reLAKSation 288. Callander McDowell
Easter prices: Salmon has once again been the focal point of many supermarket Easter promotions this year BUT unlike previous years the promotions began very late and seemed to be limited to just one or two products. Easter ranges seemed somewhat limited so some of the added value products available in previous years were absent. Most significantly, most prices this year were higher than last.
This year there was an absence of newspaper advertising but at least three supermarkets used television advertising to promote their salmon discounts instead. Another change this year was that at least three supermarkets promoted wild Alaskan salmon as an alternative to farmed.
Discounts this Easter are compared with those from last year.
Fresh fish counter
Asda
2007
Whole salmon £10 each (equivalent to £3.99/kg save £2.85/kg)
Salmon fillet £9.87 (standard price)
2006
Whole salmon £2.98/kg save £1.30/kg
Salmon fillet £3.13/kg half price
Booths
2007
Salmon fillet £7.99/kg save £3/kg
2006
Whole salmon £4/kg save £1/kg
Salmon joint £7/kg save £1.79/kg
Morrisons
2007
Whole salmon £3.99/kg save £2/kg
Salmon fillets £5.99/kg save £3/kg
Salmon steaks £4.65/kg save £2.34/kg
2006
No promotion
Sainsburys
2007
Whole salmon £3.49/kg half price
2006
Whole salmon £3.49/kg half price
Tesco
2007
Whole salmon £3.49/kg half price
Salmon side £5.49/kg half price
2006
Whole salmon £3.29/kg half price
Salmon side £4.49/kg half price
Waitrose
2007
Whole salmon £5.59/kg save £1.90/kg
2006
Whole salmon £5.99/kg save £1.50/kg
Chilled prepacks
Asda
2007
Young’s salmon fillet £10.41/kg save £2/kg on multi-buy
2006
Young’s salmon fillet £10.33/kg save £2/kg on multi-buy
Booths
2007
Salmon fillet £11.50/kg save £2/kg
Salmon steaks £9.00/kg save £2/kg
2006
No promotion
Coop
2007
Young’s salmon fillet £12.46/kg half price
2006
Young’s salmon fillet £9.96/kg half price
M&S
2007
All salmon products on multi-buy offer including
2 fillets £14.11/kg save £4.72/kg on multi-buy
Bag of fillets £9.74/kg save £3.25/kg on multi-buy
2006
2 fillets £15.05/kg save £1.89/kg on multi-buy
Bag of fillets £10.57/kg save £2.35/kg
Sainsbury’s
2007
Whole salmon £3.99/kg save £4/kg
Salmon side £7.49/kg half price
2006
Whole salmon £3.99/kg save £4/kg
Young’s salmon fillets £8.32/kg on BOGOF
Tesco
2007
Icefresh salmon fillet £9.62/kg half price
2006
Salmon side £4.49/kg half price
Somerfield
2007
Salmon fillets £10.38/kg half price
Young’s salmon fillets £12.46/kg half price
2006
Salmon fillets £8.31/kg 100% extra free
Waitrose
2007
4 salmon fillets £11.80/kg save £3.63/kg on multi-buy
Although these price promotions appear very generous with discounts of up to 50%, the overall impression is that salmon prices are far too high and continue to suppress demand. Global demand may continue to be high reflecting in these higher salmon prices but consumers in the more developed markets have sought alternative species instead. They have either decided that the same money can buy species they had previously thought expensive or have sought a cheaper alternative. Consumers may have fallen for the half price offers over the Easter holidays but these offers are not all they seem. For example, Icefresh salmon fillets in Tesco (and we are not actively pointing the finger at Tesco) are selling at £9.62/kg but this compares with Tesco’ standard fillet at £9.99/kg and their ‘Value’ fillet at £6.98/kg. At the other end of the spectrum, Tesco’s Organic salmon fillets sell for £13.99/kg and their ‘Finest’ salmon fillets for £16.99/kg. This makes Icefresh salmon fillets rather expensive at £19.24/kg.
A report in IntraFish looks at the effect of rising prices on British cod consumption. According to Seafish, in 2004 6.3 million kg of cod were sold at an average price of £5.16/kg but by 2006 the price has risen to £5.90/kg and sales fell to 5.1 million kg. We believe that the same effect is hitting salmon sales despite the reports of strong market demand. Although, we do not monitor actual sales, it is apparent that rising prices have had an effect on sales by the availability of salmon and salmon products in most supermarkets. The shelf space allocated to salmon has noticeably shrunk except at key sales periods such as Christmas and Easter.
The same is also true in France, the largest market for salmon in Europe. According to a report in ‘Fish update’, the market research company AC Nielsen recorded a 5.3% increase in volume sales and 6.1% increase in value sales for smoked salmon from September 2005 to September 2006. We, at Callander McDowell, do not believe that a similar result will be achieved for this year as our impression is that sales of salmon in French supermarkets have declined. Where once we saw whole banks of smoked salmon lining the shelves, now the offering has noticeably shrunk as smoked salmon has become more expensive. Equally, where we once observed swathes of pink on the fresh fish counter, it is now necessary to look for the salmon products.
What is of the most concern is the increased promotion of wild MSC approved Alaskan salmon. With prices for salmon fillet as low as £12.46/kg this Easter, consumers are not digging any deeper in their pockets to buy the so called sustainable choice than they do farmed salmon. With the sustainable message increasingly in the news, consumers can select the sustainable choice at a value for money price.
