reLAKSation 274. Callander McDowell
No smoke without fire!: Last month, IntraFish reported that sales of smoked salmon in France jumped by 5% in volume during the first nine months of this year. The figures came from AC Nielsen and were published by the French magazine Lineares. The increase was even greater if sales from supermarkets and hypermarkets are considered separately and the peak Christmas period has not been included.
According to IntraFish, the strong sales performance appears far removed from the situation earlier in the year when a group of salmon smokers sounded the alarm over high raw material prices in the first half. The president of the French Salmon Smokers Federation, Jean Louis Le Painteur, said that prices are a far cry from levels two years ago when salmon smokers were paying around €3/kg.
We, at Callander McDowell, are quite surprised by this reported growth, especially by the French supermarkets and hypermarkets. As in previous years, we have regularly visited France to conduct our retail surveys this year and our belief is that the high raw material prices have had a dramatic impact on the smoked salmon sector. The major changes that we have recorded are, not unexpectedly prices have risen but more importantly, the range of smoked salmon products has diminished significantly. Where once there were whole walls devoted to smoked salmon, now it is just a few shelves. The choice has disappeared. It may well be that the French public have ignored the changes that have been visible in stores and have continued to buy smoked salmon with increasing vigour but in our experience we have tended to find that product ranges tend to shrink or disappear when consumers stop buying them. Perhaps this time, it is different. It is not as if the smoked salmon ranges in France might not benefit from some rationalisation. It is very difficult to understand how consumers have been able to make a choice. Not only does every supermarket have its own label smoked salmon, but they all stock a variety of different brands. In addition each range then consists of Norwegian, Scottish and Irish salmon and more recently salmon from the Faeroe Isles. This is not forgetting the recent rise of smoked wild Pacific salmon too. When different sized packs are brought into the equation, it is not surprising that a great deal of shelf space is devoted to smoked salmon.
Throughout this year, the number of ranges has declined as has the availability of so many pack sizes. In most cases, the ranges stocked include the own label and just one brand as well as a cheap low cost alternative. The conclusion is therefore that many consumers have been buying more of the same product or haven’t been buying any at all.
What the AC Nielsen findings have not provided is any clue as to what will happen over the peak Christmas period, but it is probable that sales will soar. Our observations in the run to Christmas, are that by and large, the price of most supermarket smoked salmon has been cut across the board. The standard ranges have not been increased but as in the UK, the supermarkets have brought in a whole raft of large sized packs of between 400g and 750g in size. The common feature is that, dependent on the size of the pack they all offer a number of slices free as well as in most cases, a price discount. The largest free offering recorded was 105g or the equivalent to a small pack free. These deals apply to both own label and branded products.
If these discounts and free offerings are not enough to encourage consumers, the supermarkets have further helped consumers by placing the most attractive offerings in various prominent positions around the store away from the usual store locations.
We have no doubt that Christmas will be a bumper time for French salmon smokers but it has yet to be seen whether the sales will continue throughout next year once the Christmas discounts have vanished.
Bah humbug!: At the beginning of this year, European Commission trade bureaucrat. Fritz-Harald Wenig said that consumers must be prepared to pay a fair price if they want to continuing buying salmon. As a result of this belief, European salmon prices have soared with the outcome that farmed salmon has become less common in many retail outlets. Farmed salmon was once described as ubiquitous but higher prices have deterred consumers and as a result, its presence has diminished. We previously described how smoked salmon ranges in French stores have declined but it is not just smoked salmon that has suffered. The presence of fresh salmon has also decreased not just in France but also in the UK too. Where once swathes of pink fleshed fish dominated the fish counter, now they are just a colourful blob in a mass of whitish coloured flesh. However, we also think that the reduced availability of value for money salmon has had an impact on fresh fish sales in general. The whole appearance of many fish counters seems to be in decline. This is because most fish species now appear expensive to many consumers without the value for money alternative that salmon once offered.
In the UK, consumers tend not to be offered such a large choice of smoked salmon at Christmas as consumers in France. Instead, the focus tends to be on a whole range of value added smoked salmon offerings including parcels, mousse rings and terrines and cones as illustrated on our website. However this year, the offerings have been quite underwhelming and much shelf space has been given over to products made from prawns and crab. Salmon has almost been downgraded to second class.
In addition those products that are available tend to be higher priced and or smaller in size. This year the consumer seems to be on the end of a raw deal. Farmers may be getting a fair price or an even better than fair price, but the consumer is clearly losing out. So much for Christmas spirit!!!
The power behind the throne: Seemingly the French competition authorities have ruled that PanFish should divest itself of some of its Scottish operation as it has deemed the otherwise merged company will be too powerful. It seems that the French, who are one of the most xenophobic nations, are quite happy to intrude in other nations’ affairs.
The simple fact is that whilst those who complained about the merger believe that Scottish salmon is a distinct market sector, most consumers couldn’t care less. They are not bothered as to where the salmon was farmed rather preferring to select whichever salmon offers the best value for money. It’s only necessary to look at the market in France to see how even this market, which Scottish producers have declared to be the most discerning, has lost its taste for supposedly premium quality fish and is just as happy to buy that which offers the best value. In recent years, the availability of Label Rouge Scottish salmon has rapidly diminished. On our last visit, we only recorded a couple of examples of packs bearing the Label Rouge mark and one of these was of Norwegian origin. This year we have seen almost no Scottish salmon on the fresh fish counters and on the limited occasions it was spotted, the display was dominated by portions and fillets of other origins. The reasons for this decline are not difficult to understand. The pack of Scottish Label Rouge salmon was selling at about €33/kg whilst similar prepacks of salmon from a different origin could be had for less than half that price. Interestingly, packs of Norwegian Label Rouge salmon were priced at just under €20/kg not too dissimilar from similar product. Even those wanting to buy Label Rouge salmon must have a hard job justifying paying an extra €13/kg just for Scottish fish. It is for this reason that fresh Scottish salmon has become a rare commodity in French supermarkets. Maybe commodity is not the most appropriate word in this case!!!
Those complaining about this merger have argued that if the new Pan Fish decided to restrict the supply of salmon from Scotland it would force up prices but this is exactly the strategy that the Scottish industry pursued for years. The whole strategy behind the idea of Producer Organisations was to restrict supply and force up prices. No one was keen on the idea then and it seems that having spent millions on expansion, the newly merged company would be reluctant to then restrict supply.
The reality is that Pan Fish appears willing to invest in the salmon industry when many others, especially in Scotland, won’t. Councillor Michael Foxley expressed his concern that the divested company will probably end up with foreign owners. He should reflect on why this is.
Whilst foreign owned companies have been focussed on growing their businesses, the ‘Scottish’ industry has spent the last fifteen years whingeing and whining about having to compete against imported salmon. It’s therefore not of any surprise that Scottish owned companies now account for less than 20% of Scottish production. However, before shedding a tear for this opposed minority, it is worth considering about how much power they wield. It is this minority that appear to hold the Sword of Damoceles above the rest of the industry. The high profile involvement by the European Commission in industry affairs is at the behest of this minority. It seems that it is they, not companies like PanFish who hold the real power since it is they that have forced, not just the industry in Scotland, but also in Europe to comply with the way that they do business. This is a guaranteed way to stifle the future development of the salmon industry not encourage it.