Market Information
United States

Cruise Line Industry

Trends and Opportunities for Canadian Exporters 2005

Prepared by:
Elise Legendre
Marketing and Trade Officer
Agriculture and Agri-Food Canada
B.C. Regional Office
420-4321 Still Creek Drive
Burnaby, B.C. V5C 6S7
Telephone: 604-666-6344
Fax: 604-666-7235
Web site: www.agr.gc.ca
Email: atsbc@agr.gc.ca

In collaboration with:
Miami Consulate General
Miami, Florida, US
Sophie Legendre
Consul Senior
Margaret Cullen
Trade Commissioner

Table of Contents

Introduction

Industry

Trends

Opportunities

Next Steps

Appendix 1 - Cruise Line Purchasers, Chandlers, Distributors and Brokers Interview Summary

Appendix 2 - Marine Hotel Association (MHA) Trade Show Intelligence Exercise

Appendix 3 - Cruise Line Contacts and Resources

Appendix 4 - Bibliography

Introduction

This report's objective is to give an overview of the cruise line industry, trends that are shaping it and opportunities for Canadian agri-food suppliers. Information has been gathered though 4 distinctive activities:

• Interviews conducted with 21 cruise line purchasers, chandlers, distributors and brokers. (Interviews took place in March 2004 and were done in collaboration with Sophie Legendre, Consul and Margaret Cullen, Senior Trade Commissioner at the Canadian Consulate General in Miami.);
• Trade Show Intelligence exercise performed at the Marine Hotel Association (MHA) Trade Show held in Vancouver in April 2004;
• Observations made and participation of the author in the first Business Cruise Conference held on-board the Diamond Princess in September of 2004; and
• Documentary searches on the cruise line industry performed in June 2004 and in January 2005.

The report is divided into four sections: Industry; Trends; Opportunities; and Next Steps. Four appendices provide supplementary information from the cruise line purchasers and suppliers' interviews, information from the MHA trade show intelligence exercise, a list of cruise line industry contacts and resources, and a bibliography.

Industry

Facts and Figures: Cruise Industry in the World

According to a report from Datamonitor, the global sector of hotels, resorts and cruise lines reached a value of $315 billion in 2003. The cruise line sector represents 5.2% of this market segment⁽¹⁾. Its worldwide value was estimated at $16.2 billion in 2003. The global sector is forecast to grow at a compound annual rate of 3.8% between 2003 and 2008. The cruise line segment alone is forecast to achieve the strongest growth. Conservative estimates put the annual growth of the cruise sector at approximately 8%; more optimistic figures are as high as 20%. Therefore, the following projections using Datamonitor's 3.8% annual growth rate indicator for the global sector, should be considered as conservative.

Source: Calculations made from data in Datamonitor. 2004. "Global - Hotels, Resorts and Cruise Lines." P.16

After years of decline or near nil growth following the September 11 terrorist attacks in New York, and the wars in Afghanistan and Iraq, most cruise lines reported improvements in the 2004 season. It is expected that the growth trend should accelerate by 2006 when the first large wave of baby-boomers reaches retirement age⁽²⁾.

Two companies dominate the industry: Carnival Corporation and Royal Caribbean Cruises. Carnival is the largest in the industry with 47% of the market⁽³⁾. It owns six cruise brands: Carnival Cruise Line; Holland America Line; Windstar Cruises; Seabourn Cruise Line; P&O Princess Cruise Lines; Costa Cruise Lines; and Cunard Cruise Lines. Royal Caribbean operates two brands: Royal Caribbean Cruises; and Celebrity Cruises. Together, they own 70% of the market⁽⁴⁾. Both companies are involved in cruises and on-board casinos but Carnival also reports revenue from tour operators and resort hotels. Royal Caribbean identifies land excursions as a revenue source⁽⁵⁾.

Facts and Figures: Cruise Industry in North America

The number of passengers that have participated in a cruise in North America has gone from 8 million in 2000 to an estimated 11.4 million in 2005 a growth of 42.5% in 5 years or just under 8.5% per annum.

Source: BREA. 2004, "The Contribution of of the International Cruise Industry to the Canadian Economy in 2003", p. 16 and Cruise Lines International Association's website.

According to a study from the Business Research and Economic Advisors (BREA)⁽⁶⁾, 7.9 million of the 9.8 million cruise passengers in 2003, or 80.6%, embarked from a North American port. The remaining 1.9 million embarked from elsewhere in the world. The United States dominates the market claiming 72.4% of 2003 embarkations. Florida alone, with 4.68 million embarkations, reports nearly half of them (47.6%). As shown in the figure below, Canada, with 482,000 embarkations, holds just under 5% (4.9%).

Figure 1 - Embarkations in North America per Region of the World, 2003

Source: BREA. 2004 "The Contribution of the North American Cruise Industry to the US Economy in 2003", p.13

The majority of passengers (76%) that took part in a cruise in North America were residents of the United States in 2003⁽⁷⁾.

In terms of value, with gross revenues of $14.7 billion in 2003⁽⁸⁾, the North American market represented 90.7% of the worldwide cruise industry.

It is estimated that the cruise line direct economic impact in the US in 2003 was $12.9 billion, of which $873 million (6.8%) went to food and beverage industry suppliers⁽⁹⁾.

