reLAKSation
207.
In or out?: In a recent IntraFish editorial, Drew Cherry poses the question whether salmon is passé? He was prompted by an article written by Bryan Curtis in Slate.com in which he argues that many consumers may be suffering from an acute case of salmon fatigue. This is because salmon is now on the menu in virtually every restaurant chain and therefore has become declassé. Mr Curtis suggests that ordering salmon in a seafood restaurant produces a mild feeling of shame, the kind of embarrassment one feels when a dinner companion requests spaghetti bolognese in an Italian eatery or pad thai in a Thai restaurant. He surveyed a few elite New York chefs who confirmed this view. Dan Barber, owner of Greenwich Village restaurant Blue Hill told him that salmon is now pretty much passé. After reading, Mr Curtis’s article, one is left wondering whether this is the end of the road for farmed salmon?
The answer is of course a resounding no. As usual, the views of one or two elite chefs are interpreted as being indicative of what’s happening in the wider marketplace. The reality is that through successful farming, salmon has become widely available to the mass market. This is why it is now listed on every restaurant menu. However, just because it is available in very restaurant does not mean that it is passé. What it means is that salmon is a great food which many consumers are more than happy to eat. Of course, the widespread availability of salmon is often used as proof that the market image of salmon has been devalued. In fact, it is not just restauranteurs and food critics who support this view, even some salmon farmers believe that the widespread farming of salmon has devalued its image, but so what? We, at Callander McDowell, have argued many times that the industry has to decide what it is that it is trying to produce. If we want to produce a high quality fish for the small luxury market, then we must accede to the demands of the minority of producers who want to impose production or trade controls to ensure that salmon retains a luxury image. Alternatively, do we want to go all out for production growth to satisfy the demand of the mass market who want a value for money everyday meal choice? This continuing indecision is what destabilises the salmon market and has led to the continuing trade dispute in Europe.
Inevitably, those who advocate producing salmon specifically for the luxury market will lose the argument. The main industry players are gearing up for further expansion and market growth. The small producers who are fixated on the perception that their salmon is of the highest quality and merits a premium price will either develop their own local market or will fall by the wayside. As we discussed in a previous issue of reLAKSation, a unnamed leading industry figure in Scotland has warned that the independent sector will collapse in weeks if it does not receive aid. Perhaps this is a better indication that the market prefers farmed salmon as an everyday food rather than a once in a while treat?
Of course, Mr Curtis’s view is based on the US market, which is different to that in Europe. This is because of the presence of wild pacific salmon, boosted by a slick marketing campaign. The question is now not whether to eat salmon or not, but to eat wild or farmed salmon? Mr Curtis suggests that salmon, or at least wild salmon, has gone upmarket. He quotes Julian Niccolini, co-owner of the Four Seasons restaurant in New York who described an upturn in salmon connoisseurship with diners now requesting specific wild salmon breeds. The rash of adverse publicity targeting farmed salmon has helped this move to the wild varieties, mainly at the top end of the market. Meanwhile, the wider market has continued to enjoy farmed salmon.
Whilst this is more a US phenomena, more wild pacific salmon is finding its way to Europe. Even the lowest price supermarket chains are starting to offer Pacific salmon on their fresh fish counters at prices well above that for the farmed fish. As in the US, it is the celebrity chefs who are encouraging this trend. Interviewed on the BBC TV Food website, top fish chef Rick Stein was asked ‘What do you think about the farmed salmon versus wild salmon debate?’ His reply was: ‘I'm afraid to say that a great deal of farmed salmon is rather flabby and fatty, so it's worth paying for organic farmed salmon or there's a lot of Alaskan wild salmon around at the moment, distinguished by its deep colour, which is excellent.’
Whilst top chef’s are never going to serve standard farmed salmon, just as they would always select the specialist beef, pork, and poultry, they represent only the very tip of the market. Most consumers want something else, which farmed salmon can more than ably offer.
Is salmon passé? It may be in the minds of these top chefs, who charge high prices for the privilege of visiting their restaurants. However, if we take a closer look at what a top chef like Dan Barber of the Blue Hill restaurant offers his customers. A review of his restaurant in New York magazine talks of dishes such as salmon, cod, halibut, duck and chicken. Surely that’s not the same chicken that is available in huge volumes in every supermarket and is now a cheap staple of the mass market. If salmon is passé, then chicken must be well past its’ cook by date!
Too much or not enough?: An article in Intrafish newspaper poses the question as to whether the salmon farming industry will eventually produce too much salmon for the world’s market to absorb? According to Lars Liabo of Kontali, the market isn’t saturated, rather that it continues to grow. He says that there’s room for increased production in the years ahead but warns that it is dependent on many factors. The most significant of these is that producers must continue to become even more efficient. Another factor is that if the technology can be found to transport chilled fresh salmon from distant producers like Chile, then this will open up new markets for increased production. He acknowledges that there is a limit between supply and demand, but just what that limit is remains unknown. Annual growth over the last five years has so far averaged about 10 percent despite claims from small producers in Scotland that the Chilean and Norwegian industrys’ have permanently over-produced and consequently dumped fish into the most developed markets.
