reLAKSation 107.
Raking the mud: The Norwegian Seafood Export Council has been trying to target its marketing efforts by exploiting some of the differences between Norwegian and Chilean salmon. Recently there have been reports that the Chilean aquaculture industry uses one hundred times the quantity of antibiotic as that used in Norway. Whilst, no-one specifically states that the Norwegian industry is highlighting this difference to their customers, the implication is that it does happen. NSEC’s current marketing programme places the emphasis on improving food safety.
We,
at Callander McDowell, believe that this is not only a dangerous strategy, but
also one which is rather pointless. NSEC have recently conducted surveys in
Japan which have shown that one salmon is not necessarily the same as another,
i.e. that Norwegian salmon is distinct from other salmon. The Scottish industry
have made similar claims in the UK market, but whilst British consumers might
identify Scottish salmon as superior to other imported salmon, once faced with
any buying decision they are just as happy to buy imported fish as they would
Scottish. The same appears to apply in Japan, for whilst consumers may be aware
of differences, they are not prepared to pay for them. According to NSEC’s
representative in Japan, it is proving difficult to gain any price reward on
Norwegian salmon in the Japanese market. Thus, it seems that this marketing
strategy is failing to produce any real benefits.
Yet,
at the same time, this strategy could actually do more harm. The implication
that some salmon may not be as safe as other because of high antibiotic usage
may deter consumers from buying salmon at all, irrespective of its origin and
any claims of food safety. If consumers are made aware that fish have been
treated with antibiotics, they may think that this may offset any apparent
health benefits that the fish may otherwise offer. They may therefore look for
alternative fish to eat than salmon.
It
is worth reminding NSEC, that no so long ago, the Norwegian industry also had a
high usage of antibiotic. This was reduced by improved health care management
and it is likely that before too long, Chilean producers will have the same
management techniques in place, that is, if they wish to maintain their position
as a major supplier to world markets.
Marketing
should be about highlighting the positive. Drawing attention to deficiencies in
other production areas is no better than being subjected to another dumping
complaint. Salmon producers should be working together to promote salmon
consumption, not working off each other. As Lisbeth Berg Hansen told IntraFish,
the battle is not between salmon and salmon, but ultimately between salmon and
chicken/other meats.
NOK down Christmas: The steady price rise has prompted several commentators to suggest that salmon prices might pass the NOK30/kg barrier by Christmas. However, we at Callander McDowell believe that such expectation might have more to do with wishful thinking than reflecting actual salmon prices. Yet, we would be more than happy to be proved wrong.
IntraFish spoke to Kim Broderson of Danish importing company Saga Lax and he listed six points to explain why the market has surged forward with rising prices. We certainly cannot argue against the first two points. Increased demand in Eastern Europe and the reduced catch of wild salmon certainly will have a positive effect on prices. Equally, the cull of ISA infected salmon in the Faeroes, his fourth point, and reduced slaughtering in Chile (Point 5) would also contribute to this upward trend.
However, we do feel that his third and sixth points could certainly put a brake on any dramatic rise. Mr Broderson suggests as his point six that much of the industry is starting to enter in to negotiations with the major supermarket groups regarding Christmas and Easter contracts. Not surprisingly, he feels that the supermarket chains will be fighting against any attempt to make them pay more for their salmon. Most probably, these supermarkets will be accused of trying to profit from rising prices by paying less, but charging more for the salmon they sell, but we are not so convinced. This is because of Mr Broderson’s third and final point, which is that the market for salmon has risen dramatically from last year when salmon was at its cheapest.
We believe that the problem for the salmon industry is that the market for salmon increased simply because salmon was cheap. Many consumers were attracted to buying salmon because its low cost meant that salmon represented value for money, especially when compared with more expensive wild caught marine species. If salmon prices continue to rise, these same consumers will find salmon too expensive and look instead for alternative cheaper species, or even turn to cheaper alternative proteins such as chicken. This means that this increasing demand will stall, followed closely by a downturn in prices.
Whilst every farmer
clearly wants to see a return to higher prices, these can only come at a price.
Salmon farmers now need to decide if this is a price they are prepared to pay?
Down
in the dumps: Sadly, the aquaculture industry
has become associated with the ready use of dumping complaints in order to avoid
the issues of the marketplace. Finnish trout farmers have followed the example
of other European producers and complained to Brussels about allegedly cheap
imports of trout from Norway and the Faeroe Islands.
When
asked by IntraFish, whether this was a poor way for neighbours to behave, Per
Dag Iversen, Norway’s ‘expert’ on dumping issues replied perhaps it would
have been better off applying their energies to improving their own industry and
he is right. Dumping complaints do not solve the problems of the marketplace
they only help enhance them.
It
is already common knowledge that the trout industry has greater market issues to
address than their salmon counterparts. In reLAKSation no 88, we discussed
how Mr Andrew Cookson of market research company GIRA had told trout
farmers that their sector was suffering severe market stagnation with trout
perceived to be the frumpy old aunt of the fish farming industry. Mr Cookson
said that this is an image that is not going to keep the industry in business.
Clearly, this is a message that Finnish producers never heard.
Hopefully,
this might be the last dumping action to disrupt the European aquaculture
industry. Fish farmers need to recognise that previous dumping complaints have
failed to benefit the complainants, but rather have damaged the overall market
with uncertainty and distrust. By comparison, consumers simply want to buy the
fish they want, when they want at the right price. If any specific fish is not
available because supplies are disrupted, they will just look for other
alternatives, which may not even be fish. Producers therefore risk losing
consumers. In the case of trout, this may be even more damaging because it is
already losing market share to other species. Producers from Finland need to be
collaborating with their Norwegian counterparts, not fighting them. They need to
look at how they can enhance their produce in the marketplace, not downgrade it
further.