Facts and Figures: Cruise Industry in Canada

According to the study from BREA on the impact of the cruise industry on the North American economy, the number of Canadian embarkations was 482,000 in 2003. However, if passengers in transit or disembarking are factored in, passenger traffic amounted to 1.55 million arrivals for the same year. All together, 880 cruise ship calls were made in Canada⁽¹⁰⁾.

The West Coast, part of the popular Alaska cruise route, claims the bulk of the arrivals with 1.12 million between Vancouver and Victoria. Alone, Vancouver accounted for more than 60% of all passenger arrivals in Canada, as shown in the table below.

Source: BREA. 2004, "The Contribution of of the International Cruise Industry to the Canadian Economy in 2003", p. 23

The direct cruise-related expenditures in Canada are estimated at $965.3 million in 2003. The majority of these expenditures were made by the cruise lines ($616.7 million or 64%) and directly by the passengers ($301.6 million or 31%). Passenger expenses include money spent while in Canada as well as money paid to service providers when Canadians book cruises (travel agent commissions, airfare, etc). The crews spent the balance ($47 million or 5%), mostly while in transit in Canadian ports. Food and beverage expenditures by cruise lines in Canada reached $55.5 million in 2003⁽¹¹⁾.

Trends

Options and tailoring of the dining experience

Since the introduction of "Freestyle Cruising" by Norwegian Cruise Lines (NCL) in 2000, a trendsetter and the third largest player in the industry, dining options and variety are now becoming the norm on cruise ships. The principal feature of this program is the departure from the "early or late formal seating" to a dine-all-around experience with choices in terms of restaurants, freedom from dress codes, and doing away with strict serving schedules. In 2003, NCL added a selection of 30 to 50 shore restaurants to its "Freestyle Cruising" to Bermuda. This means that passengers can incorporate shore dining into their cruise meal plan, making it the most flexible in the industry.

Most new cruise ships that have been launched have adopted a similar choice-based dining offering. The Queen Mary 2, the largest passenger vessel in the world when it made its maiden voyage in January 2004 is expected to set the new standard for food service in the industry. It boasts a three-story main dining room called Britannia, a grill, a real British Pub, Kings Court (4 venues), an Asian and an Italian restaurant, the Carvery, the Chef's Galley and a spot for proper English teatime⁽¹²⁾. Bigger ships, because of their sheer size and the fact that they are attracting different segments of cruisers from neophyte to very experienced, have to offer a wider variety of styles and classes to cater adequately to the heterogeneous clientele they are hosting at any given time.

Tailoring is the next evolution of the cruise ship experience. It encompasses more than options. It implies an effort to satisfy passengers' specific needs such as dietary constraints (diabetes, old age), dietary choices (low carb diets, weight loss program) or lifestyle choices (vegetarian, organic foods, etc.). Already, buyers⁽¹³⁾ for the cruise line industry have identified health/health conscious passengers as a major trend that will influence the foodservice side of the industry. Price is the major obstacle to a wider offering of healthy products.

Dining, a form of entertainment

Another major trend in the cruise industry is the desire of passengers to be active and participate in a series of activities. Dining is not an exception. Restaurants such as the Chef Galley's on the Queen Mary 2 where guests can have an "interactive experience" as the chef reveals his secrets before their eyes⁽¹⁴⁾ are getting increasingly popular. Some companies now offer "cooking school cruises" and the trend should strengthen as more and more passengers want more than a vacation, they want an "experience". Mariani reports that the Radisson Seven Seas' five ships offer Le Cordon Bleu workshops and that Celebrity Cruises offer reservation-only 50 seat gourmet dining rooms where passengers have access to an award-wining consulting chef who has prepared a king's feast for them.

Involving popular chefs in a cruise line's kitchens, products or menu development is also perceived as a selling feature worth showcasing, even if the chef does not make it on board⁽¹⁵⁾. According to some experts, the next step is the introduction of branded restaurants aboard ships. Royal Caribbean has already announced a strategic alliance with an American coffee shop chain to open branded coffee shops aboard some of its ships. A consequence of such an alliance is that it gives the supplier exclusivity for this cruise line's involved ships and all other coffee brands or suppliers are literally kept off the boat.

Long-term procurement solutions

The shift towards establishing longer-term procurement solutions is deeper than attracting chains. More and more, cruise lines are looking to diminish their risk by establishing long-term contracts with suppliers. This is particularly troublesome for suppliers of fresh produce when the price varies on a minute basis. According to an article by Anne Kalosh, about 80% of NCL's food and beverage purchases are under contract for at least 6 months. This proportion reaches 95% for Royal Caribbean. Such a situation makes it more difficult to enter the market.

New segments, new opportunities

Although the introduction of large vessels has contributed to blurring cruiser segments, other factors in the industry have contributed to the emergence or the strengthening of segments of interest for the food industry namely:

• Riverside and "Close to Home" cruising;
• Niche cruising;
• Ship crews; and
• Old age assisted living.

Riverside and close to home cruises are definitely a growing segment in the cruise industry. One of the reasons identified is that they offer the benefits of both the cruising and touring experience. They offer the same benefits as ocean cruising but in a smaller, more intimate product. They are particularly appealing to experienced cruisers and seniors as well as the corporate incentive and conference meeting markets. The latter segment is particularly interesting and has been growing quickly, going from about $20.3 million in 1991, to $42.9 million in 1997⁽¹⁶⁾. If the same growth rate persisted, this segment, which was valued at approximately $90.6 million in 2003, should exceed $190 million in 2009.

