reLAKSation 265. Callander McDowell
Forecast-growth ahead?: Sid Patten, Chief Executive of the Scottish Salmon Producers Organisation told Seafood intelligence.com that the market outlook for Scottish farmed salmon is improving. This is good news, but is it actually news?
Against a background of a declining wild catch, how can any farming industry consider the market prospects to be anything other than good, especially as demand continues to increase? Of course, this is a long term view. In the short term, the story is slightly different.
Mr Patten has said that demand for salmon in the UK has grown by 13.8% from 2004 to 2006, however this data is misleading. It is difficult to understand why the data has been presented over two years and not annually. The reason is simple. The increased price of salmon has significantly suppressed demand this year and although we don’t know what the figures are, we are sure that if the data for 2005 and 2006 was presented separately, it would not tell the same upbeat story. Speaking at AquaVision, Mike Parker of Young’s confirmed how demand for salmon had declined this year. His presentation showed that volume of salmon in some sectors had declined by up to 30%. This is not the story that Mr Patten would like the world to hear.
The problem for Mr Patten is that it is some of his membership who are directly responsible for the market disruption that led to the increased price of salmon and the subsequent decline in sales. His approach is therefore more understandable.
Following years of accusations of over-production in the salmon industry, Mr Patten now says that the increasing demand for salmon means that production must now keep up with demand – and about time too.
As we have repeatedly argued. The real problem of the salmon farming industry is not over-production but under-marketing. The Scottish industry has largely ignored the marketplace focusing on the production of what they want consumers to buy. Mr Patten has said that the industry has had to look at itself and see how and where it was going. Let us hope so. There is still a huge market potential for salmon.
Interestingly, whilst the Scottish Salmon Producers Organisation have said that production is due to rise in response to the increased demand, they are unable to actually put a figure as to by how much. Mr Patten said that in order to understand the true rise, it is necessary to put the figures into context. This is easier said than done as the annual production figures seem to have become something of an uncertainty in recent years. As we approach the end of 2006, we are still waiting for publication of the 2005 figures. These would provide an estimate of production for 2006 but we would remain in the dark about what will happen in 2007.
Mr Patten said that in 2003 production stood at 169,736 tonnes declining to 158,099 tonnes in 2004. He said that it has fallen to 136,000 tonnes in 2005 (FRS prediction 136, 056 tonnes) and is expected to remain about 130,000 tonnes in 2006. After then, Mr Patten is unprepared to make any prediction.
Fortunately, there are other sources of information such as Kontali. Speaking in Chile, Lars Liabo offered the following data:
2005 120,000 tonnes
2006 128,000
2007 141,000
2008 147,000
Whilst these figures would seem to suggest that the rate of growth in excess of Mr Patten’s expectation, the reality is that Scottish production may never reach previous levels. Unable to obtain a premium for a Scottish label, many of the independent farms are now converting to either organic or sustainable production. This means that stocking levels are much reduced as will be eventual output.
Anyhow, this debate is largely irrelevant. It is not a question of how much salmon Scotland can produce, but whether it can produce the right fish for the right markets. Instead of investing in production, the industry might be better served if it invested in the right marketing.
What we see…: Our company adage is ‘what we hear is not what we see’. This generalism arises from many years of regular observation of the marketplace for aquaculture products. We mention it because National Seafood Week in the UK has just come to an end and we are yet again left wondering whether we have missed something.
At the beginning of the week, Intrafish reported that Seafood Week was getting into full swing aimed at encouraging consumers to eat fish twice a week. As part of the drive, the country’s leading supermarkets – Asda, Morrisons, Sainsburys’s, Tesco and Waitrose are to offer special promotions, offers and sampling to encourage customers to try a wide range of seafood products.
As regular visitors to many supermarket stores, we, at Callander McDowell can only say that we have been rather under-whelmed. We have found a great deal of difference between what is claimed will happen and what actually did.
The Two a Week website, which has replaced that promoting the National Seafood Week, provides the following summaries for each supermarket’s involvement.
The website states that 'ASDA is promoting the ‘2 a week’ message throughout Seafood Week on ASDA FM, the biggest commercial radio station in the UK. Stores will also offer price promotions encouraging everybody to buy two portions a week.'