Whilst Mr Liabo is unable to predict future growth we, at Callander McDowell, believe that demand will never become a problem and that it is supply that will be the limiting factor. We would argue that even if all the available production sites produce their maximum harvest, they would never satisfy the potential demand for salmon……provided that the industry produces what the consumer actually wants and that production and market grow hand in hand.
Issues such as transportation are largely irrelevant. This is because the market has already demonstrated its willingness to accept previously frozen defrosted salmon and still pay a competitive price.
Mr Liabo suggests that so far producers have been able to open up and develop new markets. We are not so sure. We would argue that there has been little effort to develop market-led strategies and that the most of what appears to be market development is actually price-led. At the moment prices are relatively high and whilst farmers bask in immediate riches, there is little consideration as how these prices will affect the market in the longer term. Many of these price rises are only just now starting to filter through to the retail sector. It remains to be seen whether these prices rises deter consumers or whether sales volumes can be maintained. Past evidence suggests they might not because the whole reason why the salmon market expanded in the way it has is due to the fact that salmon became affordable as an everyday meal option. If the price becomes too high, consumers will simply look for cheaper alternatives and the salmon market will contract. Fritz-Harald Wenig at the European Commission says that consumers should pay a fair price for the salmon they buy, but he remains quiet as to what will happen to producers if they won’t.
Mr Liabo argues that producers must become more efficient, which is true. Ever since 1989, producers have sought to reduce the cost of production in order to retain some margin as prices tumbled. This trend must continue as in order to maintain a cost differential for when prices start to fall again in response to consumer pressure for value for money meal choices. There will eventually be a limit to how far costs can be cut. The challenge will then be to seek margin elsewhere in the supply chain. We have argued previously that the main problem affecting the industry is the continuing focus on raw salmon flesh. We firmly believe that as the industry continues to evolve, this focus will change and with this change will become the recognition that the opportunities for salmon stretch far beyond the basic raw flesh. Is the industry producing too much salmon. The answer is not even near enough.
Chinese (quota) crackers!: Callander McDowell have regularly come in for much criticism concerning our stand on free trade. We firmly believe, as we have outlined above, that the salmon market still has enormous scope for development but that it is the continued fight between producers to establish a dominant market image that has hindered this development. When this issue has been resolved once and for all, then the industry’s efforts can be refocused completely on market development. It will then be essential that free trade should be allowed to prevail.
Based in the city of Manchester, it should be of no surprise that Callander McDowell support free trade as the city has a long association with the desire to trade freely. In an article in the local Manchester Evening News, the former president of the Manchester Chamber of Commerce is keen to point that Manchester offers a reminder that business will always find a way to prosper despite artificial constraints such as quotas. This is because Manchester’s Chamber of Commerce was established back in 1794 specifically to help local business find ways to trade with the French, notwithstanding that the two countries were actually at war. Manchester became famous in the 18th and 19th centuries as a place where men could trade without let or hindrance. This policy of Free Trade was known throughout Europe as ‘The Manchester Method’. That is why the Industrial Revolution began in Manchester and why ‘free trade’ is the foundation of the city’s subsequent prosperity.
Mr McGuire argues that if we cannot open our arms to competition, the lifeblood of innovation and enterprise, then we don’t deserve to be in business. He said that it is time that our political masters woke up to this fact and seemingly he is not the only one.
The Guardian newspaper suggests that Peter Mandelson has grossly underestimated the impact that the end of the multifibre agreement would have on European producers, despite having had 10 years to prepare for it. It seemed to come as a complet shock to Brussels that cheaper Chinese products would come flooding into the European market. Having bowed to the wishes of producers in southern Europe, Mr Mandelson and his team failed to predict the backlash of retailers who are just as cross as the producers but only more numerous and intensely more powerful. In a letter to Mr Mandelson and copied to the Guardian, one such retailer, Peter Simons of the 500 store Monsoon chain said that he had been sourcing products from India and the Far East for 32 years. With half of the store groups clothes now imported from China, Mr Simon points out that he didn’t go there to improve our margins, but rather because the Chinese make what we want. By comparison, textile workers in Italy and Spain cannot produce what we want to buy.
For us at Callander McDowell, the similarities with the salmon case are all too apparent. Independent Scottish farmers cannot or do not want to produce what consumers want and when buyers turn to foreign competitors, the local industry simply bleats and moans about unfair competition. We might have more sympathy for these producers but they too have had many years to adapt and have failed to do so. Equally, rather than stand up and fight their case, they prefer to hide behind unnamed sources and twist the facts. As with the textile imports, DG Trade have failed to understand the salmon market and as a result the Norwegian industry faces 5 years of totally unnecessary trade controls. Sadly, theses controls will not save the independent salmon producers as their days are clearly numbered. However, it is not overseas competition which will have destroyed this sector but a total unwillingness to adapt to the changing market.