Cruises seem to be a perfect fit for the corporate incentive and conference meeting market. For planners, it is easy to keep a handle on costs since most cruises work on an all-inclusive basis. Most ships now offer meeting rooms, business centers, email, fax, phones and in-cabin Internet hook up. In some cases, when the group is large enough, they can charter ships and basically design their own cruise.

Niche cruising is very close to riverside and close to home in terms of characteristics. It caters to almost the same clientele (experienced cruisers, conference meeting and corporate incentive) and offers a product that is either tailored to one's need or appeals to a small portion of the cruising population. Examples are a book club cruise where the author of the chosen book is on board to do lectures and participate in discussions with the participants or a cooking school that explores the cuisine of Atlantic Canada while cruising in the area. The possibilities are endless. These cruises are more elitist in nature and the dining experiences on board tend to reflect this by using exclusive and higher end products.

In ports of call, ship crews often constitute a neglected segment. With a ratio of 2 to 3 passengers per crew, it means anywhere between one and two thousand people come to the port on a regular basis and disembark for at least a few hours. The crew composition is usually very diverse with a majority of employees coming from South East Asia and Latin America.

Finally, costs of old age living on land are comparable to those of living in a dedicated cabin abroad a cruise ship. On average it costs about $28,500 for land living and about $40,000 for city living compared to $33,260 for a cabin on the Royal Caribbean's Majesty of the Seas⁽¹⁷⁾. A cruise ship also features most of the benefits of old age living accommodation such as 24 hour access to medical staff, dining, and maid service and easy access to other services such as hairdressers and laundry. Also, service is likely better on the cruise ship with a ratio of 2 to 3 crew members to one passenger that far surpasses the 1 to 10 to 40 land option. Cruises also offer easier access to exercise, fresh air and socialization. With the baby boomers getting closer to retirement age, this segment could become very interesting for cruise lines and their suppliers, namely those supplying "special diet" products such as low sodium or low cholesterol alternatives.

Food Safety

As security awareness has been raised following the event of September 11, 2001, so has the awareness of food safety and quality following Severe Acute Respiratory Syndrome (SARS) and Avian Influenza outbreaks as well as Bovine Spongiform Encephalopathy (BSE) cases. Hazard Analysis Critical Control Points (HACCP) is becoming an industry standard and cruise lines are looking for this kind of accreditation when they are recruiting new suppliers. The focus on food safety and quality was apparent at the Marine Hotel Association (MHA) Conference and Trade Show⁽¹⁸⁾ where exhibitors were displaying food safety accreditation and touting product that had limited or at least diminished handling (frozen pre-cut fines herbs, IQF scallops), and thus reduced risk of cross-contamination. For example, food safety attributes were also part of the selling features of shelf stable dairy products (cheeses, milk, frozen yogurt mix, etc.) along with ease of handling and storage.

Security

Cruise lines have always had more stringent security than any other type of resort because they sail international waters. Regardless, since September 11, all of the cruise lines have taken additional measures to further enforce security. Passengers must go through many check points before making it on the ship and, just like airline carriers, extra time must be allotted for boarding.

This also implies that enrollment in national security enhancing programs such as the Custom-Trade Partner Against Terrorism (C-TPAT) and compliance with other programs such as the Bioterrorism Act (BTA) and the Country of Origin Labeling (COOL) will be expected from the cruise lines and their suppliers.

Opportunities

A growing industry

The cruise industry is growing fast; estimates of annual growth rate go from about 4% up to 20% for some segments like river cruising. An estimated 29.7 million people are expected to take a North American cruise within the next 3 years⁽¹⁹⁾. Alaska cruises are top of mind when it comes to identifying appealing places for cruising. In a survey conducted for Cruise Line International Association (CLIA), 30% of experienced cruisers and 51% of non-cruise vacationers/cruise intenders have identified Alaska as respectively the second and the third most appealing places for their next cruise. The Canada/New England segment was identified by 8% of the experienced cruisers and 7% of the non-cruise vacationers/cruise intenders as the most appealing place for their next cruise⁽²⁰⁾.

Fine dining - an integral part of the cruise experience

Fine dining is an integral part of the cruise. Passengers have high expectations and, according to the CLIA 2004 Fall Overview, they are being met. A strong 57% of respondents have mentioned that the fine dining experience on cruises were somewhat or much better than other types of vacations. Cruise customers are also developing luxurious taste and cruise lines are looking at profitable ways to offer products like jumbo shrimp, premium ice cream and specialty wines.

Dining options mean more variety on the menu

The development of segmented dining options instead of the traditional unique dining room opens the door to more variety in the menus. Therefore, there are opportunities for a wider array of suppliers to penetrate the market.

Food related experiences are becoming a selling features

Just like on land, with the increase of celebrity chefs, cooking shows, and "foodies", hype for "everything cuisine" has hit the sea. The offering of cooking or wine tasting niche cruises and menu design by celebrity chefs on the Queen Mary 2 are all examples of this. These also constitute great venues to introduce distinctive products or products that fit with the theme or location of the cruise. Riverside, close to home and niche cruises are particularly interesting for Canadian exporters that might not have the capacity to supply "classic" cruises but can supply these smaller exclusive segments.

A client base mostly North American

Canadian companies can build on the fact that the majority of the global cruise passengers of the North American cruise industry lived in the United States, 76% in 2003. They are familiar with and accustomed to North American food products.