Like many shoppers, our visits to supermarket stores are relatively short. In some stores, it is possible to hear ASDA FM but any attempts to continuously listen to what is being said are blocked by the constant interruption of colleague messages and announcements from the store greeters who obviously have a whole script to adhere to. We think we did hear the word fish in one store from the greeter, but the message was very garbled. ASDA FM may be the biggest commercial radio station in the UK, but we are not convinced that too many people actually can either hear it or listen to it so we wouldn’t be too surprised if few Asda customers heard the seafood message. Equally, we don’t believe that many Asda customers were encouraged to buy one portion of fish, let alone two, this week since none of the promised price promotions actually materialised.
Last year, Asda appeared to be one of the most enthusiast supermarket supporters of Seafood Week. Then, at least they made an attempt to pass on the message at the point of sale. This year, there was nothing.
Seafood Week 2005 - pennants and balloons Seafood Week 2006 - no promotional material
Asda, however, did devote a page of their latest magazine to Seafood Week mentioning the promotion twice – as in two a week!!
The Two a Week website stated that ‘Morrisons had produced a 16-page leaflet, featuring easy to cook recipes and cooking tips and sea to plate stories reinforcing the provenance of the seafood on sale. Some outlets will be hosting educational visits, teaching children the importance of eating two portions a week.’
We found the leaflet in all the stores visited but it was not accessible in some. The leaflet seems to be more about promoting Morrisons as Seafood Retailer of the Year 2006 rather than promoting Seafood Week. The leaflet was only available at the fish counter so would do little to attract customers who never buy fish and therefore never visit that part of the store. Morrisons also ran a competition for children in which they could win an i-pod if they could identify fish using the latin names. At least, the competition leaflet actually referred to Seafood Week. Some stores also displayed a poster at the back of the fish counter, which mentioned Seafood Week.
The Two a Week website stated that ‘Sainsbury’s will offer in-store sampling, with fully trained food advisors on hand to explain the health benefits of eating seafood twice a week. A brochure will also be available, encouraging customers to try something new.’
We found no mention of Seafood Week in any Sainsbury’s stores and any promotions running had also been running during the previous week so were not relevant to Seafood Week. Equally, we encountered a total absence of any in store sampling.
The Two a Week website state that ‘Tesco will be offering a ‘Try Me Free’ promotion on their pre-packed fish products during Seafood Week. Customers can purchase a specially marked fish product (cod, smoked cod, haddock and smoked haddock), send in a 20 word statement saying whether they liked the product or not and receive a refund (maximum refund £3.95)’
Tesco did actually run this promotion although we found the promotional stickers on Haddock and smoked cod only. Tesco tend to stack their fish produce horizontally so the front of the packs can only be seen if they are actually picked up. There was otherwise no mention of Seafood Week so the promotion was only relevant to those customers who had actually decided to buy one of the promotional products.
The Two a Week website stated that ‘Waitrose planned 20% off the majority of service counter fish and shellfish and will be offering an informative customer leaflet and recipe card.’
Waitrose did reduce the price of a number of fish species from their fish counter but there was no promotional material telling customers why. Waitrose discount fish every week and for all customers knew, the discounts were part of their regular promotional programme. Some packs of chilled fish did carry the two a week symbol.
Seafish will yet again deem National Seafood Week to be a great success but our view is that most consumers didn’t even know it was Seafood Week and even less did anything about it. It is fine to have promotional material available on the fish counter, although most supermarkets didn’t have any, but as most consumers give wide berth to the fish counter, it would fail to pass on the message it carries. What is needed is a simple display at the entrance of the store supplying vouchers and recipes to everyone including those who never consider eating fish. Of course, if free samples are available so much the better. From our perspective, the real problem is that the message is not reaching the consumer, especially those who have never considered eating fish. Once again Seafood Week has been a major disappointment.
No form: Following on from BBC TV Newsnight’s accusation that the Soil Association had allowed its organic standards to drop by allowing the certification of salmon farming, Patrick Holden, has acknowledged that for some people no form of salmon farming will be acceptable. It is however worth remembering that although organic production is featured heavily in the news, it is still a tiny proportion of total production. This may be changing as the latest Mintel survey indicates, but it is a minority. The Guardian newspaper reports that a third of British shoppers are now prepared to spend more on ethical foods such as Fairtrade, free range, local or organic production. Spending on these foods has risen by 62% over the last four years to over £2bn. Whether this third of the population are will buy this food remains to be seen. The indication is that price is still a major factor in deciding what to buy as can be seen from a report about chicken production in the Observer Food Monthly.
Chicken Typical Price Market Share
Standard £3.60 90.00%
Freedom Food barn reared £5.40 1.70%
Free range £7.20 1.09%
Organic £9.00 0.14%
Organic salmon may represent about 2% of total Scottish production so there is clearly still a long way to go for both salmon and poultry.