reLAKSation 364. Callander McDowell
Bon appetite!: This year, former Marine Harvest Managing Director, Atle Eide, spent some of his holiday in Paris. He said that if there is one nationality that likes a good meal, a good glass of wine within a generous social framework, then that is the French. He suggests that this culture of good gastronomy has developed over generations based on an excellence of raw material; the best that can be produced and not least a demanding consumer. Mr Eide goes as far to suggest that the French are even the world’s most demanding consumers.
Such consumers demand the best as can be found in the finest restaurants such as that run by top chef Alain Ducasse as confirmed by the inclusion in the Red Michelin Guide. There are also a multitude of bistros as found on every street corner that offer choice eating. However, it is not just eating out that provides the best. Mr Eide says that there are the street markets, the specialist food shops such as bakeries and wine shops run by passionate shop keepers who take the best of care of their products.
Mr Eide also highlights the larger food stores including the food hall at Galeries Lafayette who stock the best of all produce, including meat and fish, fruit and vegetables, breads, cakes and cheeses. He says that when it comes to fish, they sell (farmed) salmon from Norway, Ireland and Scotland and even wild fish. They also stock smoked salmon in all sorts of formats including gravadlaks and pates. This includes smoked salmon sold under the Petrossian brand at NOK 600/kg (£57/kg) which is of the highest quality.
At the same time that Mr Eide wrote about his time in Paris, Guardian newspaper columnist Simon Hoggart reported on his holiday in France. He said that he ate dreary, predictable and sometimes downright unpleasant food. One dish he said he cannot forget was a pile of chitterlings (pig intestine) on a salad of tough lettuce leaves, drenched in a dressing that could have been used to scour pans. He also remembers pates that could have been bought in Tesco, wishy-washy soup and the most depressing dish ever found in Europe, oeuf dur mayonnaise which he says the French serve up as if you can’t have ever had anything so delectable. Mr Hoggart sums up his experience saying that French middle-ranking cookery can be so dull.
Of course, everyone is entitled to their views but there does seem to be some discrepancy about the experience of French cuisine. However Mr Hoggart admits that France does have some great restaurants, more than in any other country, but that only a handful of people can afford them. He says that they are the equivalent of expensive haute couture and he is right.
It is interesting that Mr Eide has used the food department of Galeries Lafayette to illustrate the range of gourmet food available in Paris because this is not a shop that most Parisians would used for their day to day shopping, just as Londoners would never do their daily shopping at Harrods, Fortnum & Masons or Selfridges. These shops represent that absolute pinnacle of food shopping and their offerings and prices reflect this.
Mr Eide mentions that Petrossian smoked salmon can be bought in Galeries Lafayette at over NOK 600/kg. The Petrossian website doesn’t mention the origin of their salmon but even this smoked salmon is cheap compared to the offerings at Fortnums & Masons with their wild Scottish smoked salmon costing over NOK1200/kg. This is not the sort of product that the typical Londoner would buy let alone Parisians.
We, from Callander McDowell, also have some difficulty reconciling Mr Eide’s vision of French food with our experience. Callander McDowell produces a regular survey of the salmon sector in the French retail market. This entails visits to a variety of stores belonging to the 13 main French supermarket chains.
There are clear differences between these French supermarkets and the ones we survey in the UK but this is due to the geographic differences between the two countries and the resulting local produce. Yet at the same time, there are many similarities with a lot of the food being much the same. From what we see, French food doesn’t really stand out as being that different from the UK. What is most clear is that French supermarkets offer the same everyday foods that can be found in any supermarket around the world. Smoked salmon prices start at just NOK 100/kg and fresh salmon fillet can be bought for as little as NOK 80/kg.
In just the same way there is no doubt that there are some top restaurants in Paris but there are also some extremely poor ones too (we know). However, there are some fantastic restaurants in London and some really dire ones too. This is the nature of the food business.
Mr Eide argues that his Parisian experience of top quality foods is illustration why salmon companies should look towards branding and market development in order to boost margins. We, at Callander McDowell, do not entirely disagree. We have argued for many years that adding value is the way forward for salmon companies however at the same time examples, like Petrossian, are not really a true representation of the French food market. They are just a niche specialist.