Opportunities in terms of products

In terms of products, there are opportunities in many categories. Besides the triumvirate of price, quality and availability, some of the other benefits sought are convenience, less handling, ease of use, storage efficiency, and waste reduction. To be of interest, a supplier must be able to demonstrate the selling features of his product, its advantages compared to the one the cruise line is already using and the savings the cruise line will make, either in money, time, storage or waste.

Logistics - the biggest challenge

The biggest challenge for the cruise line industry is logistics. Even as they strive to improve quality of food products and spend more money on food purchases to respond to the needs of their clientele, they are also looking at ways to save on logistics⁽²¹⁾. Mandatory use of technologies such as Electronic Data Interface (EDI) by suppliers is one way to reduce logistics cost. In fact, Kalosh reports that "being willing to convert to EDI is a must to participate in Royal Caribbean's Quality Supplier Development Programme". This does not mean that every Canadian exporter that wants to penetrate the cruise sector needs to convert to EDI. However, EDI compliance should be a criterion when choosing an American chandler, distributor or broker.

As the interviews and the MHA trade show visit have indicated, there are as many procurement policies and processes as there are cruise lines. Some prefer to work with a national distributor; others have vertically integrated the whole supply chain. Some have one centralized warehouse where they expect the agri-food supplier to deliver Freight On Board (F.O.B.) while others have developed a network of warehouses in ports they call in or have established their own distribution network and expect to pick up the goods F.O.B. at your doorstep. The key is to get to know each cruise line, its need and the way it works, and then to evaluate if there is a fit between theirs and the supplier's business objectives.

Ports opening

More "smaller" ports are opening to cater to the exponential needs of the industry and to satisfy the demand for riverside and close to home segments. Niche cruising providers are also taking advantage of these openings. They benefit the industry in two ways. First, it fosters the development of new product offering that will keep the industry current. Second, it has been demonstrated by a study sponsored by CLIA that the proximity of a port increases the likelihood of a person to take part in a cruise. Almost 7 people out of 10 (69%) have mentioned that such proximity would increase their likelihood of taking a cruise somewhat (36%) or greatly (33%)⁽²²⁾.

New segments, new opportunities

For Canadian agri-food suppliers, the riverside, close to home and niche segments are particularly interesting because they are relatively smaller and more fragmented than the ocean cruising sector. Providers in that segment are looking for unique product and, even if price is important, distinction and quality are even more so.

The cruise line industry definitely offers a wide array of opportunities to Canadian suppliers that are willing to invest time, resources and money. Is it worth it? As an indication, Royal Caribbean buys meat products worth $10 million annually for 12 ships⁽²³⁾. The popularity of the Alaska Route and the development of more river/close to home cruise packages in the Northeast and in the Pacific Northwest will certainly favor Canadian exporters.

Next Steps

As one supplier mentioned, it is wise for a company that wants to cater to the cruise industry to take a cruise and experience what it is like onboard. This should be followed up by a visit to one of the two major trade shows of the industry: Seatrade usually held in March and the Marine Hotel Association (MHA) Conference and Trade Show usually held in April⁽²⁴⁾. Seatrade is the largest show but the MHA is more focused on hotel operations. At the trade shows, companies will be in a position to evaluate the competition, learn the latest "news" in the business and talk to suppliers that are already involved in the industry.

From that point on, interested suppliers need to research the cruise lines to target, get in touch with them and identify procurement policies and processes. There is no "one fits all" approach in the industry. An alternative to supplying the big three might be to approach companies that already call in Canadian ports. They are more likely to be familiar with Canadian products and often load product while in port. Smaller companies involved in river, close to home or niche cruising might also constitute a good stepping-stone and an occasion to build experience in supplying the industry.

Cruise lines offer opportunities for Canadian agri-food suppliers who are willing to invest time, resources and money in developing this fast growing segment. One of the weaknesses of Canadian exporters, as identified by industry players, is the lack of knowledge of the cruise line industry. This report attempts to address this weakness but further research and educational activities should be undertaken to further an understanding of the industry and Canadian supplier ability to serve it.

Appendix 1 - Cruise Line Purchasers, Chandlers, Distributors and Brokers Interview Summary

In March 2004, in collaboration with the Consulate General in Miami, a series of 21 interviews were conducted by phone with cruise line purchasers, chandlers, distributors and brokers. Although the sample is small, results can be taken as a representative indication of the cruise line industry since all the major players were interviewed, namely Carnival Cruise, Royal Caribbean, and Norwegian Cruise Lines. Between the three of them, they represent more than 80% of the industry's market share⁽²⁵⁾. The summary results of these interviews are presented in the following pages.

Type of respondent and products offered

Cruise line purchasers represented nearly half the respondents to the survey, as shown in the figure below:

Figure 2 - Type of Respondent

In terms of product offering, whereas all cruise lines offer a full line of products to their clients, the suppliers to the cruise lines (chandlers, distributors and brokers) are more segmented. Three offered a full line while the remaining eight had specialties:

• protein products (3)⁽²⁶⁾;
• frozen food ;
• dairy;
• fresh produce;
• beverages ; and
• desserts and pastries.

Importance of product origin

For most respondents (17 out of 21), the country of origin of the product is irrelevant. As long as the product fits the quality, availability and price specification, the origin is of no significance.

Of the four respondents that mentioned that origin was important, half identified logistical and border clearance issues as a deterrent to buying outside of the US. However, the other two are actually seeking products from other countries. One mentions that he buys locally when calling in Canada while the other one only buys European products. One of the respondents actually mentioned that Canada was recognized as having high quality standards and a very high sanitation code.

