reLAKSation 123.
Price
Wars: The Guardian newspaper reports that the impending takeover of
supermarket chain Safeway by smaller Morrisons will herald a new supermarket
price war. They suggest that whilst this will undoubtedly benefit the consumer,
it is likely to hurt the farmers as both prices and margins are increasingly
squeezed.
The
farming community, no doubt including salmon farmers, have been quick to blame
the supermarkets for this further pressure on margins as they try to compete for
a larger proportion of the potential customer base. They also say that lower
prices may increasingly compromise quality, and even food safety issues, as they
fight to retain even the smallest of margins. However, evidence from the retail sector would indicate that
the supermarkets are not solely to blame for low prices. It would seem that it is the consumer who is unwilling to pay
higher prices, when value for money alternatives are available as the
supermarket group Sainsbury have found to their cost.
Sainsburys
used to be the leading supermarket chain in the UK, but they have been gradually
overtaken by rivals Tesco, who are now number one. Retail analysts ascribe this
downturn to the fact that they have continued to focus on quality rather than
price and as a result they have been deserted by customers who have sought
better value elsewhere. Tesco, for
one, have shown that it is possible to maintain a quality profile as well as
respond to this demand for value for money.
They have achieved this by segmenting their product ranges. Thus as well
as their traditional products, they also offer a cheaper value range and a
higher priced quality range.
Clearly,
the same principle can be applied at the farm gate. Farms must look to differentiation rather than offer one
standard product. This way salmon
can be targeted at the different market areas, even if they are supplied to one
single retail customer.
Farmers,
whether from agriculture or aquaculture, cannot force consumers to pay more than
they are willing for their produce. Farming must produce what the consumer
wants, at a price the consumer is prepared to pay. It may well be that the only
way that consumers can be weaned away from this approach is when they realise
that the supermarket is no longer to stock specific products because consumers
find them to be too expensive. When consumers recognise that their choice has
been curtailed, they may be more willing to dig deeper in their pockets to find
the extra cash to ensure farmers are paid a better price for their produce.
Mistaken
or misled? According to the newspaper 'Scotland on Sunday', Andrew Lane
of Loch Fyne Oysters, claims that consumers are being misled about the quality
of the salmon sold in British supermarkets.
Whilst he undertook a vociferous attack on the supermarkets suggesting
that there were questions to be asked about the quality of the salmon sold to
consumers, he did not elucidate as to what these questions might be?
Presumably, he might have been implying that imported salmon was not
grown to the same quality standards as that farmed in Scotland.
This is only supposition, but it is hard to see that the boss of a
Scottish company would complain to a Scottish newspaper about the quality of
salmon grown in Scotland?
Are
consumers being misled? We, at Callander McDowell do not think so.
None of the supermarkets are making extravagant claims about the quality
of the salmon they sell, in fact few of the supermarkets make any claims at all
so it would be difficult to show that consumers are being misled at all. The
reality is that most consumers are prepared to place their trust in their
supermarket to supply them with salmon that is both safe to eat and of the
sufficient quality to reflect the price paid.
Most supermarket chains have invested in specialist technical department
to ensure that the foods they buy, including salmon, meet their standards.
In addition, most of the salmon supplied to supermarkets, whether it be
Scottish or imported, comes from a handful of specialist processors who operate
under strict quality guidelines. It
is not even as if salmon is treated any differently from other proteins, whether
they be meat or fish, because it is not.
It
is difficult to understand what Mr Lane had in mind when he said that consumers
were being misled. He said that there is very little on the label, yet there are
great variations in quality. Labelling legislation demands that salmon, like all
other fish, be labelled with the country of origin and method of production. It
also needs to labelled if it has been previously frozen. However, there are no
demands for quality information. If there were, it would be difficult to provide
because everyone’s perception of quality is very different. However, those
supermarkets that sell salmon under premium quality labels, do try to supply
more detail. This applies equally to other protein sources as well. For example,
the label on Tesco’s Finest Scottish beef topside roast states
‘Finest Scottish beef is produced only on selected
farms in Scotland using a predominantly grass-based diet to give a fuller
flavour. Hand trimmed extra succulent matured on the bone for added flavour and
tenderness.’ This can be
compared with Tesco's Finest Shetland salmon fillet, another Scottish product,
the label of which states: Tesco’s Finest salmon is carefully reared on
selected farms in the Shetland Isles, where the fish grow in the cold clear
waters of the North East Atlantic. The salmon is filleted
and carefully hand trimmed and
then deboned . Then only the Finest fillets are packed for Tesco, ensuring
consistent appearance, succulent
texture and absolute freshness.
