reLAKSation 294. Callander McDowell
Accused again: Following the claim by the Food Standards Agency that one store belonging to the British supermarket chain Sainsbury’s sold farmed salmon as wild, another has been accused of selling previously frozen fish as fresh. According to the Press and Journal, customers at the chain’s Garthdee store in Aberdeen have been misled when buying wild Alaskan salmon which has been previously been frozen. Staff have told them that the fish is actually fresh and can be frozen.
A reporter subsequently visited the store and was told the fish was fresh even though the label clearly stated that the fish had been previously frozen. The official response from Sainsbury’s was that the misinformation was down to a ‘lapse in knowledge’. Sainsbury’s are now sending the staff for retraining.
Sainsbury’s have been unfortunate in that these two stories have come to light so close together but the reality is that Sainsbury’s are no worse or better than most other supermarkets in providing information to their customers. Supermarket staff are not the best paid employees in the retail sector and the long opening hours have produced a culture of part time employment. This means that even stores that do employ trained fishmongers do not have fully qualified staff on duty all day. This is often not necessary since most of the fish is supplied to the store ready filleted and only requires that is laid out for display on the fish counter. The staff have only to weigh out whatever the customers requests and then wrap it up. In some stores, staff have to double up and cover the fish and fresh meat counters at the same time. This may sound more demanding than it is since most consumers buying fish and meat prefer to make their choice from the wider selection of chilled prepacks.
Whilst we, at Callander McDowell, are regular observers at many supermarket fish counters, we tend to maintain a low profile in order to conduct our surveys without interruption. However, from time to time we do have some interaction with staff and generally find their knowledge is not extensive. Equally some of the information is provided is inaccurate although we suspect that this is because they want to be seen to be helpful rather than admit that they do not know the exact answer. Even in stores which do have a trained fishmonger, we have found answers to be seriously lacking. It could be that we expect more than the average consumer but equally, some of the responses we have received have been extremely questionable and it is not just the counter staff who are lacking. We recently were asked if we wanted help by the fresh produce manager who provided some of the most inaccurate information that we have ever received.
Most of the time, we wonder whether staff simply don’t think. This week, one supermarket was advertising a price discount on cod. They had a poster stating that the fish was reduced by £2.50/kg to £9/kg and a label on the fish counter stating that the fish was reduced by £1.50/kg to £9/kg. On questioning, the member of staff said that the fish had been selling at £10/kg and had been further reduced by another £1/kg. We said it was a bit confusing so he picked up the label from the fish counter to show us that the £10/kg price tag had been covered up with a sticker showing the new price and then happily replaced that label back on the fish counter. It wasn’t even as `if he was busy since during the 5 minutes or so we were in store no one else visited the fish counter.
We don’t find it surprising that mistakes are being made. That is why the labelling is so important.
Don’t bet on it!: FIS.com have been comparing the share prices of leading fish farming companies against the price of the fish they farm and concluded that the share price of salmon farmers such as Marine Harvest, Cermaq and Leroy Seafoods has fallen in line with a slow decline in the price of salmon whereas companies producing marine fish such as Marine Farms and Cod Farmers have seen their share price increase. FIS conclude that cod, bass and bream are a better bet than salmon. We, at Callander McDowell, are not so sure.
The problem with share prices is whether investors take a short term view looking for a quick return or are investing for the long haul. The problem with shares in salmon farming companies is that they have been too closely linked with the price of salmon, rather than the development and specific strategy of any individual company. Thus when salmon prices go up, so do share prices and conversely, when prices fall, so do share prices. This is a very short sighted approach, helped along by the views of the various market analysts. Salmon farming is still evolving and salmon farming companies are beginning to realise that there is more to life than being a primary producer dependent on the vagaries of changing salmon prices. Instead, salmon companies are considering the possibilities of evolving into food companies supplying retailers with a whole range of products made from salmon. This means that producers will become less dependent on the price of the basic raw material for determining their future finances.
FIS suggest cod, bass and bream may be a better bet. Whilst farmed cod would appear to have a bright future based on current world demand, it is still not clear whether consumers are prepared to pay more for it. Fresh farmed cod appeared on the fish counter of one British retailer this week priced at £5.51/kg more than the equivalent wild cod on the same fish counter. At this stage it is impossible to tell whether consumers will buy it when cheaper wild fish is also available? We can only watch and see.
Meanwhile, bass and bream producers are not fairing so well. It was not so long ago that we discussed reports that bass and bream producers were being squeezed on prices again, especially hampered by the lack of added value development. This week, IntraFish reported that French sea bass producer Maree Phoceenne has just undergone a major restructuring of the company, laying off over half of its 120 strong workforce and closing most of its head office operations. Clearly, Maree Phoceenne has struggled to remain profitable and has been forced to address its cost base.
This news is significant since Maree Phoceenne produce between 400 and 600 tonnes of the sea bass under Label Rouge certification, presumably meaning that the company can command a higher price for its fish than other sea bass producers. If a company such as Maree Phoceenne producing Label Rouge sea bass has been struggling, then presumably other producers may be in a worse position.
The focus of our own visits to the French retail sector remain firmly fixed on salmon and its associated products therefore we are not aware how much of a premium, if any, Label Rouge sea bass receives over other sea bass but it is also possible that, in common with some other quality labels, consumers are not so willing to pay extra for quality labelled fish such as those with Label Rouge. This could place extra pressure on the producer dictating even greater control of costs as reported. Either way, sea bass may not be such a good bet for investors unless farms also consider diversifying away from a dependence on the production of raw flesh.
Could it be that the share prices is not really a true indication of the potential of any aquaculture venture?
Second half squeeze?: IntraFish report that analysts have suggested that Norwegian salmon producers can expect a second half squeeze on prices. This follows on from earlier predictions that prices will remain strong well into 2008. We have discussed previously that salmon prices have been too high for too long and that they would eventually undergo some form of adjustment. The latest predictions come on the heels of a slow decline in prices in recent weeks but now high levels of feed sales may indicate that there are still plenty of fish in the sea awaiting harvest.
Whilst lower prices may not be what the producers most hope for, they will stimulate demand in the most significant markets for salmon. It is vital that salmon demand continues to expand if aquaculture is to be seen as a realistic and alternative source of sustainable fish to wild catch fisheries.
Yet equally, this is not the most ideal time for a weakening of salmon prices even if it is desirable since the European Commission have just begun their review of the trade measures against salmon producers in Norway. If prices start to come close to the MIP, the Commission may be prompted into retaining the MIP. This would be the wrong decision since these trade measures are holding back the industry from exploiting the real market potential for salmon.
Of course, stimulating demand does not depend exclusively on weaker prices. The industry has still to reach a decision as to whether it should invest in marketing its produce, something that has been lacking irrespective of whether prices are high or low. If prices are squeezed, then any decision to invest in marketing will be further delayed as any willingness to invest evaporates completely.