reLAKSation 333. Callander McDowell
Yes (there is a) Catch?: ‘No Catch’, the organic cod farming company has failed to live up to its’ name since there does appear to be a catch. Simply, if one aspires to grandiose schemes then a lot of money is required to finance them. In the case of ‘No Catch’, the money has run out forcing the company into administration with debts of £40 million.
‘No Catch’ were unique in that they were the first ‘organic’ cod farm but they also were one of the first farming ventures to put marketing at the top of their list of priorities. This is an approach that we, at Callander McDowell, would applaud. Sadly, their marketing objectives became too ambitious and eventually, it appears that they contributed towards their downfall. We are not party to what has happened at ‘No Catch’ but we can offer a perspective gleaned from our observations of the marketplace.
Speaking to the Financial Times, the administrator, Daniel Smith of Grant Thornton, said that the company has been very ambitious in attempting both to invest heavily in the facilities and build a standalone brand. Clearly, the company need facilities if it is to produce its organic cod but whether it needed a standalone brand is a totally different question.
Branding is the ideal way of building a product identity and creating a market image but it is a very costly exercise. The UK market is dominated by supermarket own label which makes brand development even more of a challenge. We are not convinced that raw fish flesh justifies such investment after all it is just a bit of fish flesh which to most consumers will look like any other bit of raw fish flesh. Many years ago, Marine Harvest tried to market their salmon under the ‘Lochinvar’ brand and failed. Consumers were not persuaded to pay extra for branded salmon when identical unbranded salmon was equally available. However, it is not just raw fish which is difficult to brand, most meat and poultry is also sold as own label in the UK.
‘No Catch’ were undoubtedly extremely successful in getting their branded product into at least four UK supermarkets and were determined to ensure that they supplied branded rather than own label product. Speaking at the ‘Aquaculture Today’ conference last year, MD Karol Rzepkowski said that the supermarkets put pressure on him to supply their fish as own label but he stood firm and they eventually agreed to take the branded product. Mr Rzepkowski could afford to do this since he knew that theses supermarkets could not source organic cod from elsewhere. The problem for ‘No Catch’ would arise when alternative sources of organic cod eventually come on line from other farms that would be willing to supply own label product. Mr Rzepkowski might have hoped that by then the ‘No Catch’ brand would be sufficiently established to have gained customer loyalty but we are not so sure. We know of only one other example where a branded product sits on a supermarket shelf alongside an identical own label brand. This is ‘Young’s’ brand tuna which is priced at £2/kg above identical supermarket own label product. We suspect the reason why this branded product exists is because it is part of a wider package of products supplied by Young’s. We don’t think it is a big seller as observations indicate that there are usually just a couple of packs available on the shelf.
The key to successful branding is that the product should be distinctly identifiable. This means that it is associated with some form of added value processing. ‘No Catch’ has taken steps in this direction with the launch of their organic cod fingers. Marine Harvest also recognised the need to add value to justify their ‘Lochinvar’ branding but by then the brand was already on the way out. Whether the ‘No Catch’ fish finger can save the brand remains to be seen.
Shetland-News reports that ‘No Catch’ received 14 awards for their marketing efforts. Clearly, their marketing was well received in the appropriate circles but whether it was right for organic cod is another question. Certainly, the company received a great deal of publicity following its launch on the market but initial publicity cannot sustain a brand. The company opted for a mainly internet approach with a sophisticated web site. We have no idea how much interest this attracted but two segments of the website which were put on ‘You Tube’ have only attracted a couple of hundred hits a piece. The website was undoubtedly clever but at the same time it is rather divorced from the marketplace. We wonder whether the same amount of money spent on a more traditional approach might have generated even more interest and more importantly, revenue, for the brand. One of the retailers currently selling ‘No Catch’ cod is Tesco’s. One of the more targeted types of marketing used by Tesco is through their Club Card. Every so often, customers are given vouchers at the checkout offering extra club points with specific purchases. These are tailored to the shopping patterns of individuals so when a customer is recognised as buying fresh cod regularly from the fish counter then that customer would be offered a voucher for ‘No Catch’ cod to be used in the following weeks. We believe that this engages the consumer much more than any website can.
