reLAKSation 233. Callander McDowell
Forty reasons: Intrafish report that analyst Samir Bendriss from stockbroker ABG Sundal Collier has suggested that salmon prices may soar to NOK 40/kg. We, at Callander McDowell, are not in the business of price predictions but we would be very surprised if prices were to reach this level and even if they did, it is unlikely that they could be sustained. There is one very good reason for this and that is that the majority of consumers who buy salmon do so simply because salmon represents a value for money meal choice. If prices reach NOK 40/kg then salmon will be considered to be too expensive for anything but a special treat. Demand for salmon will collapse until prices return to being affordable.
Over the last 5-6 years, salmon prices only once reached the NOK 40/kg level and this was in 2000. The price only stayed at that level for a matter of days before it fell and it has never really passed even the NOK 30/kg since.
Mr Bendriss’s prediction is influenced by the potential outbreak of bird flu, which he likens to the BSE outbreak in cattle. He calculated that a 15% growth in salmon price can be attributed to the negative effects of BSE, however there are differences between BSE and bird flu. Whilst eating BSE inflected meat could lead to a similar disease in humans, the risk of bird flu is from live birds. Eating properly cooked chicken does not lead to infection in humans. However, large sectors of the public will not be reassured by such claims and chicken sales will plunge if a confirmed outbreak is reported. The salmon industry will only benefit from a falling demand in poultry if they can offer consumers a good value for money alternative. High prices will be just as much a deterrent as bird flu itself.
One of the reasons that salmon prices are currently firm is that demand from Russia has been strong removing fish from the European market. This is despite the problems of supposed cadmium contamination. Obviously increased demand from consumers wanting to avoid poultry will push prices up but only until it is no longer considered to be value for money. Meanwhile, the latest reports from Russia now suggest that consumers there are starting to listen to concerns about contaminated fish. Kyst.no report that Børge Prytz Larsen of Royal Atlantic in Moscow has observed that sales of fresh salmon are falling by 30-40% even though he now sources fish from Scotland. This effect will weaken prices in the short term. Whether prices start to soar at all will depend on how quickly the Russian ban is resolved and whether bird flu actually develops into a real problem.
Salmon will make a good alternative meal choice for consumers concerned about bird flu but it is easy to forget that consumers have many alternatives to choose from and that they will not just buy salmon at any price.
Three reasons: Some of Britain’s best known chef’s have been signed up to support a new omega-3 awareness campaign to help boost consumption of oily fish such as salmon and mackerel. According to IntraFish, the campaign follows the March 2005 ruling from the Joint Health Claims Initiative that long chain omega-3 essential fatty acids, especially those found in oil-rich fish, help maintain heart health. The campaign is run by the seafood industry and government backed Omega-3 group, which was set up in 2002.
Their spokesman said that omega-3’s are becoming an everyday marketing message, which seafood manufacturers have the opportunity to grasp however, we, at Callander McDowell, wonder whether the boat of opportunity has already left the harbour?
The Guardian newspaper’s Saturday magazine recently featured a double page spread highlighting ‘Seven things you should know about omega oils.’ One of the seven things to know was ‘Where to find them’. Their answer – “While most people in the UK eat too much omega-6 they are deficient in omega-3. Good sources of omega-3 are rapeseed, evening primrose and walnut oils, although the richest supply are fish oils. Also good are fresh seeds, especially hemp, pumpkin and sunflower, wholemeal bread and wholegrain breakfast cereals (Shredded Wheat, Weetabix and oat flakes). Use a cold pressed seed oil in salad dressings. Nutritionists recommend we consume to portions a week of fish, including one of fish oil such as mackerel, herring and tuna. In fact, most Britons eat only one third of a portion of fish a week – one reason our omega-3 intake is so low. Organic milk and cheese provide good additional supplies. You find omega-6’s in most edible oils (notably sunflower and corn ) and in meat.”
