Introduction
Peter Shelley, Executive Director of the ISFA has heralded the ISFA/Roche marketing study as the first ever consumer study for salmon and a pathway for salmon marketing for the next five years. The study entitled "The European Market for Salmon: what do consumers really want?" was based on the recognition that there was a need for the salmon industry to be market driven rather than production driven. It is expected that it will be the forerunner for further generic studies of the farmed salmon industry.
The study examined what consumers wanted and how they perceived salmon, focussing on three of the key European markets, France, Germany and the UK. According to Mr Andrew Cookson of GIRA strategic market research, who undertook the study, the aim was consumer perception, "their reality, not ours".
The key question, arising from this study, is whether "their reality" bears any resemblance to the reality of the market place? This document further discusses the issues raised in this report.
The following sections mirror those of the report: -
1. Background & Objectives.
The reports' introduction states that it is almost a platitude to say that growth of salmon in recent years places it in the forefront of successful modern food products. This view is not quite correct, since whilst salmon production has exhibited rapid growth, the salmon farming industry is still clearly in its infancy. The signs, such as price pressures, relative modest growth levels of some markets and inconsistent quality, which mig ht suggest that the market is maturing, can also be representative of other market conditions. This would appear to be the case with the salmon industry.
The three market signals, highlighted in the report, can be fully explained without reference to a maturing market. For the last ten years, salmon prices have been falling. This has been typically explained as being the result of over-production. The reality is that there is a direct link between volume production and price. As volumes increase, prices will fall and vice versa. This is a normal market response, however it has been misinterpreted by the salmon industry because from the outset salmon was perceived as a luxury product. Unfortunately, as volumes rise, it is simply impossible to maintain such a luxury image and therefore the plunging price became even more conspicuous. Salmon farmers who built their business on the expectation that they would be producing a luxury product became disenchanted, which in turn caused further market disruption. This has been read as a sign of a maturing market, but is rather an indication that the salmon industry has experienced the early growth pains of a rapidly expanding business.
The suggestion that there is only relatively modest growth in some markets is equally not necessarily a sign of a maturing market. This might have more to do with the type of production led strategies commonly operated throughout the salmon farming industry. For example, the Scottish industry has believed that the addition of a Scottish brand mark is sufficient incentive for consumers to want to buy their salmon. This has proved to be just not the case.
Finally, inconsistent quality is never an indication of a maturing market, but rather a by-product of an industry trying to maximise production, but giving little regard to the needs of the target market. This is the inevitable consequence of the type of production led strategies operated by the salmon industry. However, it should also be recognised that cold-blooded animals like salmon, will respond differently at the range of ambient temperatures found throughout the major salmon producing areas. This can lead to significant differences in flesh quality, which might be further enhanced by various production strategies employed by salmon farmers.
However, even if the market is not approaching maturity, as suggested this does not prevent the development of 'more' market led strategies. Instead, it should actually encourage and promote such development, not only because it can reduce the pressure on the market, but can also contribute to overall margins.
The report suggests that the global approach in which salmon is all things to all men is the surest way to 'devalorise' salmon. This is the inevitable outcome of the production led strategies adopted by the industry and the reality is that such 'devalorisation' has already happened and there is little the industry can do to change it. However, this does not mean that it cannot capitalise on such 'devalorised' products.
Salmon were selected as a candidate species for farming because salmon were perceived as a high value, luxury product for which consumers would be prepared to pay a premium price. However as production increased, it was inevitable that this image could not be sustained. Volume production and luxury image are incompatible, yet the industry has tried to maintain the image whilst at the same time undermining it by significantly expanding production. The proposition that product differentiation is essential is nothing new, but the past preconceptions of image have previously prevailed over and above the need for this urgent change.
The ISFA report states that its objective is to establish what needs consumers have that can be fulfilled by salmon products and how salmon should be differentiated so that they are perceived by consumers as an optimal meal solution. This aim reflects the continued call for the introduction of more market led strategies which would enable farmers to produce the exact product that consumers actually want rather than those that they think that consumers want. However, the need to react to consumer demands must be tempered by the necessity to implement a full marketing plan rather than highlight and rely on consumer opinion as the aims of this study would imply. This is because consumer views cannot be isolated from the issues of the wider market place. Taken out of this context, there is a potential danger that the consumer might not exactly know what he/she wants simply because of any prevailing unfamiliarity with the market place. This issue will be discussed in more depth in the conclusion.
2. Coverage
The ISFA has selected three key European markets for its study. However one significant factor has not been highlighted and that is whilst the UK market ha s been identified as being one of the three most important in Europe, it is also the only one which is able to meet its own market demand. This is because it is the only key European market with its own producing industry.