Commenting on the shock news, David Sandison of Shetland Aquaculture told the Shetland News that he wasn’t aware of any problem with the price or the market. We, at Callander McDowell, aren’t as sure, as our observations suggest.
Tesco were the first UK supermarket to take ‘No Catch’ cod with three different presentations all at different price levels. All three presentations were offered at a discount at launch but since then, Tesco have not reverted the price back to the original price levels. In addition, the two more expensive presentations have disappeared from the shelves. Since the original launch, the product has been further discounted and is currently being sold at this lowest price as standard. This suggests that for Tesco customers at least, the aspiration of premium pricing was far too high. This wasn’t any different when the fish fingers appeared in store. These too were discounted and this discounted price is now seemingly standard. ‘No Catch’ fish fingers sell in Tesco for £2.99 as compared with their recommended price of £3.99.
Other stores have also discounted ‘No Catch’ cod but it is difficult to put this into a true perspective because the price for this organic cod is different in every store group. For example, Sainsbury’s sell the organic cod for 61p/kg more than Tesco whilst Morrison’s price is more akin to that in Tesco’s. Booths, the small independent supermarket group sell it at up to £5/kg more than in Tesco’s but the volumes are likely to be much smaller by comparison.
Sainsbury’s have been selling the fish fingers at the same price as Tesco although they have just raised the price back to the recommended price. It is too early to tell whether consumers are willing to pay this higher price.
Whilst ‘No Catch’ has offered the only organic cod in the UK, they are still have to consider its position in the wider retail market for cod. Cod is extremely popular with British consumers and the supermarkets have recognised this popularity by keeping prices low, almost treating cod as a loss leader used to attract customers into the store. Despite continuing claims that the supply of cod is under threat, prices of cod fillet have remained low in the main supermarkets at around £9/kg. This means that there is a huge differential between cod fillet and organic cod, at times nearly double the price. This is a big difference to overcome although since the New Year, prices for more expensive cod loins have risen making the differential more attractive, although it is not yet apparent whether the higher cost of loins has deterred customers or not.
Price is more of an issue in the mainstream supermarkets than it is at those supermarkets aimed at the more up-market consumer. A typical customer for organic fish would be expected to shop at Waitrose or Marks & Spencer rather than Tesco or Morrisons. This is reflected in the availability and range of organic salmon products in British supermarkets. Waitrose and M&S would be followed by Sainsbury’s, Tesco and finally Morrisons and Asda. Thus shoppers looking to buy organic cod might be expected to visit Waitrose or M&S first, yet neither store stocks organic cod although Waitrose do stock farmed cod. The absence of ‘No Catch’ organic cod from these stores must be viewed as a significant missed opportunity as it means that the ‘No Catch’ products are not available to the greatest number of potential customers.
At the end of last year, Karol Rzepkowski told IntraFish that he would be willing to remove the word organic from packaging if it meant that Waitrose would stock the products. In this one single concession, Mr Rzepkowski, has indicated that he is willing to completely devalue the brand. The whole point of the ‘No Catch’ brand is that there is no catch, yet seemingly Waitrose have found that there is.
The underlying problem is the organic status of the cod. ‘No Catch’ cod have not been certified as organic by the Soil Association but rather by one of the other certifying bodies. The Soil Association argue that the fish do not meet organic guidelines because of the use of artificial lighting. These are used to mitigate the influence of long dark winters which would otherwise slow down the growth of the fish. As a result, Waitrose are reluctant to sell the fish as organic. Meanwhile, they have sourced farmed cod from elsewhere.
It could be suggested that ‘No Catch’ might have been in a better position now had they resolved the organic status of their fish ensuring that they were placed before the greatest number of customer for organic fish than spending time and money in promoting the brand.
Interviewed on IntraFish TV at the last European Seafood Exposition, Karol Rzepkowski said that he wasn’t there to sell fish but rather an aspirational brand. Perhaps, if ‘No Catch’ had invested more in selling the fish and less on the aspirantional brand they may not be in their current situation.
Good marketing is about getting the right produce into the right place at the right time and at the right price and making a profit whilst doing so. The mid range supermarkets may have been the right place but whether they were the best place is still open to debate.