjoy it more. Chicken is amazing. And by the way, my hens produce their own body weight in eggs about every ten days or so.

Part of lobster's value, I think, comes from the fact that the meat comes from such a big, ugly bug.

If egg-lovers knew that the hen pushes the egg out of her pooper, omelets and mousse might be less popular. Especially chocolate mousse.

Roux said...

It's nothing more than a big crawfish and from what I've heard it's very hard to suck the heads.

Al&Bea said...

The premise is flawed. I live in coastal Maine. We can get lobster and scallops right off the boat and pay accordingly. Our enjoyment is not reduced because of the price. In the winter, we can go to a local well-known sea food restaurant and have two (not one but two) stuffed lobsters for about $20.00. The demand is great; the taste is great; and the enjoyment is equally great. Conversely, the same dish in Texas costs $60 to $80. Does anyone really think Texans enjoy this dish any more than wee do???
BTW - the secret local delicacy is fresh native shrimp - available for only two months a year.

MadisonMan said...

Maine Lobster isn't a very green meal if you live in the Midwest, or in California. It doesn't crawl across the country by itself, after all.

I eat lobster only at Champlin's in Pt. Judith, RI. Tried lobster once at Aunt Carrie's up the road, but I was so full from Clam Cakes that I couldn't finish it! (George's has lousy service)

AlanKH said...

Lobster got more expensive when the lobsters started fighting back.

http://www.youtube.com/watch?v=GWGh1YYT4vI

zefal said...

William Buckley commented on Firing Line if peanut butter were as rare and expensive the rich would serve it like it were caviar. Peanut butter is yummy but definitely not exclusive. I have two siblings who definitely view the world on how good something is based on its exclusiveness.

Toby said...

The price at the grocery store has gone down. I regularly see lobster 4 oz. tails for $4 each. That's the start of a great bisque for less than $18 (tax included).

Paul, Dammit! said...

I was a lobsterman in MA, and got out before the price went to hell. Good thing, too, as lobster is now cheaper to buy pound-for-pound than bologna.

The price dumped because lobster exports require live arrival at the destination, and only the highest quality lobster survives a day or so in a shipping cooler. As a result, there is a dichotomy at the wholesale level, in price. 'Culls' (damaged) and 'new shell' (literally, newly shed lobster that hasn't fully grown into it's new shell) don't have the appeal at the local dinner plate because they're missing claws or are 1/3 water when you crack the shell. They're only good for meat, which is VERY expensive relative to the whole animal price.

Anyhow, as a result of slightly decreased demand in Europe and a healthy harvest, the market is flooded with high-quality lobster in a low-price bracket that was formerly reserved for the crap that gets put in lobster rolls. This has been exacerbated by the fact that in most places lobster MUST be sold by a middleman under the law, which allows for wholesale price manipulation outside of normal economic forces.

I miss catching them, but I sure don't miss being broke!

donkey_ho-tee said...

visit Stew Leonard's in Norwalk, CT sometime... just had a $3.99 per pound lobster sale... and they will probably have one or two more before the end of October

tmitsss said...

Once lobster was so cheap it was served to prisoners and servants contracts restricted the number of times it could be served them in a week.

Maddie said...

@Will, set up a "lobster direct" site, using an existing distributor, otherwise you'll probably need lots of regulatory whatnot. You either keep the price fairly high, use the banging margins for a lot of marketing. Or else you do a landing page describing why lobster is so cheap. Headline "Weird New Company Sells Lobster at Half the Price!"

If it works my cut's a beer. If it doesn't, well it was fun, right?

jeff said...

"If lobster were priced like chicken, we might enjoy it less...." I wish chicken was still priced like chicken.

The Drill SGT said...

huge lobster harvests, believed by some to be a result of global warming, have glutted the market, sending prices tumbling further.

By some, it must mean you New Yorker low info readers.

ocean temps lag air temps by 500-1000 years. and don't try to tell me that it's real sunny o the ocean now so plankton are plentiful...

however, we deniers ought to leverage myth.

psst: more oil now that global warming has heated up all that oil shale...

psst: heating bills are lower now that air temps are warm all winter...

psst: good news, global warming means a lot of cheap beachfront in Newfoundland. Just don't buy the pricey stuff on the beach. plan for those 5 foot sea level rises :)

Patrick said...

1989 was a lobster surplus year in Newport, R.I. and my naval duties kept me at that port for a lot of that summer. I availed myself of all the lobster I could. In my experience, although there is badly prepared lobster, good lobster is much better than very good chicken.

Further, lobster prepared at a tapas joint in Newport and served with garlic butter after being cooked in herbs may well be the food of the gods. When it is only $15, it is certainly a blessing to a poor sailor far from home.

Patrick said...

1989 was a lobster surplus year in Newport, R.I. and my naval duties kept me at that port for a lot of that summer. I availed myself of all the lobster I could. In my experience, although there is badly prepared lobster, good lobster is much better than very good chicken.

Further, lobster prepared at a tapas joint in Newport and served with garlic butter after being cooked in herbs may well be the food of the gods. When it is only $15, it is certainly a blessing to a poor sailor far from home.

MarkW said...

If the wholesale price stays down, lobster will get cheap eventually. What will happen is that there will be cheap lobster specials at chain restaurants that aren't worried about image. And when that happens, it will be hard for the high-priced restaurants to maintain the perception of lobster as an exclusive, premium offering.

Robert Langham said...

Sounds like a trip to Perry Long's Lobster Pier is in order...just outside Surry, Maine. They will cook it for you on the spot.

harkin said...

Back in the early 20th century New England convicts almost rioted because they felt they were forced to endure lobster dinner too often.

Dana said...

I live in PEI Canada where lobster fishing is a big business. The fisherman were up in arms this year due to the collapse of the price.

The short history lesson regarding lobster is spot on. My grandfather was a farmer and they used to take the horses to the beach... they would drag the beach and crush all the lobster they could find then load it on a wagon and use it to fertilize the fields.

Squid said...

Perhaps for their next feature, the New Yorker can investigate why it is that diamonds, which are a semi-precious stone, cost so much.

And also why it's necessary for it to stay this way.

Skookum John said...

The reason there are so many lobster these days has everything to do with overfishing of cod, one of their major predators, and nothing to do with global warming.

Matt Nichols said...

This story makes me think of my dad. His father spent an inheritance on a lobster boat (in MA), and pretty much failed miserably at it. Largely because while he was a hard worker, he was a pathetic failure as a businessman. My 10-year-old dad of course was shanghaied into working the boat, and hated every minute of it.

He viewed lobster, until the end of his days, as "poverty food - the taste of failure." Because for years that's all his family ate for protein; the dregs of the catch of the day - if there was one.

He swore as a young lad to never eat lobster again, and he never did. No matter how fancy everyone else thought it was. :-)

Skookum John said...

"Lobſters be in plenty in moſt places, very large ones, ſome being 20. pound in weight; theſe are taken at a low water amongſt the rockes, they are very good fiſh, the ſmall ones being the best, but their plenty makes them little eſteemed and ſeldome eaten. The Indians get many of them every day for to baite their hookes withall, and to eate when they can get no Baſſe."

--Wood's "New England Prospect", 1636.