All cruise lines buy Canadian products but only 8 out of 11 suppliers do. One of them buys exclusively European products while the others mention border/quota issues as a deterrent (dairy quota and BSE related border closure). Canadian products identified by the respondents are:

• Meat - beef, veal, pork, foie gras, prosciutto, deli meats, poultry, and duck;
• Seafood and fish;
• Water;
• Wines and ice wine; and
• Flour and wheat.

When asked if they were currently looking for any products, 11 respondents said no and 2 said they were always looking. The balance of respondents identified mostly protein: (beef (3), poultry (2) and pork (2)), as well as soybeans, oil, dairy, and ice wine.

How to supply cruise lines

One of the respondents mentioned that the industry has changed. Potential suppliers need not to worry about the logistics of getting the product on board as cruise lines work with distributors that have established protocols. Another company mentioned that they were planning to establish a service center in Canada to supply their boats in transit. Finally, a third company explained that most of their procurement was done through product lists on which the pre-selected suppliers get to bid. It seems that there are many different supply systems in the industry, and it will be necessary for a supplier to learn the system of the cruise line or cruise supplier company that they target.

This variety of procurement processes is also illustrated by the respondents' varied answers to what is the best way to present a new product. The cruise line purchasers identified "send literature" (4), "call" (3), "trade show" (2) and "send letter with literature, if interested will call back and set appointment", "send sample and literature" and "well prepared presentation including a company profile" as means to present product.

Chandlers, distributors and brokers identified "call and make appointment" (5), "send literature" (2), "exhibit at the MHA Trade Show" (2), "send samples" and "take a cruise first to know what the industry is all about" as options.

Characteristics of products sought

Price and quality are the two most important characteristics sought after by the buyers, as shown in the figure below:

Figure 3 - Characteristics of Products Sought After by Cruise Lines and Suppliers

Interestingly, cruise lines are more interested in quality than their suppliers (90% vs. 72.7%). Conversely, suppliers are more interested in consistency and availability than the cruise lines (combined 45.5% vs. 30%).

Trends, opportunities and threats

Trends relating to options and tailoring of the dining experience to passengers' need are dominant. Five respondents identified "alternative free style dining" as a major trend, while 10 mentions had to do with tailoring dining offering to one's dietary needs:

• Healthy food/customers are more health conscious (4);
• Diet menu - Atkins, South Beach, Low carbs (3);
• Organics;
• Low cholesterol; and
• Low fat.

Ethnic and regional cuisine also got 3 mentions, 2 from the cruise line purchasers and one from a supplier. In terms of product, 2 respondents mentioned that they were looking for signature pieces/new distinctive products. One mentioned wine and other beverages that would be sold on-board due to passenger preference for one-stop shopping opportunities. Finally, one of the cruise line purchasers noticed that there was a movement toward cutting costs on "hidden" ingredients such as cooking oil. Respondents also mentioned other considerations such as "convenience and efficiency" (2), "waste and storage saving products" and "bottom-line".

Three respondents also mentioned that they could not think of any trend affecting the industry. One went as far as saying that his company did not go for trends because they were too cost prohibitive.

Buyers' outlook on the industry is very positive. Nine respondents have said that there are lots of opportunities in the industry with four more specifying opportunities for the right combination of quality and price products. However, three buyers were less enthusiastic. They believe that Canadian products need to improve in terms of quality and price and that Canadian suppliers need to learn more about the cruise line industry in order to serve it better. One also mentioned that, because of the high volume, margins are low which make this particular market segment less attractive to new entrants.

In terms of threat, terrorism ranks high. Nine respondents have identified terrorism as a threat to the industry. Other threats identified are:

• Government import and export restrictions (2);
• HACCP / Food Safety (2);
• Environmental issues;
• Cultural differences from one country to the next; and
• Illness or disease outbreak (BSE, Avian Flu, SARS).

Three respondents were not able to identify threats for the industry.

Appendix 2 - Marine Hotel Association (MHA) Trade Show Intelligence Exercise

The 2004 Marine Hotel Association (MHA) Conference and Trade Show took place in Vancouver, BC on April 18, 19 and 20, 2004 at the Fairmont Hotel. A team of two Marketing and Trade Officers from the BC Regional Office attended the show and gathered information from the exhibitors. Here are the highlights:

• A total of 139 exhibitors attended the MHA, including 30 Canadian companies and 11 International companies. Of the remaining 98 American companies, 34 were from Florida (35%);

Source:2004 MHA Conference and Trade Show Attendee List

• Most exhibitors were members of the Marine Hotel Association and already supply the cruise line industry;
• About 62% of the exhibitors were presenting food and beverage products. Proportionally, Canadian exhibitors were more likely to present food products than exhibitors from other countries. Other suppliers included linen, dishes and cookware suppliers.

