reLAKSation 151.
Pushing home the message: Running partially in parallel with the first phase of the Scottish industry’s campaign to increase consumer confidence in their salmon, British supermarket chain Sainsbury’s has been advertising salmon as part of its summer promotions. The question which we at Callander McDowell would like to pose is which campaign has contributed most to boost salmon consumption.
A copy of both advertisements follows:
In
summary, the industry promotion runs under the tag line ‘Only the finest
farmers produce the finest Scottish farmed salmon’ whilst the Sainsbury’s
advert offers ‘Mouth-watering half price offers’ and includes ‘Young’s 2
Salmon Fillets 380g was £5.99 now £2.99.
No
matter how attractive the picture of the farmer holding a whole salmon, we
cannot see that this image will cause a rush to buy salmon. Instead, it might
even deter consumers since many do not like to see a reminder of the animal from
which their food comes from. (How many times have we heard diners in restaurants
ask that the head be removed from whole trout before being brought to the
table). This is, of course, dependent on whether consumers actually registered
seeing the advert at all. We conducted a straw poll of confirmed salmon
consumers, which we know is not really indicative of anything at all, but not
one respondent claims to have seen the advert at all. By comparison, there was
an awareness that Sainsbury’s had salmon on promotion (helped by the fact that
Sainsbury’s have a large store locally).
We
have no idea as to whether neither or both of the adverts had any effect on
salmon consumption, but at least Sainsbury’s gave readers of their advert, a
clear incentive to buy their salmon. By comparison, the industry can only assure
the people who did read their advert that Scottish farmers are proud of the care
they lavish on their fish.
Whinging
and wining!:
The Independent newspaper reported that French vintners have held crisis talks
with their Agriculture Minister as the wine industry braced itself for a bumper
harvest. For several years, the price of French wine has steadily fallen. At the
same time, there has been tougher competition from New World wines such as those
from Chile. In 2003, wine from the New World overtook the French in global
export markets for the very first time. The increasing presence of these new
wines in the marketplace has meant that demand for French wine has been falling
for more than two decades. This year, a bumper harvest means that production
will grow by about 2% to 5.66 billion litres, despite the fall in demand.
We,
at Callander McDowell, wondered whether this sounded suspiciously similar to
that of salmon. Where the two converge concerns the health benefits. The French
government have been running a major campaign to fight alcoholism and drink
driving. Consumption has dropped by 20% over the past two decades. By
comparison, the UK government has contributed money towards a campaign to
encourage the increased consumption of oily fish like salmon. Isn’t it
therefore rather strange that it is the salmon industry that seeks protection
through the imposition of safeguards. One might have thought that it would be
the French vintners who would be demanding protection. Perhaps they recognise
that consumers do have a choice and it is they that need to adapt to changing
consumer tastes.
Wild
and wilder:
Philippe Barbe, Managing Director of Direct Ocean, one of France’s largest
salmon importers told IntraFish that some of his customers appear to be shunning
farmed Atlantic salmon in favour of low value wild salmon. He thinks that this
may be that some people believe that wild salmon is better than farmed. However,
we at Callander McDowell are not so sure. Mr Barbe has noticed that more wild
salmon is now being processed into ready meals even though he thinks that end
consumers are being cheated because the taste and texture of wild Pacific salmon
is much poorer than that of farmed Atlantics.
This
switch to wild salmon could well be motivated by the price. Mr Barbe reports
that blocks of wild salmon cost between Euro 3 - 4 whereas comparable farmed
salmon costs Euro 5.5. The problem for processors is that this gap may get
larger. Some analysts believe that the price of farmed salmon will rocket
towards the end of the year. Klaus Hatlebrekke of DnB markets has already
expressed the view that prices will rise to over NOK25 by early autumn as lower
volumes start to exert an effect. Rabobank analyst, David Kerstens also expects
prices to recover by August September. Certainly, reports in IntraFish suggest
prices are already rising due to a shortage of fish with some big salmon already
fetching more than NOK 25.
One
of the main reasons why salmon has been so readily used in added value
processing has been the cost. Salmon’s low price has made it very attractive
to processors because it is not only versatile but also because the low cost
means that the final product is still affordable to the end consumer. As prices
rise, salmon will become less appealing to processors as it also pushes up the
cost of the finished products making it too expensive for many consumers. This
is why processors have now considered using cheaper wild salmon as an
alternative, even if the taste is not as good.
Mr Barbe believes that the increasing demand for wild fish may also force up it’s price, but this is not certain. Processors seeking cheaper alternatives are more likely to start to source fish from other farming areas outside Europe. The reality is that salmon supply is now a global market. European salmon production cannot be considered in isolation so if for example, supply in Norway is limited, prices are not guaranteed to rise. Consumers are used to paying relatively low prices for salmon and this is what the market now expects. If processors feel that prices are too high, they will simply look for alternatives. Currently, this means a change to wild salmon, but it could just as well be some other fish.