Irish eyes: Seafoodintelligence.com reported from the Irish Aqua 20/20 conference in Enfield where the Irish Sea Fisheries Board’s (BIM) Aquaculture Development Manager, Donal Maquire announced the launch of the Irish Quality Salmon organic standard. He said that this new standard is a step towards meeting the recommendations in the recently published review of Ireland’s seafood industry. The report highlighted the need for Irish seafood products to differentiate themselves, building on Ireland’s clean green image and to supply into premium niche markets. Mr Maquire said that the new standard provides an excellent means of further differentiating Irish products on the global market.
Irish producers do have a problem in much the same way as the smaller producers in Scotland. They find it difficult to compete in the global market so have looked at ways of differentiating their salmon in the hope that they can boost margins. The trouble is that despite any number of different standards, the simple fact is that most salmon tastes just like any other salmon. We do not doubt that there are any number of producers who would disagree claiming that their salmon does taste different. However, most consumers do not engage in regular taste tests and unless they buy salmon almost every day, most salmon will taste of salmon. Scottish producers have previously found that most consumers are unable to detect any noticeable difference in the salmon they eat and have been unwilling to pay a premium price for a supposed higher quality that the Scottish identity brings.
The situation in France is somewhat different. Fresh Scottish salmon has been able to generate a premium price but this can be more attributed to the Label Rouge mark than the Scottish identity. However, with smoked salmon the picture is different. There does appear to be a clear hierarchy for smoked salmon in terms of price differential starting at Norwegian, then Scottish and the highest price being achieved by smoked salmon where the salmon is of Irish origin. In addition, there are several high value branded smoked salmons also available in stores that do not necessarily fit within the mainstream hierarchies. We have conducted some non scientific taste tests and found that there is little, if any, noticeable difference between smoked salmon from each origin, the price differential relating more to the relatively rarity of salmon from each origin.
Standard Irish salmon is becoming increasing rare. This is because more and more production has been converted to organic hence the development of the new standard. Donal Maquire told the Aqua 20/20 conference that Ireland is already the largest producer of organic salmon with a total of 8,000 tonnes a year. Against this background, it might be expected that smoked salmon smoked from Irish organic salmon would command the highest price in France but this is not actually the case. Branded organic Irish smoked salmon is priced at about € 46/kg whereas there are a number examples of branded Norwegian Label Rouge smoked salmon priced at €60/kg and above.
According to Mr Maquire, thirty seven percent of this production is exported to the UK, some of which is sold in at least one major supermarket chain at a relatively premium price. However, it is important to point out that the premium is attributed to the organic nature of the salmon, not its Irish origin. As with Scottish salmon, the Irish origin appears largely irrelevant. This view appears to be borne out with the appearance of fresh Irish salmon in the UK market this week. Fresh Irish salmon is rarely seen in the UK, probably because of the volumes of Scottish and Norwegian salmon available. However, this week, Irish salmon was being sold in one UK supermarket alongside fish of Scottish and Norwegian origin all on the same half price offer.
(Apologies for the photo quality - It does read 'Farmed in Ireland')
When push comes to shove, one piece of fresh salmon is much the same as any other no matter how much producers try to capitalise on its origin. If farmers are to differentiate their fish in attempt to generate a premium, then it will need more than just building on a national image.
Standing out in a crowd: ‘Fish update’ report that a new research project being conducted by the Norwegian Institute of Fisheries and Aquaculture will study strategies used by salmon producers to help them stand our from the crowd. The researchers say that price is often the only factor on which producers compete so there is a strong focus on producing salmon as inexpensively as possible. Instead, the researchers intend to study alternative ways for salmon companies to increase profits such as new products, ethical aspects or traceability. The three year project will involve Scientists in Norway, Scotland and Chile (sorry Ireland, it seems you will miss out) mapping individual salmon producers’ strategies to differentiate their product from their competitors. The goal is to gain knowledge that can increase value added production in the salmon industry.
Regular readers will know that Callander McDowell is a strong advocate of market-led strategies yet we have serious doubts about this project. Firstly, we think this project is about fifteen years too late. The need for market-led strategies was recognised as long ago as 1989 when prices first collapsed but individual companies, as well as the industry as a whole, has remained firmly entrenched with strategies that are production-led. In recent years, some companies have striven to escape the production-led philosophy and consider what the market actually wants. However, it is still very early days and thus there is little point in studying what individual companies are doing now since they are still on the pathway rather than reaching their goals. Instead, the study would be better served if it looked outside the confines of the industry and presented ideas of alternative market strategies that the industry have not yet even considered. As we suggested, this might have helped if it had happened years ago. Now we are not so sure.
The study is due to last three years which in marketing terms is an age. What is relevant now may not be relevant in three years time. One of the strategies the researchers intend to investigate is organic salmon production. The market for organic salmon is relatively small. Whilst the organic market in general is expanding rapidly, that for fish is not, probably because consumers still have some difficulty relating to organic fish. Despite this obstacle, the few small producers are achieving margins that they failed to attain growing standard salmon. Yet, if this research promotes the conversion of more traditional production to organic, there is a major risk that the market can be damaged with too much fish coming to market in years to come without attempting to stimulate demand.
The researchers also intend to look at how producers can stand out from others through special labelling. Throughout the 1990’s the Scottish industry tried to differentiate their salmon with the aid of Tartan Quality Mark labels. These have now completely disappeared from the retail sector because consumers did not see any reason to pay more for salmon carrying a different label. Labelling is not enough, the consumer must be able to differentiate the salmon for him/herself to justify the extra cost.
However, the real flaw with this project is that any company that does have a winning formula is unlikely to want to share it with the rest of the industry. This project will not provide the quick fix solution to salmon marketing. Every company must investigate the potential and opportunities for its own situation and develop them accordingly. There are solutions leading to market strategies but each company must find its own and the sooner the better.