reLAKSation 119.
Yet, there is no doubt that demand is expected to rise at Christmas time. One farmer bemoaned to IntraFish that at a time when demand for smoked salmon is high, the supermarkets have been running special price promotions in the run up to Christmas. The unnamed farmer said that it seems completely suicidal to offer special price promotions when it is clear that there is a demand for smoked salmon. He said that the rationale the supermarkets seem to follow is that if they do not remain competitive, they will lose their customers to their competitors. We, at Callander McDowell, think that this is not actually the case and that there is a totally different rationale for discounting smoked salmon.
IntraFish suggest that many of the price promotions take the form of two for the price of one of ‘Buy one get one free’, but this is not what happened, out there in the retail sector. We have listed all the smoked salmon promotions offered by the main UK supermarkets this year as well as the full range for comparison. The first price is the standard price, the second is the promotion. Products in parentheses are usually available but were not present in the run up to Christmas. These are mainly smaller sized packs.
Standard price Promotion
Traditional
100g
£1.48
(200g
£2.91)
400g
£4.47
Last year priced at £5.99
Premium
100g
£2.33
Budgens
Traditional
50g
£1.79
100g
£2.95
(200g
£4.99)
400g
£9.49
£5.99
Coop
Traditional
(100g
£2.99)
200g
£5.99
£2.99
Marks & Spencer
Traditional
100g
£2.99
200g
£4.99
£4.49
300g
£8.99
£6.99
Orkney
100g
£3.99
200g
£6.49
£5.99
300g
£10.99
£8.99
Organic
200g
£6.49
£5.99
Morrisons
Traditional
100g
£1.25
200g
£2.35
2 for £3.99
600g
£5.89
Long strip
50g
£1.19
100g
£2.29
200g
£3.65
Premium
150g
£3.65
Safeway
Traditional
(100g
£2.99)
200g
£4.99
2 for £8.00
400g
£10.99
£5.99
Spey Valley
150g
£5.49
400g
£11.99
£8.99
Organic
150g
£4.99
2 for £5.00
Sainsburys
Traditional
125g
£3.69
230g
£5.99
£4.99
400g
£9.99
£6.99
Isle of Skye
125g
£3.99
200g
£6.29
£5.29
400g
£10.99
£7.99
John West
200g
£4.99
2 for £6.99
Somerfield
Traditional
(100g
£2.99)
200g
£4.99
400g – 100% extra free
So Good Hebridean
200g
£5.99
£4.79
Tesco
Traditional
100g
£1.98
200g
£3.88
Specially Selected
200g
£4.95
£3.65
400g
£11.99
£5.99
Finest
150g
£4.79
500g
£10.00
Organic
100g
£3.25
Waitrose
Traditional
70g
£2.29
140g
£3.99
210g
£5.79
£4.79
400g
£9.99
£6.99
Speyside
70g
£3.29
140g
£4.99
Ghillie & Glen
200g
£5.89
400g
£9.99
£6.99
Organic
140g
£4.99
The clear trend is that it is the larger sized packs, which have been put on promotion. These are not usually available during the rest of the year and are brought in especially for the Christmas market. Most of the promotions are in the form of a discount of a couple of pounds, rather than two for the price of one. In fact, only two of the smaller supermarkets have offered a deal of this type. This reflects exactly what has happened in previous years with similar levels of promotion. We, at Callander McDowell, believe that the discounting is not really designed to attract customers away from competitive supermarkets but rather as a loss leader to push customers to the much more expensive smoked salmon products, which fill the shelves at Christmas time. There are a whole host of salmon terrines, mousses and stuffed parcels made from smoked salmon, which are stocked at Christmas and clearly offer the supermarkets the potential to increase their margins over plain smoked salmon. Customers attracted towards cheaper smoked salmon are more likely to pick up the added value smoked salmon products as well, especially as they are eye-catching when served to the table.
In addition, the
reality now is that as salmon has become cheaper and more widely available, so
has smoked salmon. It is no longer the expensive luxury it one was. The market
has evolved and the luxurious smoked salmon products take many different forms.
This is also a mirror of what is happening to the wider fresh salmon market.
Finally, it is worth
pointing out that it is not just British supermarkets, which are discounting
smoked salmon at this time of year. The French chain Auchan are offering the
following deals:
4 slices Norwegian
salmon (160g) plus 1 slice free (40g)
Euro 4.95
6 slices Norwegian
salmon (240g) plus 2 slices free (80g)
Euro 7.50
More details of the French market can be obtained from the Callander McDowell French retail survey. E-mail us for further information.
Driving seat or back
seat?: In reLAKSation no 111, we, at
Callander McDowell, discussed comments made by eminent Scottish writer Magnus
Linklater, who bemoaned that Scotland had lost control of salmon farming.
