reLAKSation
205.
Will
they never learn?: According to IntraFish,
Professor Ragnar Tveiteras of the University of Stavanger said that Norway must
‘help’ consumers understand that fresh Norwegian salmon is of better quality
than frozen Chilean fish. He suggested that such help was required if Norway was
to meet the burgeoning Chilean competition in Europe. Professor Tveiteras made
his comments during a seminar on the competition situation for Norwegian salmon
at Aqua Nor. He added that whilst Chile’s exports to the EU were expected to
grow, the Chilean product was very different to that supplied by Norway. The
Chilean industry exports consisted mainly of
frozen fillet whereas Norway sells whole fresh salmon. This should
benefit Norway since Professor Tveiteras said that the mega-trend amongst
consumers when buying fish and seafood is a leaning towards fresh products
rather than frozen.
If
what Professor Tveiteras says is true then we at Callander McDowell cannot see a
problem for Norwegian producers. Clearly, market research shows that consumers
prefer fresh fish to frozen and as Norway and not Chile can meet this demand,
then Norway should be able to maintain a distinct advantage in the marketplace.
Any threat from Chile is unlikely to materialise. There should be no need
whatsoever to ‘help’ consumers understand that Norwegian salmon is of better
quality than frozen Chilean fish.
Of
course, there is the possibility that Professor Tveiteras has got it wrong and
that consumers might be more than willing to buy Chilean fish rather than fresh
salmon from Norway. It is certainly evident from observations in retail stores
that consumers prefer to buy fresh fish rather than frozen. The range of frozen
fish products has dramatically declined in recent years. However, many stores
still stock a variety of
frozen added value fish products including some made from salmon, so
frozen fish is not completely in decline. These added value products are made
from different salmon including wild fish from Alaska and farmed salmon from
Chile. In addition, whilst consumers may prefer fresh salmon, not all of the
salmon sold in Europe is sold direct to the end consumer. Much goes to the
processing industry where any advantage gained from fresh over frozen may be
diminished.
Even
though consumers may opt for the fresh product, the Norwegian industry may
believe that Professor Tveiteras’s advice may be worth taking and that an
initiative to help consumers understand that fresh Norwegian salmon is superior
to that from Chile. This would not be the first time that a salmon industry had
pursued such a strategy. Professor Tvieteras’s suggestion is very reminiscent
of the marketing strategy previously adopted by the Scottish industry. The Scots
maintained that their salmon was superior to imported Norwegian fish and even
merited a premium price. The recurring dumping cases are all clear proof that
this strategy failed. Having being unable to persuade consumers that Scottish
salmon was superior to Norwegian, the Scottish owned industry have repeatedly
sought to force their salmon on consumers by trying to exclude Norwegian salmon
from the marketplace. The reality is that consumers have recognised that any
‘better’ quality is not worth the extra expense. Value for money has
overridden any desire for the best possible quality product. Any attempt to
persuade consumers that Norwegian salmon is of a better quality is also bound to
fail. This is because what Professor Tveiteras has ignored in his calculation is
understanding what the consumer actually wants.
The
final nail in the coffin of the issue of fresh against frozen is the ability for
Chile to sell ‘fresh’ salmon that has been previously frozen (and can be
refrozen). This is a subject, which we at Callander McDowell have discussed
previously in reLAKSation. Some time ago, one British high street retailer
substituted Scottish and Norwegian salmon fillet with salmon imported from
Chile. This fish sold at the same price as the store charged for local fish,
which incidentally was significantly higher than fresh Scottish salmon sold by
the leading retailers. This salmon was sold without problem and seemingly
consumers were just as happy to buy the Chilean salmon as fresh as they were
salmon from Scotland or Norway. The store only stopped selling Chilean fish when
their supplier was taken acquired by another company who operated a different
buying policy.
The
real issue is that it is not a question of whether the salmon consumers buy is
fresh or frozen or whether it is from Norway or Chile or even Scotland. What is
much more important is whether it is what the consumer wants to buy!