Source:2004 MHA Conference and Trade Show Attendee List

• Most suppliers report treating the cruise line like the food service sector as the needs in both sectors are similar. Major differences are the rhythm of delivery (bigger orders, less often than a restaurant per se) and the fact that quality is more important than in the general food sector.
• Food trends such as "low-carb" do not seem to be hitting the cruise lines as much as on land. However, suppliers are starting to offer the products to answer the demand for healthier alternatives. Products without sugar are sought to cater to the needs of the growing diabetic population. One exhibitor also reported that there are more offerings of "healthy/spa" cruises and that generally the operators of these cruises seek healthier products.
• Food safety is a front and center issue with packaging and offering adapted to diminish the risk of cross-contamination. Mention of food safety including recognized certification is also very present on product literature. In dairy, shelf-stable products are becoming increasingly popular.
• Price, quality and reliability are the three qualities that cruise line buyers are seeking. Suppliers need to perform in all three areas in order to succeed in this market.
• In the cruise supply system, the ultimate buying decision is with the cruise line. Either the Executive Chef or the Buyer choose a product and put it on the "list". That list is open for bidding at regular intervals and suppliers are invited to bid. Suppliers that are selected are then referred to a distributor that will fulfill cruise line orders. Occasionally, distributors will introduce new products to the cruise line chefs or buyers but ultimately, the cruise line makes the decision.
• The cruise line industry is a small world; some exhibitors used the term "clique" to describe it. Relationships and a good reputation are important for success.
• Exhibitors raised no major trade issues.

Appendix 3 - Cruise Line Contacts and Resources⁽²⁷⁾

Chandlers (Ship Chandlers, Distributors and Brokers):

A-ONE-A Produce & Provisions, Inc. - Distributor
1351 NW 22nd Street
Pompano Beach. FL 33069
Tel: (954)-917-7272
Fax: (954)-917-8864
www.aonea.com
Type of products: Fresh fruits and vegetables, dairy products
Contact: Oscar Sotolongo, Director, Cruise Ship/Export,
oscars@aonea.com

Apollo Ship Chandlers, Inc. - Ship Chandler
1775 NW 70th Avenue
Miami, FL 33126
Tel: (305)-774-7550
Fax: (305)-702-0349
www.apolloships.com
Type of products: Full line food, beverage and other products
Contact:
Ed Valenz, Director of Purchasing, ed@appoloships.com
Nick Rosaki, Food Department Manager, nick@appoloships.com
Manuel Barcala, Beverage Department Manager, manolo@appoloships.com

Allstate Food Marketing, Inc. - Food Broker
4494 N. John Young Parkway
Orlando, FL 32804
Tel: (407)-296-2911
Fax: (407)-296-4511
www.afm-fla.com/organization
Type of products: Full line food, beverage and other products
Contact: Paul Haire, President, phaire@afm-fla.com

Bob Rowe Sales - Food Broker
P.O. Box 64061 16F, Uleta Branch
Miami, FL 33164
Tel: (305)-947-9966
Fax: (305)-947-5526
Type of products: Full line food, beverages and other products
Contact:
Bob Rowe, CEO, bobrowesales@net.com
Steve Schultz, President, bobrowesales@net.com

Carib Basin Food Sales Inc. - Broker
9620-D Boca Gardens Circle North
Boca Raton, FL 33496
Tel: (561)-487-2176
Fax: (561)-482-5362
www.caribbasin.com
Type of products: bacon, ham, pepperoni, salami, mortadella, poultry, fresh pack tomatoes
Contact:
Jim Mancusco, Owner, mancusco@caribbasin.com
Mindy Mancusco, Office Manager, mancusco@caribbasin.com

Carisam-Samuel Meisel Inc.
10900 NW 27th Street
Miami, FL 33126
Tel: (305)-591-3993
Fax: (305)-591-2886
www.carisamco.com
Type of products: Liquor, wine, spirits and water
Contact: Isabella Henry, Sales Manager, i.henry@carisamco.com
Kevin Borosso, k.borosso@carisamco.com

Cheney Brothers Food Service - Distributor
One Cheney Way
Riviera Beach FL 33404
Tel: (561)-845-4700 x.186
Fax: (561)-845-4717
www.cheneybrothers.com
Type of products: Full line of food, beverage and other products
Contact: David Kissel, Manager, Cruise Ship Sales, dkissel@cheneybrothers.com

Colorado Boxed Beef Company
302 Progress Road
Auburndale Industrial Park
Auburndale, FL 33823
www.coloradoboxedbeef.com
Type of products: Fresh and frozen beef, pork, seafood, poultry and other specialty
Contact:
John Rattigan, Director of Marketing and Business Development, j.rattigan@cbbcorp.com

Corman Ship Supplies - Ship chandler
501 NE 183rd Street
Miami, FL 33179
Tel: (305)-651-1150
Fax: (305)-651-3497
www.cormanshipsupplies.com
Type of products: Dairy products
Contact:
Jimmy Gomez, General Manager, jimmygomez@cormanshipsupplies.com
Raul Geurrero, Director of Sales, raulgeurrero@cormanshipsupplies.com

De Boer Importers
4001 St-John's Parkway
Sanford, FL 35771
Tel: (407)-322-2499
Fax: (407)-322-1815
www.deboerfood.com
Type of products: European pastries and desserts exclusively
Contact: Evert De Boer, CEO, evert@deboer.com

Essex Exports, Inc. - Distributor
550 SW 12th Avenue
Deerfield Beach, FL 33442
Tel: (954)-698-9333
Fax: (954)-698-6766
www.essexexports.com
Type of products: Frozen seafood
Contact: Francis Mahfood, Vice President, essex@netrox.net

Excel Food Distribution Co. - Distributor
9151 NW 97th Terrace
Medley, FL 33178
Tel: (305)-884-7032
Fax: (305)-884-7013
www.excelfooddist.com
Type of products: Beef, veal, poultry and seafood.
Contact: Kevin Waters, General Manager, kevin_waters@cargill.com