IntraFish have discussed this subject again because several industry insiders
have suggested that Scotland risks becoming a ‘branch economy’ in salmon
farming with the ultimate decisions being taken in head offices, which are not
in Scotland. Intrafish state that many in the industry have come to the
conclusion that the UK and Scottish governments have not been sufficiently
supportive of the domestic industry in recent years and this is why 85% of the
industry is now owned abroad.
One industry source
told IntraFish that the high price of foreign ownership is due to the too rapid
expansion of the industry fuelled by inward investment. He suggests that the
quality of management might have left a lot to be desired, with a lack of the
visionary thinking then needed to take the industry forward. We, at Callander
McDowell, certainly think that this may be partly true.
However, we feel that
the real reason that Scotland has lost its driving seat in relation to salmon
farming is due to a lack of focus on the market. Sadly, this continues today as
can be seen by the latest Strategic Framework for aquaculture in Scotland.
The Scottish industry
has continually focussed on the production of high quality salmon, for which
consumers are expected to pay a premium price. Unfortunately, it has become
increasingly clear that this is not what many consumers actually want. The
Scottish industry has therefore been headed in one direction, whilst other
producers have headed off in a different one. The result of this is that the
Scottish industry has lost out. They have headed down a blind alley and whilst
they became more and more blinkered to what was happening in the market place,
they were both overtaken and taken out.
This can be best illustrated by the example of one single product; Spey Valley smoked salmon, Safeway’s premium smoked salmon range. The packaging for this product is shown below.
Whilst the front of the pack is a standard piece of smoked salmon packaging, it is the reverse, which demonstrates the decline of the Scottish vision. A year ago, the reverse of the Spey Valley packaging incorporated the Tartan Quality Mark to show that the salmon was of premium quality. Interestingly, the fact that the TQM then appeared on the reverse of the packaging showed that it had already been deemed to be of lesser importance to consumers since it was concealed from customers' view when displayed on the shelf. It could therefore not be used to persuade consumers that this smoked salmon product was of superior quality. Instead, consumers were left to contrast the Spey Valley salmon with Safeway’s traditional smoked salmon.
This year, the same Spey Valley smoked salmon packs appeared on Safeway’s shelves as they did in 2002, but this year, the Tartan Quality Mark had been overlaid with a grey coloured square so that it merged in with the general background colour.
This
year, Spey Valley smoked salmon is clearly not produced from Tartan Quality Mark
salmon and it is being bought up in much the same way as it was last year.
Consumers appear unconcerned whether the Tartan Quality Mark is present or not.
This is because they are more concerned about whether the smoked salmon looks
right and more importantly tastes right. Consumers are also concerned that they
are not paying over the odds for the right product to meet their requirements.
The reality is that it is unlikely that consumers would be too concerned if
Safeway’s premium range were produced from Norwegian salmon as long as it
meets their requirements. Certainly, consumers are equally happy to buy
prepacked salmon fillets from Safeway irrespective of whether the salmon is
Norwegian or Scottish or whether the Scottish salmon is of Tartan Quality Mark
quality or not. This is because Safeway offer their customers all three choices
and customers appear willing to select any of the three options, especially as
the price is the same for all three.
The
Scottish industry has continually focussed on origin and quality, yet Safeway
customers demonstrate that both issues are of little concern to them. Meanwhile,
other producers have looked at what the consumers actually want and have adapted
their production accordingly. Scottish producers are simply missing out. They
have opted out of the driving seat, preferring to sit in the back.
Deboned !:
IntraFish recently posed the question whether there is still scope to reduce the
cost of production in Scotland? The answer elicited was ‘Decidedly not’.
According to one farmer, the universal view in Scotland, is that costs have
already been pared to the bone.
Whilst we at Callander
McDowell are not salmon farmers ourselves and therefore will be adjudged to be
unqualified to express any view as to whether costs are the lowest possible, we
do believe that it is the limitations of the Scottish strategy, which is the
major constraint. We would argue that the costs of producing higher quality fish
can only be justified if they generate sufficient premium to offset the higher
costs involved. If the higher quality fish do not generate any extra premium,
then the extra cost of production is wasted.
We would accept that
there is a niche market for premium salmon and certainly there are one or two
companies who have aimed to exploit this market. Unfortunately, the market is
far too small for all Scottish salmon production and thus, much of the extra
production must compete in the wider commodity market. If it is to do this, then
companies must adopt a different production strategy and especially one, which
is better suited to taking advantage of the economies of scale. This requires
much further vision than currently employed, but we at Callander McDowell
certainly believe that there is still plenty of scope to adapt to the current
salmon farming climate. This may not be to the industry’s liking, but the
reality is that there may not be much option. It is a matter of evolving with
the rest of the industry or else risking all.