reLAKSation 246. Callander McDowell
Prices, prices, prices?: According to kyst.no, Jan Trollvik, an analyst with the Norwegian Seafood Export Council, the rise in salmon prices is consumer driven. He said that salmon is now a more mature product in the marketplace where consumers have a significant influence on prices. Salmon has become more popular not only because it is so widely available but also because new presentations have made salmon into a product on a par with chicken. Mr Trollvik said this is why salmon is now eaten so readily as a main meal of the day dish.
We, at Callander MacDowell would wholeheartedly agree with Mr Trollvik that salmon has become more popular because it is not just widely available but also because it is available in many different presentations. We have collected over 500 different examples of salmon meal choices and the list continues to grow. It is this huge range of salmon presentation that has attracted consumer interest. Where we would disagree with Mr Trollvik is that we certainly do not believe that the ongoing price rise is consumer driven. This is simply because the price rises are not yet being passed onto the consumer.
We have always argued that one of the main reasons that consumers have been attracted to salmon is that it is widely available at a value for money price. Salmon farming is solely responsible for lower salmon prices. Prior to the onset of farming, salmon was relatively rare in the marketplace and this was reflected in its price. As more farmed salmon came to market, then prices fell, making it more attractive to more consumers. Salmon farming was helped by the current crisis in the fisheries industry which meant that traditionally eaten fish were in short supply and therefore sold at higher prices. Consumers saw salmon as a good value, lower cost alternative.
As the price of cod rose and its availability declines, consumers chose to buy salmon instead, even though there was a long tradition for eating cod. If retail salmon prices were to rise, the big question is whether consumers will look for cheaper alternatives in the same way that high prices of other fish brought them to salmon?
We, at Callander McDowell, are not in the business of forecasting fish prices however we did express the view that we did not think that prices would rise up to the NOK 40/kg plus level. We were wrong, however our view was based on the fact that if ex-farm prices would reach NOK 40/kg then retail prices would be significantly higher. We thought that the prospect of such high retail prices would keep salmon prices below NOK 40/kg. This has yet to be shown to be the case.
What is different to our viewed scenario is that whilst farm gate prices have risen, retail prices have not. Consumers are still benefiting from relatively low prices and this has continued to fuel demand. Prices have risen over the past months, but typically by less than 50p/kg. Some prices, especially at the high end have even fallen. This has meant that consumers have seen little difference in the prices they pay and thus the price rises have had little impact on the consumer. So far it seems that the processors and suppliers have had to absorb the higher cost of their raw material. Jakob Sigurdson of Alfresca told IntraFish, that it was bloody hard work persuading the supermarkets to accept the price rises. He is pinning his hopes on indications from Fishpool’s forward contracts which are much lower than current prices. The hope is that prices will start to fall at the end of the year. Others do not share this view. For example Scot Trout Managing Director Muir Hunter believes that prices will remain high for the next 18 months. If he is right, it is inevitable that the retail sector will have to put up their prices to reflect the farm gate sales, otherwise the processing sector could well be damaged. If prices start to rise in line with farm gate prices, then the real question will be whether consumers will continue to buy salmon as Mr Trollvik suggests or whether they start to look for cheaper alternatives as Mr Sigurdson predicts. We share the latter view.
Our retail surveys clearly show that retail prices do not reflect those at current farm gate levels. This week Asda raised the price of its cheapest prepack salmon fillet but only to bring it in line with its fish counter price. Retail salmon prices have shown little movement but until they do, it is impossible to say whether the price rises are consumer driven or whether they are influenced by some other factor.
Sandwiched?: Last week was National Sandwich Week, although it was an occasion that was hardly marked except by the British Sandwich Association. Their Managing Director, Jim Winship told IntraFish that seafood processors are missing opportunities to bring more varieties of fish into the sandwich market. He said that the industry relies on prawns and tuna although it has introduced new ingredients such as crayfish and these are gaining popularity. He added that the sandwich industry is fashion driven and demonstrates few logical patterns although growth can swing from year to year between trendy sandwich bars and the mainstream retailers.
Clearly independent sandwich bars can respond quicker to trends and are capable of trying out new products with greater ease than the major retailers but most of the innovation does seem to come from the retail sector. The latest trends are not related to the fillings at all but rather to the bread. Consumers are now not just able to choose the filling but also from a whole range of different breads. The same filling can appear in brown bread, white bread, onion bread, sundried tomato bread, flat breads, wraps, subs and so on. This is the main focus for the latest innovations.