FAB Marketing - Alcohol Broker
7154 N. University Drive, Suite 205
Tamarac, FL 33321
Tel: (954)-722-6222
Fax: (954)-726-1406
Type of products: Wines, spirits and confectionary
Contact: Bob Syner, Director, fabwinespirit@aol.com

G&J Marketing - Food Broker
1261 E. Sample Road
Pompano Beach, FL 33064
Tel: (954)-781-4600
Fax: (954)-781-8600
www.gandj.com
Type of products: Full line food, beverages and other products
Contact: Greg Sidwell, President, greg@gandj.com

Gordon Food Service/Henry Lee - Distributor
3301 NW 125th Street
Miami, FL 33167
Tel: (305)-685-5851
Fax: (305)-681-7752
www.gfs.com
Type of products: Full line of food, beverage and other products
Contact: Joe Copeland, VP of Program and International Sales, info@gfs.com

Kansas Marine
5511 NW 163 rd Street
Hialeah , FL 33014
Phone: (305) 628-5555
Fax: (305) 628-5540
www.kansasmarine.com
Type of products: Fresh and frozen fish and seafood
Contact:
Peter Alvino, General Manager, palvino@kansasmarine.com

Quirch Foods Company
7600 NW 82nd Place
Miami, FL 33166
Tel: (305)-691-3535
Fax: (305)-691-7483
www.quirchfoods.com
Type of products: Protein, mainly beef, pork and seafood
Contact:
Andrew Broce, Buyer Meat, andrew.broce@quirchfoods.com
Jaun Garcia, Buyer Seafood, jaun.garcia@quirchfoods.com
Zeny Rivero, Meat Buyer Assistant, zeny.rivero@quirchfoods.com
Kevin Miller, Buyer Pork, kevin.miller@quirchfoods.com

SYSCO Food Services of South Florida
555 NE 185th Street
Miami, FL 33179
Tel: (305)-770-5474
Fax: (305)-652-6013
www.sysco.com
Type of products: Full line of food, beverage and other products
Contact: Harry Roberts, Director of Cruise Sales, Roberts.Harry.R016@sysco.com

Cruise Line Purchasing Managers

American Classic Voyages
Manfred Seifert, Global
Tel: (305)-774-7550
www.amcv.com

Carnival Cruise Lines
David Mizer, Global Sourcing, Strategic
Tel: (305)-599-2600
www.carnival.com

Celebrity Cruises, Inc.
Jacob Roth, Director of Food and Beverages
Tel: (305)-982-2974
www.celebrity-cruises.com

Costa Cruises
Contact Carnival Cruise Lines
www.costacruises.com

Crystal Cruises
Hans Hesselberg, Vice President
Bob Koven, Vice President, Purchasing
www.crystalcruises.com

Cunard Line Limited
Contact Carnival Cruise Lines
Peter Tobler, Vice President Food and Beverages
Tel: (800)-728-6273
www.cunard.com

Disney Cruise Line
Bert Swets, Purchasing and Logistics Manager
Tel: (407)-566-3592
disneycruise.disney.go.com/disneycruiseline/index

Holland American Line
Steve Kirsch, Director of Culinary Operations
Tel: (206)-281-3535
www.hollandamerica.com

Lindbald Expeditions
Jim Straatman, Purchasing Manager
Tel: (206)-382-9593
www.expeditions.com

Meridian Ship Managers/Sea Escape Cruises
Al Courtney, VP Passenger Operations
Tel: (954)-453-3380
www.meridiancruisestours.com/specials.shtml

Norwegian Cruise Line
Alvin Dennis, VP Purchasing
Tel: (305)-436-4858
www.ncl.com

Princess Cruises
Jonathan Wilson, Director of Culinary Operations
Eugene Marino, Director of Purchasing and Logistics
Tel: (661)-753-2230
www.princesscruises.com

Radisson Seven Sea Cruises
Tel: (954)-776-6123
www.rssc.com

Residensea Resorts
Roger Porta, Purchasing Agent
Tel: (305)-264-9090
www.residensea.com

Royal Caribbean Cruises
Henry Lopez, Corporate VP Purchasing
Tel: (305)-539-6000
www.royalcarib.com

Seabourn Cruises
Larry Rapp, Vice President, Hotel Operations
Tel: (800)-929-9391
www.seabourn.com

Silversea Cruises, Ltd.
Henrik Kjaer, Director, Purchasing
Mario Martinez, Purchasing Manager
Tel: (954)-522-4477
www.silverseacruises.com

Windstar Cruises
Gerald Moeslinger, Manager of Hotel Operations
Tel: (206)-281-3535
www.windstarcruises.com

Cruise Line Associations

Cruise Lines International Association (CLIA)
80 Broad Street, Suite 1800
New York, NY 10004
Ph: 212-921-0066
Fax: 212-921-0549
www.cruising.org

International Council of Cruise Lines (ICCL)
2111 Wilson Boulevard, 8th Floor
Arlington, VA 22201
Ph: 800-595-9338 or 703-522-8463
Fax: 703-522-3811
www.iccl.org

North West Cruiseship Association (NWCA)
100 - 1111 West Hasting Street
Vancouver, BC V6E 2J3
PH: 604-681-9515
www.nwcruiseship.org

Niche Cruise Marketing Association (NCMA)
12920 NE 32nd Place
Bellevue, WA 98005
Ph: 425-867-0399
Fax: 425-867-0589
www.nichecruise.org