The message that this seems to say is that whilst fish oils are the best source of omega-3 oils and that Britons do not really like eating oily fish, there are plenty of other sources from which the public can obtain their omega-3’s. This is a message, which is repeated in many magazine articles and is re-enforced by the appearance of foods enriched with omega-3 fatty acids such as milk, yoghurt and cereals. By comparison, eating fish for their omega-3 content is best left to those consumers who actually like eating oily fish. It would seem that the seafood industry will face a difficult challenge persuading consumers to eat oily fish out of choice especially as there are plenty of alternatives from which to choose. The Guardian article didn’t even mention salmon, now one of the most popular oily fish amongst fish eating consumers.
It is possible that if seafood companies develop products, which are attractive to those consumers who never eat fish, then this trend away from fish as a source of omega-3’s may be reversed. This new campaign is expected to raise the profile of oily fish. Ray Rice from the ‘Rich in Omega-3’ campaign told IntraFish that the group is developing a logo for use by members to identify their products. He said that the logo would likely be ready for use within a year. However, a year’s time may be too late since if the omega-3 message continues to be promoted in the way it is at present then many consumers will have already opted for a fish free supply. Fortunately for the seafood industry, Dr Rice seems to be a little out of touch since the group’s website already has developed a rich in omega-3 logo.
Some supermarkets have already adopted it as this photo taken this week shows.
Yet, we at Callander McDowell believe that such logos may not be enough. Certainly, the logo helps consumers identify those species which are rich in omega-3 but those consumers have to visit the fresh fish counter or chilled fish cabinet to see it. The real challenge will be persuade those consumers who never buy fish and never even see the fish counter that oily fish not only make good eating, but also impart a real health benefit.
One reason: The Sea Fish Industry Authority has recently been the subject of an independent review which set out proposals for its future. The most contentious recommendation was that the authority’s levy should now be applied to salmon. Traditionally, Seafish’s main role has been to meet the needs of the UK’s fishing industry but its role has changed as the seafood industry has become increasingly reliant on imported fish. Seafish work in three distinct areas. These are Business Services, Development including consumer marketing and Technology and Training.
The review has raised the issue as to whether the traditional focus towards fishing technology is now relevant and whether more focus should be placed on how the wider industry can meet the interests of the consumer. This new focus on a seafood industry is the reason why the review has proposed that salmon should now come under the Seafish remit. When Seafish was established by Government act in 1981, salmon were excluded. Hearsay suggests that the reason why was that one member of the House of Lords believed that salmon were too exclusive to be lumped together with ordinary fish. Of course, farming has now changed that perception.
According to Seafoodintelligence.com, Sid Patten of the SSPO has rejected this proposal saying that the overwhelming view of the salmon farming industry is that they are best served by an organisation dedicated to safeguarding its long term future, but then that is what he would be expected to say.
The reality is that the consumer isn’t in the slightest bit interested as to whether the fish they buy is overseen by one or two or three different organisations. They are only interested in whether the fish they buy is of the best possible quality, is affordable and is good to eat. Common sense would suggest that this requirement can only be satisfied if all the fish and seafood meet the same criteria and are marketed in the same way.
Currently, Seafish and the salmon industry market their fish in different ways. Seafish’s main thrust is now the National Seafood Week. It does seem nonsensical that some fish on the fishmongers slab are not covered by this promotion since any consumers would naturally think that a week-long promotion of seafood would include everything harvested from the sea. At the same time, the salmon industry has never managed to raise sufficient money to run effective marketing activities and therefore salmon marketing is virtually non-existent.
We, at Callander McDowell believe that the sensible approach is that Seafish operate as an umbrella organisation for all seafood but then each interest group runs a separate subgroup that focuses on their own specific needs. This would enable every interest group to pursue its own strategy but benefit from the experience of the wider industry. It is worth remembering that the one reason why any company is in business is to satisfy the needs of the consumer. If these needs can be better served through co-operation and collaboration then the recommendations of the Seafish review should be worth consideration.