reLAKSation 149.
War: safeguard or supermarket prices: The Glasgow Herald reports that the British public will benefit as two of the largest supermarket chains slashed millions of pounds from the cost of many products including seafood. This latest round of price cuts has intensified the price war between the store groups and has increased the pressure on rival chains Morrisons and Sainsburys. Asda and Tesco are reported to cut a range of products by an estimated £50 to £53 million.
Whilst
supermarket shoppers will clearly benefit from these latest cuts, suppliers will
be under greater pressure as the stores look to minimise their loss. Many
suppliers, especially in the agricultural sector, blame the supermarkets for
reducing their margins by forcing down prices. It is therefore surprising that
salmon farmers have not followed suit. Instead, they have chosen to blame cheap
imports for their current difficulties. The British application for safeguards
argues that EU producers have had to reduce their prices to compete with the
low-priced imports. Yet it is equally possible that prices have fallen because
of demands by the supermarkets for cheap salmon. Thus, the low prices could be
buyer led and not fixed by the exporters. With most salmon being sold through
the supermarket chains, maybe it is they who have dictated how low the price
should go. It is even possible that the import price has been reduced to match
those paid to producers in Scotland. Could it be that the price of salmon in
Scotland is pushing prices down? This possible scenario is evident from the
pricing structure of salmon in British supermarkets.
Currently,
loose salmon fillets sold through the supermarket fresh fish counter is priced
at three different levels.
Sainsburys/
Waitrose - £9.99/kg
Asda/Tesco
– £7.97/kg
Morrisons
– £5.99/kg
These
prices reflect the market position of the various supermarket chains and given
that according to the safeguard application, there is a flood of cheap salmon
entering the EU, it might be expected that Morrisons would be buying such
salmon. However, this is not the case as all the salmon they sell is marked as
Scottish. There is even a suggestion that the salmon is from Tartan Quality Mark
producers, but the fish is not actually marked as such. Since Morrisons took
over Safeway earlier this year, they have brought prices slowly into line. So
far they have reduced the price of over 13,000 Safeway product lines including
salmon. Safeway used to price their salmon in line with Sainsburys so the price
of salmon has been slashed from £9.99/kg to £5.99/kg almost overnight.
Morrisons must have demanded that the price they pay also be cut which of course
puts the suppliers under increased pressure. As this transaction occurs
completely in the UK, cheap imports cannot be blamed. Equally, suppliers cannot
even blame the supermarket price war since Morrisons have always priced their
salmon at well below the price found in other supermarkets. There is no reason
why their Scottish product could not be priced even a little bit higher to ease
the pressure of their suppliers. However, in common with all the other
supermarket chains, Morrisons regularly offer discounts on their salmon. Unlike
all the other supermarkets, who discount by £2/kg, Morrisons cut their prices
by only £1/kg but this makes their fillet only £4.99/kg, which is well below
the price that other supermarkets usually charge for whole fish, normally the
cheapest salmon presentation of all.
Of
course, it is not just in the UK where supermarkets appear to influence the
price. It is only a short time ago that we highlighted how the French
supermarket chain Auchan were promoting whole salmon at Euro 3/kg, even cheaper
than in the UK.
Clearly,
if the European Commission decides to impose measures against imported salmon,
the underlying problem will not be resolved because salmon farmers in common
with other food suppliers are at the mercy of the supermarket attempts to
increase their market share.
Today’s
advert; tomorrow’s waste paper?: Readers of
last Thursday’s Guardian newspaper may be forgiven if they missed the launch
of the first phase of a two year £3
million salmon marketing campaign. The ‘naturally they’re the best’
advertisement was one of many that appeared in the Guardian, as well as other
newspapers, that day mixed in with adverts for computers, internet service
providers, banks, cars and electrical goods amongst others. It was just another
advert and was probably missed by many readers.
Those
readers that did scan the advert may also be forgiven if they didn’t really
understand what it was trying to say. The message was certainly confused.
According
to IntraFish, Ken Hughes of Scottish Quality Salmon said that the first phase of
the marketing effort is a ‘facts’ campaign to give consumers information on
salmon farming. He added that research suggested that the people who wanted
reassurance didn’t know much about salmon farming. This follows on from the
negative press last January.
The
advert which appeared in the Guardian stated that ‘To produce such high
quality salmon you must have the right ingredients. Fresh air, clear loch water
and great highland views.’ The picture showed part of a salmon cage in a still
loch against a background of mountains. For what is supposed to be a factual
campaign, the adverts appear rather flippant. Fresh air and great highland views
have little relevance to growing salmon. It might sound like good spin, but how
can the public be reassured if the facts are not actually true. The advert
sounds more like a promotion for Scotland than for salmon farming. Could it be
that the advert will encourage more tourists to visit Scotland than will eat
salmon?
There
is also further confusion in the advert because it is unclear whether the
intention is to promote Scottish salmon or Scottish Quality Salmon. The advert
focuses on Scottish Quality Salmon and its Tartan Quality Mark. Scottish Quality
Salmon claim to represent 65% of the industry (at least in terms of production
volume) so does the advert imply that the other 35% of Scottish salmon does not
live up to the mark. If the aim of this factual campaign is to rectify the
damage caused by the Science article, then surely the campaign should be
generic. In fact Ken Hughes of SQS told IntraFish that the campaign was generic,
yet the Tartan Quality Mark (formerly known as the Tartan Brand Mark) is a brand
which supposedly appears on salmon products found in retail stores.
Unfortunately,
anyone reading the advert and opting to buy Tartan Quality Marked Scottish
Quality Salmon will have an extremely hard time finding such labelled fish in
any of the major retail stores. The mark has virtually disappeared from the
British retail sector since most consumers are unable to differentiate this high
quality salmon from any other.
If
the campaign is supposed to be generic, then it should really be promoting just
salmon and not Scottish salmon. However, as this is a Scottish industry
campaign, then it would be expected to promote Scottish salmon even though most
consumers do not really care as to the origin of the salmon they buy. The
important factor influencing salmon purchase is more likely to be value for
money.
Ken
Hughes said that newspapers featuring the adverts are read by the main target
audience for salmon buying. Whether these adverts will change the publics
perception of salmon has yet to be seen. Certainly, only one advert has appeared
in Guardian to date and most readers will probably have difficulty even
remembering it. The newspaper, together with the advert, will have long since
been despatched to the waste bin to become just another bit of waste paper. The
danger is that the £200,000 spent on this first phase of the marketing campaign
might also consider to be wasted without producing any real gain for the
industry.
The
real problem with this promotional campaign is that it perfectly reflects the
current state of much of the Scottish industry. Ian Pritchard, Marine Estate
Manger with the Crown Estate, which provided most of the campaign’s funding,
told Fishupdate.com that they were pleased to be supporting this initiative as
it emphasises that we have an industry of which Scotland and the rest of the UK
can be proud. This point was underlined by Brian Simpson of Scottish Quality
Salmon who said that it is time that the industry stood up and said ‘ we are
proud of what we do, the way we do it and what we produce.’ Unfortunately,
who, besides the industry itself, really cares?
The
fact is that these adverts are about an industry singing its own praise. This is
symptomatic of the production-led strategies which dominate salmon production
today. The Scottish industry continues to focus on what it thinks that the
consumer wants to buy rather than what the consumer actually wants to buy and in
the same way these adverts promote the industry’s perception of itself without
any regard to the needs of the consumer. The only way that the Scottish industry
is going to minimise its difficulties is if it starts to focus on the consumer.
It needs to move from its production-led strategies to those which are much more
market-led. The £200,000 spent on this current campaign could have gone a long
way to help the industry make this change happen.