reLAKSation 277. Callander McDowell
Very cold: Under the heading of ‘seafood’s hot and cold’, the IntraFish newspaper lists what was in and what was out during 2006. Despite a lot of media attention throughout the year, some people might have been surprised to see the inclusion of organic seafood as something that is now cold. Could organic seafood be yesterday’s news?
Indications from the retail sector might suggest that organic salmon may be struggling to become widely accepted. Both Marks & Spencer and Sainsbury’s, stores that have championed organic salmon have been offering organic salmon at discounted prices for several weeks. Small packs of M&S organic salmon are now selling at the same price as identically sized packs of their ‘Lochmuir’ traditional salmon. This week even Waitrose has discounted the price of organic salmon from their fish counter. Such discounting, especially when it runs for several weeks, would suggest that consumers have not been buying organic salmon at the levels originally anticipated. One possible explanation is that some consumers have a problem with organic fish. Logic would suggest that wild fish are truly organic but only farmed fish can be classified as such so while consumers have been steadily increasing their organic spend, they have been ignoring organic salmon. They have been able to do this because there is another option available to them; the opportunity to buy ‘wild’ salmon from the Pacific. The typical organic customer has been encouraged by celebrity chefs, environmental groups and some parts of the media to buy wild Pacific salmon and they have been doing so.
Although seemingly unrelated to the fate of organic salmon, fishupdate.com reported that just prior to the New Year, Angus Macmillan, an independent salmon farmer from the Western Isles, has claimed that the new Marine Harvest will do nothing to help the development of other companies in the Highlands & Islands. Why Marine Harvest should be expected to help the development of other companies is a mystery? Instead, other companies might be more likely expected to help themselves. Sadly, this doesn’t always seem to happen in Scotland where when things start to go wrong, there are some who are more likely to look to blame others.
Independently owned farms have always been quick to blame Norwegian imports for devaluing the image of Scottish salmon. This led to continued market disruption and the imposition of trade measures. In response, some independent farmers converted to organic or freedom food production. Now it would seem that these specialist niche markets may not be living up to expectation prompting the recurrence of finger-pointing towards others in the wider industry.
This readiness to blame others may be masking the underlying problem affecting the salmon industry. Many farmers, especially those in Scotland, have implicit faith in the fish that they produce. They believe that they produce the best fish of the highest possible quality and they cannot understand why consumers are not only rushing to buy their fish, but also to pay a premium for it. This is probably because consumers have been finding it increasingly difficult to differentiate Scottish fish from any other but also because the Scottish industry have consistently failed to market and promote their fish most effectively. In fact, most of the Scottish industry has failed to engage in any marketing activity at all so it is not surprising that they don’t benefit from the opportunities of the changing market place. If the Scottish industry has a great product then it needs to shout about it. Since the demise of the Scottish Salmon Board, this has never really happened.
Mr Macmillan might hope that the new Marine Harvest might help the development of other companies but the reality is that these companies must help themselves. Mr Macmillan is part of the EUSPG which represents the independent salmon industry. The EUSPG have already obtained money from Europe to develop a business strategy. This has been so wrapped in secrecy that whatever strategy they developed is unknown. Perhaps the EUSPG should now take this a step further and act to promote their members’ fish. This must be more positive than continually bleating about what others do. Unless they take their destiny into their own hands, the independent farmers might find that it is not just organic salmon that are growing colder.
History or historic?: According to IntraFish, the Norwegian Seafood Federation is to consider a new two year export marketing levy on salmon and trout. The original proposal for a levy of NOK 0.50/kg was made by Atle Eide during his tenure as chairman of FHL. He said that the basis of the proposal is that the industry should invest in marketing to actively increase salmon consumption as production continues to grow.
The expectation is that an export duty of NOK 0.50/kg will provide a NOK 270 million contribution towards marketing activities. This equates to about 2% of the export value for 2005, a figure calculated by Oystein Myrland from the Norwegian College of Fishery Science. Mr Myrland was involved in the interpretation of the results from the EU generic marketing promotion that resulted from the 1996 dumping case.
We, at Callander McDowell, are all in favour of boosting the marketing efforts for farmed salmon. The industry, whether in Norway, or elsewhere, has suffered from under-marketing for many years and is one of the reasons why the Scottish industry pursued a strategy of dumping complaints. They blamed Norway for over-production but the real issue was not over-production at all but under-marketing. Against a background of over-fishing and collapsed wild stocks, no farming industry can be over-producing. In fact, we do still do not produce enough.
Yet, this does not mean that marketing should be ignored. Far from it, it is even more reason to engage in wide ranging marketing activities. However, the ability to raise a levy of even NOK 270 million is no guarantee of success. The resulting campaign needs to be well thought out and carefully targeted to generate a positive response.
The EU generic campaign was also well financed but failed to deliver the goods as salmon consumption was thought to have grown by just 2%, a figure which probably could have been achieved through natural growth alone. The problem with the EU campaign was that it tried to satisfy the aspirations of Norwegian, Scottish and Irish growers and ended up being a compromise that failed to get its message across to consumers. Had it been a success from which the industry could really see the benefits, there might have been an attempt to retain the campaign after the termination of the EU salmon agreement. Instead, the marketing campaign was dropped as quickly as the agreement itself.
FHL have an opportunity to make history with a new campaign but without careful thought, the campaign might risk being history!
Red Label: IntraFish report that 2007 could be the year that the Irish salmon industry could gain accreditation for France’s Label Rouge. Peter Marshall, Managing Director of IFCQ, a group responsible for helping food industries receive quality certification, said that it is evident that there are increased price margins for Label Rouge products in France and this could bode well for an Irish industry which has focussed on quality in recent years. The Irish industry is following in the footsteps of a Norwegian industry that gained Label Rouge accreditation last year and the Scottish industry, which obtained Label Rouge distinction as long ago as 1992.
It is however worth noting that whilst the Scottish industry has been able to sell Label Rouge marked salmon for nearly fifteen years, the last time figures were made available, Label Rouge exports stood at just over 5,000 tonnes a year. In 2004, Label Rouge sales grew by 21% but 21% of 5,000 plus tonnes are hardly likely to make a significant impact on total sales of Scottish salmon.
The question now is whether with the appearance of the first Norwegian Label Rouge salmon in France, is the market likely to expand or will the Norwegian product simply eat into the Scottish share. The same will also apply if and when Irish salmon gains Label Rouge accreditation.
We, at Callander McDowell, are regular visitors to France as we conduct surveys of the retail sector. We actually have some difficulty in finding much Label Rouge salmon in the marketplace, although when we do, it is highly priced.
Our belief is that there is a small section of the salmon buying public who are prepared to pay extra for salmon of the highest quality. We are not convinced that the presence of Norwegian and Irish Label Rouge salmon in the marketplace will significantly expand this demand but rather each national product will end up fighting for a share of this limited market. We actually think that in the retail sector, consumers are beginning to recognise that salmon sold with the Label Rouge are not that different to ordinary salmon and are thus not worth the extra cost.
Only time will tell whether Irish farmers will financially benefit from Label Rouge or whether the extra cost of audits and administration will give them not only a red label but also a red bottom line.