reLAKSation 166.
Drinking
horses: Chairman of the European Salmon
Producers Group, Angus Grains, told the IntraFish Media newspaper Fiskaren that
safeguard measures must include a minimum import price. Mr Grains said that he
hopes the safeguard committee will support this position, as no other solution
would be acceptable.
However,
we at Callander McDowell, suspect that this hoped for imposition of the MIP may
not live up to Mr Grain’s expectation. The latest issue of Fish Farming Today
includes an article written by a group of Norwegian students studying
International Marketing in London. As
part of their course, they undertook a diploma project looking at the market for
salmon in England, which consisted of in-depth interviews with ten fish
processing and wholesale companies. Some
of the companies argued that when the MIP had previously been in place, it had
been difficult for Norway to export its fish to Britain.
Consequently, Norwegian salmon had been more expensive than equivalent
Scottish fish. As all the companies
said that the most important factor affecting their buying decisions was price,
Norwegian fish were definitely not as competitive in the English marketplace.
The UK market therefore favoured Scottish fish.
What
is interesting is that the reason Scottish fish were cheaper was that the market
would not let the price of Scottish fish rise to a level compatible with the
MIP. This is because the market demand is for ‘value for money’ fish and not
for salmon at any cost. Clearly, if
the market is limited as to how much ‘value for money’ fish it can buy,
prices will still not rise above the level perceived as the maximum that
consumers are prepared to pay because there is no market for more expensive
fish. Should the Commission now decide to reintroduce the MIP, Scottish farmers
are unlikely to benefit from a comparable price rise.
There's a common saying in the UK that you can lead a horse to water but
you can't make it drink. In exactly the same way, the Commission can aspire to
higher salmon prices in the EU market, but they can't force consumers to spend
their money on them.
Where
in the world?: The BBC has just begun
broadcasting a new television series; 'Full on Food'. This is a mix of news,
features and recipes in front of a live audience.
The
first programme included a news item concerning the Meat and Livestock
Commission, the agency responsible for promoting the consumption of beef and
pork. They argue that there should
be better labeling of meat in the UK, and a survey they conducted showed that
61% of consumers agree. The MLC say
that information should be provided as to where the meat comes from and how old
it is, i.e. if it has been hung after slaughter and for how long.
The
programme presenters said that if consumers were buying wine, details of the
grape, the vineyard and sometimes, even which slope the vine is grown on, is
provided on the label and therefore why not the same degree of detail for meat.
Some
supermarkets have recently improved their labeling, providing much more
information. Some salmon and smoked salmon products include details of the
specific location that the salmon were farmed. We have previously mentioned the
example of smoked salmon from Shetland and listed some of the locations cited.
The list has since expanded and includes locations such as Loura Voe, North
Sandwick, Nevis, Hoy, Flotta, Spoose Holm, Wadbister, Hammerness, Punds Voe,
Skelda, Hoganess, Hoove, Burwick, North Knowe and Binnaness.
However, it is unclear as to what the consumer is supposed to do with
such information. Tesco refuse to provide details of where these sites are in
Shetland saying the information is confidential.
This diminishes its value, yet at the same time, does
it make any difference to the consumer if they are unable to
differentiate between each location?
The
presenters of 'Full on Food' found it difficult to accept that only 61% of
consumers thought that improved labeling was needed. Yet, they should not be too
surprised since evidence would suggest that many consumers are simply not that
bothered. Instead, they are happy to leave decisions as to where their food
comes from to the supermarket buyers, who can then buy the best quality food at
the best possible price.
Part
of the reason for this is that more and more consumers are buying added value
convenience food rather than the basic raw ingredients.
Whilst both producers and foodies may be concerned about the origin of
their salmon, those who buy processed foods, such as salmon en croute, are much
less interested as to where the various different ingredients come from.
Whilst
the TV presenters may be concerned that only 61% of consumers want better
labeling, experience has shown that many respondents to such surveys say one
thing and do another. The figure of 61% may in reality actually reflect an even
lower interest in labeling than it would suggest.
Branded!:
Two post graduate students from the Norwegian School of Economics and Business
Administration have suggested that Norway has missed the opportunity for
branding its salmon. IntraFish
reports that whilst Scottish salmon generally fetches better prices in the
French market, Norwegian salmon fails to achieve a similar premium in any
market, even those in which it is highly regarded. The students conducted market
studies in Japan and France and found that there is a strong association between
Norway and salmon. They conclude that this will provide a strong basis for brand
building based on country of origin on a par with products such as champagne and
Parma ham. We, at Callander McDowell, are not convinced.
There
is already plenty of evidence to indicate that developing the country of origin
for salmon as a brand does not work. This is why the Scottish industry have
continually sought to exclude Norwegian salmon from the European market through
trade actions because most consumers have shown that they are not concerned
where their salmon comes from but are more interested in where it represents
real value for money. This applies equally in France where the premium for
Scottish salmon comes from its association with Label Rouge.
This sector of the market accounts for only about 15% of Scottish imports
to France. The majority of Scottish
salmon exports fail to generate such a premium.
The
two researchers also suggested that such brand building can be compared to
champagne and Parma ham. This is a misconception. Both these products have
significant value added and bear little relation to the basic raw material from
which they are produced. Adding
value is the main building block of a well-defined market-led strategy, but this
is something the Norwegian industry has by and large ignored. It is extremely
difficult to brand raw salmon flesh, irrespective of its origin and such a
strategy can soak up significant funding for very little reward.
The
researchers also concluded that co-branding would bring benefits for the
Norwegian salmon. Yet, the examples they cite, such as Dell and Intel are a huge
distance from raw salmon flesh. It is a pity that IntraFish did not report how
they suggest it would work for salmon because there is no clear association for
raw salmon and another brand. It
might be another story if the Norwegian industry had invested in value added,
but then it is unlikely that a value added industry would consider branding to
be such a lost opportunity!