With regard to fillings, there certainly are a lot of sandwiches made with tuna or prawns but there are also other seafood varieties widely available. The most notable is of course salmon either as red/pink, smoked or poached. Red and pink salmon make good salmon fillings because like tuna they are made from canned products and can be bought in bulk and stored. Smoked salmon is also another widely available filling, usually made with cream cheese. Poached salmon is also readily available. Sainsbury’s have just launched poached salmon in a wrap. Alongside their salmon offering, Booths have a fresh trout sandwich.
In addition to various prawn varieties and crayfish, most retailers offer a seafood cocktail sandwich made from prawns and surimi.
It is difficult to see what other fish species lend themselves to sandwich fillings. It is not just taste which counts but also commercial considerations. We, at Callander McDowell would see that the greatest opportunities for product development would lie with hot smoked salmon and trout. These are regularly used in shop bought salads and would adapt well to a sandwich. Unfortunately, high raw material prices would seem to be a major deterrent to such opportunities.
Pure they’re not!: Seafoodintelligence.com report that Don Staniford from the Pure Salmon Campaign will ask the Office of Fair Trading to investigate Pan Fish’s acquisition of Marine Harvest. Mr Staniford is concerned that a monopolised or oligopolised industry will be less responsive to consumer and community concerns than one which is more competitive. Given that Mr Staniford’s aim has been to force the industry to replace open cages with closed containment systems, a previously more competitive industry has been just as unresponsive to his demands. Could it be that the consumer and community concerns to which the Pure Salmon Campaign refer are more Pure campaign concerns than those of the consumer and community. Perhaps the industry might take more note of Mr Staniford’s demands if he were to demonstrate the viability of a closed containment production system rather than just demand its implementation?
The Pure Salmon Campaign quotes the Competition Commission report of 2000 which resulted in today’s Marine Harvest. This said that the then merger would reduce competition and lead to increased prices. We would have thought that this would be attractive to the Pure Campaign as higher prices would mean less demand and therefore less fish in the sea. Clearly, by objecting to the latest merger, the Pure Campaign would prefer to see more competition and hence lower prices, which we know leads to more fish in the sea.
The reality is that Mr Staniford and his colleagues are, for reasons best known to themselves, simply intent on disrupting the salmon industry in whichever way they can. By requesting this investigation, they hope that they can bring the issue of salmon farming to a wider audience. They are not in the slightest bit interested in social responsibility or job losses.
An interesting side issue to this story appeared in Sunday’s BBC TV’s Countryfile programme which visited Johnson’s cod farm in Shetland. The programme featured Don Standiford’s sidekick, Bruce Sandison of the Salmon Farm Protest Group. He said that the organic cod farm produced fake cod in the same way that salmon farms produced fake salmon and that it was irrelevant that the farm was organic, it still dumped waste feed and faeces into the sea. Mr Sandisons’ website, the Salmon Farm Monitor states that “In discharging contaminated waste (including chemicals, uneaten feed, faeces and sea lice) directly into the sea, salmon farms use the marine environment like an open sewer. WWF Scotland estimates that salmon farms generate sewage waste equivalent to untreated sewage from 9 million people. The population of Scotland is 5.1 million. The government agency that allows fish farmers to discharge untreated sewage into Scotland’s marine environment is The Scottish Environment Protection Agency. In recent years, the Agency has received more than 700 discharge requests from fish farmers, all but 10 of which they have approved”.
Mr Sandison seems to imply that salmon farms are responsible for the greater part of the pollution found in Scottish waters yet a report in the Sunday Herald suggests that 18 of Scotland’s most popular beaches are likely to fail new bathing standards. Among the bathing waters that Sepa says may breach the new limits are beaches at Ayr, Turnberry, Prestwick, Saltcoats and Ettrick Bay on the Isle of Bute. Ballroom Beach in Aberdeen, Portobello West in Edinburgh and Eyemouth in the Borders are also likely to fail to reach the safety standards. The Sunday Herald reports that the pollution at these beaches comes from sewage works pumping waste into the sea, or from rain washing animal faeces off the land. The problem persists despite public investments of more than £3.5 billion into new sewage works over recent years. Perhaps if Mr Sandison is worried about pollution in Scotland’s waters he should first campaign to improve those areas that are actually responsible for the pollution, not those that he prefers to blame for the problem.