reLAKSation 26.
Choking the market? The website FIS.com has attempted to discover why there is such a discrepancy between prices in the marketplace. There is a lot of talk about low prices in the industry, but yet retailers are supposedly not reflecting these prices in the salmon they sell.
FIS.com estimate that landed price for imported salmon at Miami was about USD 1.90/lb, whilst typically salmon fillets retail at about USD 5.00/lb. They ask why consumers are not benefiting from this current low price? They also pose the question whether it is the retailers, who are continuing to charge higher prices, who are encouraging a global glut, rather than Chilean salmon farmers, as some now claim?
The reality is that retailers are faced with two key, but inter-related issues.
The first is that as many farmers have discovered to their cost, it is very difficult to force prices back up, once they have fallen. Low prices do attract new consumers, but these consumers are attracted by the fact that the price is low. If prices subsequently increase, these new consumers look for alternative products. The market then shrinks so there is no overall gain. However, retailers can provide their customers with better deals in the short term through the use of BOGOF and other offers.
More importantly, salmon continues to experience identity problems within the marketplace. Salmon farming has brought about many changes, not least that salmon itself has evolved from what was once considered to be a luxury food into a low cost value for money everyday meal option. There continues to be a lot of uncertainty in the marketplace as to which it really is. This is not just with the end consumer, but also with the retailer and even the farmer. Some sectors of the market still want salmon to be the luxury food, yet how can this be justified with the current low price. Equally, some want salmon to be the mass produced, everyday food, but want to receive a high market price.
Many within the industry believe that generic marketing programmes are the solution, but the real answer lies with the development of market strategies. These would allow each sector of the market to develop independently and without conflict.
Global Marketing: A recent meeting of several of the world's largest salmon groups in Norway decided that it is far too early in the development of the salmon industry to invest in international brand development. This is a decision with which we at Callander McDowell would certainly concur, however, we might even suggest that such international brand development should not even be on the agenda.
Intrafish reports that Dag Eivind Opstad, former director of the Norwegian Seafood Export Council, suggested that other proteins like meat are not branded and therefore why brand salmon? This is nothing new. Several years ago, a leading salmon farming company tried to brand their salmon and failed. Their Managing Director of the time later wrote privately, 'they don't brand fillet steak do they?'
Mr Opstad also indicated that international brand names are extremely expensive to maintain. However, the issue goes much wider than this. Brands are expensive and require to be underwritten by a significant margin. Margins for salmon continue to decline and therefore it is likely that any salmon farming company will struggle to meet the high costs associated with branding.
Yet, it is not even this simple. Many well known brands are under pressure in the marketplace. Kellogg's, for example, used to highlight the unique nature of products claiming that they never produced breakfast cereals for anyone else. Yet, recently they have started to produce own label product for other companies.
This is necessary because of the rise of supermarket own label products. Supermarkets are now akin to brands and this has significantly increased the competitiveness within the marketplace. At a time when well known international brands are feeling the pinch, it is unrealistic to even consider such brand development.
The salmon industry has suffered in the past because it has focused too heavily on its own needs rather than those of the customer. The future success of salmon farming will ultimately depend on planning strategically to ensure that customer needs continue to be met.
Misreading the market: Tore Garmo, Chief Executive Officer for Burger King in Norway claims that fish is part of the new food trend. According to Intrafish, Mr Garmo claims that fish is gaining increasing importance on menus in restaurants for both enticing new customers and retaining existing ones.
Whilst there is no doubt that fast food restaurants like Burger King are keen to expand their customer base by offering a wider range of products than their usual burgers, we at Callander McDowell are not wholly convinced that fish represents a new trend in food consumption.
Mr Garmo illustrates his belief that fish is the new trend by citing the number of sushi bars, which continue to flourish throughout Europe. However, it is possible that Mr Garmo has misread the signs and that it is Japanese food per se, which has become the latest trend and not specifically fish. It just happens that fish features heavily in many areas of Japanese food, and not just sushi.
Hopefully, the fish production can benefit in the long term from this interest in Japanese cuisine and that consumers who previously had never considered buying fish might be stimulated to now do so.
However, a word of caution, the rapid growth of sushi consumption may not be sustained when consumers tire of this most recent trend. Let us hope that the next food fad also specialises in many fish dishes.