reLAKSation 22.
Realising the Market Potential: The Irish Sea Fisheries Board (BIM) have published a report investigating the market potential for Irish seafood not just in the home market, but also covering the EU, Poland and Japan.
Although a wide ranging document, Intrafish reported on the part of the report focussing on the UK market. This suggests that the British market will enjoy significant growth especially in the fresh and chilled sector. Salmon is seen as the greatest opportunity with an expected 10% growth per annum, powered by increasing demand for portions and ready meals.
Clearly, this new report conveys the right message; however, the real question is whether it offers anything new?
There is scant targeted market research covering this market area and therefore it is not surprising that organisations like BIM believe it is necessary to highlight possible areas of market development. However, anyone who regularly carries out their family's weekly shop should be well aware of the changes to the pattern of consumer demand.
Such patterns might be best illustrated by consideration of the market development of a different protein source to salmon, but one, which shows many similarities. This is chicken.
Like salmon, chicken was once considered to be a luxury food. In many homes during the 1950s, chicken was always seen as a special treat. However, intensification of poultry production meant that chicken became widely available and more importantly, increasingly affordable. Chicken became an everyday meal option.
Fuelled by ever-lower prices, the market for chicken grew, which in turn fuelled production. Increased production forced down both prices and margins. Eventually, the market growth for chicken slowed down and producers began to look for alternative ways to encourage further market growth and at the same time, improve margins.
The solution was to start to produce portions, chicken breasts, thighs, legs and even the cheapest cuts; the wings began to appear in retail outlets, which in turn attracted new consumers who would not consider buying a whole chicken.
Producers now saw further opportunities with the development of flavoured portions and other value added products. The latest products to reach the retail sector include a variety of fresh chilled ready-to-cook chicken dishes. These better meet the need of the modern young consumer and are a far cry from the traditional idea of a whole roasted chicken as a family treat.
It is possible to see how such market development can be used as a model for the salmon industry. Like chicken, salmon was once considered to be a food for special occasions. However, the onset of salmon farming made it readily available to the consumer at a value for money price. Initially, salmon was always sold as a whole fish, but as margins have fallen, more and more producers offer portions, not just of fillets and steaks, but other more intricate cuts.
With portions now also widely available, the retail sector is offering more complicated options. Flavoured portions and ready meal dishes are starting to appear, although not at the same scale as from the poultry industry. The scope for further market development is enormous, especially as the price as salmon as a raw material continues to decline.
Sceptical Response: Following publication, the Irish report received a mixed response. Intrafish interviewed key personnel working within the fisheries industry, who all welcomed the report. However, at the same time, some felt that it had little significance for the smaller fisheries and aquaculture companies. This was because they believe that the sort of product development featured was well outside their capability. Instead, they felt that it was mainly the domain of the larger integrated corporations.
This is a natural response, since many of the smaller businesses do not have either the skills or the capital to extend their existing operations. Unfortunately, those companies who are unable to react to the changing marketplace may find that they are simply unable to compete.
Yet, this does not have to be the case. Whether it be fishing or farming, it is still possible for the smaller companies to compete against the largest concerns and develop the margin creating value added products. This is achievable, although to do so, the smaller companies will need to look towards co-operation with others. Locally based enterprises can join together to form joint ventures for the production of value added products, either themselves or through contract manufacture. This is not a new idea, as it has even been proposed as a way for the agricultural sector to regain some of their lost margin.
As production of farmed species continues to increase, such co-operation may be the only way that smaller farms might be able to compete and remain viable. It is therefore a mistake to dismiss product and market development as being unattainable.
Supermarket Promotions: The Irish report highlights the importance of in-store promotions. Detailed in Intrafish, the authors suggest such in-store promotions are important in challenging consumer fears; that promotions should highlight value for money as much as health; that the most effective promotions are price-based and that promotions offering 'Irish' products have the potential for success.
It is an interesting idea that in-store promotions should not only inform but also try to challenge consumer fears. This is because, as the report suggests, most current in-store promotions are simply price related. These take the form of money off discounts, Buy one get one free offers, or multiple purchase deals. Intrafish recently published an article about Sainsburys, the UK's second largest supermarket group. In this the fish buyer discussed some of the promotions currently undertaken. He said 'We're doing some good special purchase, half price, Bogofs on smoked salmon and even on fresh salmon, which we're promoting very heavily at the moment with 50% extra free. A lot of salmon sales are promotionally driven.'
By comparison, informative promotions are few and far between. It is not uncommon for free tastings to take place, but these are just tastings, often run by the same person based permanently in the store. Less frequently, branded products are promoted through a road show organised by the manufacturer. However, it is surprising how few customers are attracted to booths or trailers set up at the entrance to the store, even when product is given away free. It is no wonder that the supermarkets now rely so heavily on price promotions. The others forms of promotional campaign no longer represent the same value for money. This is simply indicative of the changing face of both the aquaculture industry and it's marketplace.