Of
course, if Mr Lane, or anyone else has concerns that the supermarkets are not
passing on the quality message about Scottish salmon to the consumer, then maybe
they should ensure that the salmon carries a separate quality mark to show that
the fish meet a set quality standard. The reality is that such a standard already exists in form of
the Tartan Quality Mark. This was first introduced in 1991 and despite claims
that several British supermarkets had adopted it; consumers would be hard
pressed to find Scottish salmon labelled with the TQM in most British
supermarkets. The main reason why is that as we have already suggested, most
consumers are more than happy to place their trust in their supermarket to
supply salmon of the required quality. They do not need the extra reassurance of
a separate quality mark. Most consumers are only interested in whether the
salmon is good to eat and that it represents the best value for money.
Whilst
Mr Lane is willing to suggest that consumers are being misled about the quality
of the salmon they buy in supermarkets, he does not appear so concerned about
his own customers. He told Scotland on Sunday that he makes a point of
comprehensively informing his customers. We are not so sure. Mr Lane's company,
Loch Fyne Oysters, also operates a chain of restaurants including The Loch Fyne
Seafood Bar & Grill. The extensive seafood menu includes a couple of dishes
made from salmon. One of the main courses is 'Seared Loch Duart salmon with
wilted oriental spiced bok choy, which is priced at a reasonable £9.95. The
only additional information about their salmon is provided on the menu which
states that ‘our salmon from Loch Duart is Freedom Food Accredited’. The
Freedom Food logo printed on the inside cover of the menu also states RSPCA
monitored.
Although
the staff at Loch Fyne Restaurants are pleasant and helpful, the only extra
information they could provide was that the salmon were stocked at a low
density.
The
fact is that the Freedom Food Accreditation is a welfare standard and has little
to do with quality, although it may be suggested that happy animals will result
in good quality flesh. Loch Fyne do not make this association, in fact they make
no mention of quality at all. Even worse, Loch Fyne Restaurants do not actually
tell their customers that the salmon is farmed, only that it comes from Loch
Duart.
The
Loch Fyne website contains only one reference to quality. It states that
Loch Fyne is a registered trade marks which denotes a high level of quality with
regards to how goods are produced and where they are sourced from. We wonder
whether Mr Lane considers this statement to be more or less informative than
that provided by the supermarkets?
The
classic definition of quality comes from JJ Connel (1975. The Control of Fish
Quality. Fishing News Books). He states that fish are meant to be eaten
and decisions about what constitutes gastronomic quality rest ultimately
with the consumer, that is the person who eats the fish. Thus, in order to
discern those quality attributes that require to be fixed, the opinions of the
consumer must be elicited.
Clearly,
if consumers are happy to buy their salmon from the supermarkets at the price
they are prepared to pay, then they are not being misled. Mr Lane obviously has
his own ideas as to what constitutes a quality salmon, but he needs to look hard
as to whether it is the same idea as that held by the many consumers who
actually buy the salmon.
A
week is a long time…. They say a week is a long time in politics and
how right they are. In the last issue of reLAKSation, we expressed our hope that
2004 would herald a new realism in the salmon industry and that farmers would
start to look more at the market and rather than continue to focus on the
protectionism of the past. Yet almost immediately, IntraFish reported that Mike
O’Brien of the British Department of Trade and Industry has indicated that he
would be seeking ways to persuade the EU to safeguard Scottish producers against
cheaper foreign imports.
We,
at Callander McDowell, would repeat a question that we have asked many times
before. Why are Scottish producers so concerned about these so called
‘cheap’ imports when at least three quarters of British consumers have said
that not only would they actively choose to buy Scottish salmon, they are also
happy paying more to buy it?
The
industry’s marketing strategy has always aimed to achieve a higher price for
Scottish salmon, which, by definition means that other salmon must be cheaper.
It’s not been two years since IntraFish reported that a study, conducted by
Professor Young of the University of Stirling, showed that Scottish salmon was
selling at 25% above the price of other fish. Why are Scottish producers so
worried by these cheap imports…..unless it turns out that all these consumers,
who have said that they would pay more for Scottish salmon, are not so willing
to do so when actually faced with a choice.
Certainly,
British consumers do have a choice. All salmon sold in the UK is clearly
labelled as to the country of origin and therefore consumers are now able to
make a choice. Several British supermarkets actually make this choice even
easier for consumers because they sell both Scottish and imported salmon at the
same price. This means that the many British consumers who have said that they
would actively select Scottish salmon over imported fish are not doing so.
Equally, if they are not actively selecting the salmon they buy based on the
issue of origin, then it is even more unlikely that they will be willing to pay
more for something that appears to be of little concern to them.
So
what does this mean? What it means is that the issues which appear important to
the Scottish producer are not the same issues which are most important to the
consumer. What the consumer appears to want is a value for money every day meal
choice, not a more expensive, premium quality special treat. The industry cannot
force the consumer to change their choice and any decision to limit cheap
imports which will help push up the price will simply make consumers look for
better value alternatives. The industry must respond to consumer choice, not
dictate it. As a trade minister, Mike O’Brien should know this better than
most. Instead of imposing trade safeguards, his department should be helping the
industry to meet the challenges of providing what the consumer wants. We are
sure that this is a story to which we will have to return.