Help!!:
Whilst Professor Tveiteras suggests that the Norwegian salmon industry should
help consumers understand that fresh salmon equates to better quality, the
independent Scottish industry has been begging for help so that they can
survive. The Glasgow Herald reports that the independent sector has met with
Highlands & Islands Enterprise in an effort to raise the commercial loans it
needs to remain solvent. A ‘senior industry figure’ warned that the entire
independent sector could fold within two months. According to the Herald, the
independent sector represents less than 20% of the Scottish salmon industry and
is made up from nearly 80 companies.
We,
at Callander McDowell, recognise that this is a very difficult subject to
discuss for no matter what we say, the independent industry will always find
someone else to blame for their circumstances other than themselves. We do agree
with Sandy Cumming of HIE who said that whilst he accepts that one or two
companies may be in serious financial difficulty, it is unlikely that there will
be major company failures throughout the whole independent sector. Certainly,
Loch Duart Salmon are proud to announce on their website that they have remained
profitable for four out of the last five years. Equally, Angus Macmillan of West
Minch Salmon spoke
at the organic fish farmers meeting about how well he was doing. In addition,
salmon prices are extremely healthy. It is therefore difficult to see how nearly
80 companies are on the point of collapse.
Part
of the problem is that whilst the Herald claim that there are 80 companies
operating in the independent sector, the EUSPG, who seem to speak for
independent farmers claim that there are less then 30 companies and they
represent 90% of independent production. We have argued previously that such
figures don’t really add up and that the EUSPG have overstated their problems.
In this case, the senior industry figure who claims that the independent
industry is on the point of collapse remains unnamed. Clearly, whoever it is, is
not willing to stand up and make these claims in public.
We
have no doubt that some farms in the independent sector do have problems. For
years, they have pursued a strategy in which they extol the superior quality of
the salmon they produce and expect that they should be rewarded accordingly.
Unfortunately, the wider salmon market has sought salmon which are considered to
be the best value for money rather than the best quality and therefore Scottish
farmers have not been rewarded as they anticipated. Rather than adapt to a more
viable strategy, the independent sector has sought a protectionist exclusion
policy aimed at the competition , which too has failed. These farmers have
continually refused to focus on what consumers actually want and they are now
paying the price. Mr Cumming has indicated that HIE would respond more
favourably to salmon companies that are prepared to follow the example of
successful companies who have already exploited niche markets with organic and
sustainable production. He is less happy about providing funds to companies
simply to keep them afloat.
The
unnamed senior industry figure said that without help, it would be the end of
independently Scottish owned companies. We would argue that if consumers are not
really interested in the origin of the salmon they buy, then they are even less
interested in the origin of the people who own the company that produces them.
The independent salmon industry can have a future as long as it realises that
they need to produce what the consumer actually wants, rather than produce what
they think that the consumer actually wants. This is where the independent
industry needs most help.
Branded:
Market researchers A.C. Nielsen have found that over 60% of global consumers
think that private label brands are as good as their branded counterparts. An
editorial in IntraFish concludes that the old argument that the quality of
branded products is better is no longer valid. Private label manufacturers are
now offering products that are as good as the branded option at a competitive
price.
IntraFish
pose the question as to where this trend will lead and conclude that the answer
can be found in the UK market. In the British retail sector, private labels
dominate the market so that branded products, especially seafood, is becoming
increasingly rare. For example, private label now accounts for 80.4% of chilled
seafood sales. IntraFish point out that this means that naming a seafood brand
has become increasingly difficult and as the assault on brands continues, will
become increasingly more so. IntraFish therefore pose the question as to what
the big branded players will do to stay alive?
Callander
McDowell conduct regular observations of the seafood market as part of our
surveys of the retail sector. Over the years, we have watched the changing
trends, especially the development of private label product and it is clearly
evident as to the different strategies adopted by the manufacturers of branded
products. These can be summarised as:
-
Offer the retailer a deal to supply all their seafood needs as a complete
package so negating the need for any private label product.
-
Become a supplier of private label in parallel to their branded products.