Marine Hotel Association (MHA)
P.O. Box 1659
Sausalito, CA 94966
Ph: 415-332-1903
Fax: 415-332-9457
www.mhaweb.org

Florida Caribbean Cruise Association (F-CCA)
Suite 201 - 11200 Pines Boulevard
Pembroke Pines, FL 33026
Ph: 954-441-8881
Fax: 954-441-3171
www.f-cca.com

Association des croisières du Saint-Laurent / St. Lawrence Cruise
Association
PO Box 384 Place d'Armes
Montreal, QC H2Y 3H1
Ph: 514-842-6776
Fax: 514-842-6730
www.saintlawrencecruise.com

Associations des croisières et excursions du Québec (ACEQ)
150 Dalhousie St, PO Box 2268
Quebec, QC G1K 7P7
Ph: 418-648-4572
Fax: 418-648-4627
www.st-laurent.org/asso_croisieres.htm

Atlantic Canada Cruise Association
www.atlanticcanadacruise.com

Appendix 4 - Bibliography

Amer, S. 2003. "Home Ports". Successful Meetings. New York, October 2003. Vol. 52, Issue 11, p.43-46.

Business Research & Economic Advisors. 2004. "The Contribution of the International Cruise Industry to the Canadian Economy in 2003". Prepared for North West Cruise Ship Association, Vancouver Port Authority and St. Lawrence Cruise Association. October 2004, 65p.

Business Research & Economic Advisors. 2004. "The Contribution of the North American Cruise Industry to the US Economy in 2003". Prepared for the International Council of Cruise Lines. August 2004, 81p.

Cruise Lines International Association. 2004. "The Overview; Fall 2004. Accessed on-line at www.cruising.org, 2004, 48p.

Datamonitor. 2004. "Global - Hotels, Resorts and Cruise Lines; Industry Profile". Datamonitor, May 2004, 17 pages.

Hessel, E. 2004. "Iceberg Ahead?". Forbes. New York, March 1, 2004. Vol. 173, issue 4, p.48

Kalosh, A. 2004. "Quality and Quantity". Hotel Operations - Purchasing.

Mariani, John. 2003. "Cruise Food: An Oxymoron Sunk". Restaurant Hospitality. Cleveland, December 2003. Volume 87, Issue 12, p.22

Marine Hotel Association (MHA). 2004. "19th Annual Conference & Trade Show Attendee List".

McDougall, Diane. 2001. "Cruising for Business". CMA Management. Hamilton, May 2001. Volume 75, Issue 3, p.52-53.

Palmeri, C. 2004. "Carnival: Plenty of Ports in a Storm". Business Week. New York, November 15, 2004. Issue 3908, p.76-78.

The Economist. 2004. "Business: Till death us do part; Cruise Liners". The Economist. London, October 30, 2004. Vol. 373, Iss. 8399, p.68

TNS/NFO Plog Research. 2004. "CLIA's 2004 Cruise Market Profile; Reports of Findings". Accessed on-line at www.cruising.org, 48p.

USDA - Foreign Agricultural Services. 2001. "Caribbean Basin; HRI Food Service Sector; Get Onboard: North American Cruise Opportunities 2001". Global Agriculture Information Network. Miami, October 2001, 10p.

Waldrop Bay, H. 2001. "Not Your Grandparents' Sea Cruise". Incentive. New York, November 2001. Vol. 175, Issue 11, p.58-62.

Young, S.J. 2004. "ARCL Readies To Launch as River Cruising Expands and Others Reports Strong Sales". Travel Agent. September 27, 2004, p.16 & p.73.

1. Datamonitor. 2004. p.8
2. Hessel, E. 2004. p.48
3. Palmeri, C. 2004. p.78
4. Hessel, E. 2004, p.48
5. Plunkett Research Ltd. Plunkett Report on Carnival Corporation and Plunkett Report on Royal Caribbean. Both Accessed on-line on January 26th, 2005
6. Business Research & Economic Advisors. 2004 (2), p.13
7. Business Research & Economic Advisors. 2004 (2), p.24
8. Business Research & Economic Advisors. 2004 (2), p.15
9. Business Research & Economic Advisors. 2004 (2), p.28
10. Business Research & Economic Advisors. 2004 (1), p.10
11. Business Research & Economic Advisors. 2004 (1), p.24 & 25
12. Mariani, J. 2003, p.22
13. See Appendix 1 – Cruise Line Purchasers, Chandler, Distributors and Brokers.
14. Mariani, J. 2003, p.22
15. Mariani, J. 2003, p.22
16. McDougall, 2001.
17. The Economist. 2003, p.86
18. See Appendix 2 - MHA Trade Show Intelligence Exercise
19. CLIA. 2004, p.7
20. TNS/NFO Plog Research. 2004, p.36
21. Kalosh. 2004.
22. CLIA. 2004, p.24
23. Kalosh, A. 2004.
24. For more information on these shows, visit www.seatrade-global.com for Seatrade and mhaweb.org for the Marine Hotel Association.
25. Hessel, E. 2004, p.48 and Star Cruises Financial Results press release on their website at www.starcruises.com.
26. A number in parenthesis indicates the number of mentions. If there is no number, only one mention was made.
27. As listed in USDA - Foreign Agricultural Services and updated during cruise line purchasers, chandlers, distributors and brokers survey in March 2004.

Disclaimer: Although every effort is made to ensure that the information in this document is correct, Agriculture and Agri-Food Canada assumes no responsibility for its accuracy, reliability, or for any decisions arising from the information contained herein.