One of the big differences between French and UK supermarkets is the extent to which food products are branded. Many more food items are branded in French supermarkets than in British stores so it is not surprising that Mr Eide advocates a branded approach. However, what we have noticed is the speed at which own label is beginning to take over in France. This is most apparent in the smoked salmon sector. All supermarkets used to stock an extensive range of both own-label and branded smoked salmon but over the last couple of years, the presence of mass-market branded smoked salmon has diminished. These are being replaced by higher value products from smaller smokehouses, presumably so supermarkets can have a premium offering, although we suspect that they have a limited appeal.
The last time that figures were released for exports of Label Rouge Scottish salmon, they amounted to just over 5,000 tonnes. This again clearly demonstrates that the premium market is very small. Even if this figure is now double, it is still just a small part of the French market for salmon.
There is undoubtedly a market for premium products in France but whether this should be the primary target for the salmon farming industry remains to be seen.
A French squeeze?: Remaining in France, IntraFish has carried out a review of the French market in which they suggest that it is showing signs of weakness despite consuming nearly 35 kilos of fish per person. This is because as we have already observed, the French retail sector is now following what has happened in the British market with a greater demand for more added value products. However, IntraFish suggest that whilst they want new products, French consumers seem unwilling to cough up the extra money to pay for them. Whether this is due to their mindset or the economic climate is unclear.
IntraFish spoke to Henry Hellin of Viviers de Marin who said that France is not a price market but rather a mass market. If prices are too high, he suggests that the French consumers now appear reluctant to buy fish. This view is echoed by Karl Johannesson of OOJEE who said that the French market has become much more polarised with products either being too cheap or very expensive. He says that there is no market in-between. Fish is now becoming too expensive for many French consumers.
We have recently returned from France and would not disagree with this view. Fish counters are not what they used to be, with much reduced offerings, and this is reflected in a more notable absence of customers. However, what is most apparent was the diminishing supply of salmon. Whereas once fish counters stocked whole fish, paves (portions), fillets and steaks, many now offer just the paves. What was once a sea of pink has become just a small pond. We have already noted how the variety of smoked salmon has diminished but also noticeable is how salmon has almost disappeared from the selection of ready meals. Just a few staples such as salmon in sorrel sauce remain.
Whilst IntraFish has reported that seafood in general appears to have been squeezed in recent months, our own observations suggest that the squeeze on salmon has been applied for much longer. In fact, we first noticed this trend following the imposition of the MIP by the European Commission which forced prices upwards. The rising prices were more the result of uncertainty in the market rather than a direct result of the MIP. For whatever the reason, the French market for salmon has never really recovered since.
In this regard, the EUSPG achieved their aim in making salmon more exclusive but this has come at the price of reduced demand. However, higher prices have not rewarded the Scottish industry with an increased market presence for their Label Rouge salmon. Instead, the reverse is true with Scottish Label Rouge salmon almost disappearing completely from the supermarket sector. During our recent visit, Scottish Label Rouge salmon was found in just one supermarket chain.
One of the real benefits of farming fish is that they can be produced in consistent quantities, at consistent prices, consistently through the year. This is very different from the supply of wild caught fish. As fish in general becomes more expensive, the market is ripe for exploitation with affordable, value for money salmon.
Trading down: IntraFish report that research has shown what many have predicted in that consumers have been buying more discount food since the global economic crisis began to take hold. Forty one percent of UK consumers say that that have switched to cheaper brands and thirty percent have cut down on premium ranges. The press have repeatedly reported a surge in popularity of discount stores such as Aldi and Lidl.
Yet, Jonathan Banks of AC Nielsen suggests that the impact on the food industry will be muted and the downturn will be seen as just a minor blip on trading. Certainly, Mark Price, Managing Director of the upmarket supermarket chain Waitrose remains upbeat suggesting that many consumers still prefer to pay a little bit more for better quality but he says that it is still possible to shop inexpensively in his stores. He is probably right. We are regular visitors to discounters Aldi, Lidl and Netto and cannot say that we have noticed any greater number of shoppers whilst the main supermarkets still seem as busy as ever.
Clearly many people are trading down but are doing so within their current store. Money guru Martin Lewis has repeatedly said on TV and radio interviews that shoppers used to buying the store’s premium range should try the standard product instead, whilst those buying standard products should try the value ones. This is exactly what seems to be happening.
The picture for fish is less clear. Firstly, the fish and seafood sold by the discounters is mainly frozen, whilst the other stores all offer fresh and chilled and secondly, because supermarket fish prices have generally not risen in line with increases for other products. Yet, according to Jonathan Banks of AC Nielsen, seafood companies are still being squeezed. He told IntraFish that his advice to both retailers and seafood companies is not to resort to cheaper products but to seize the opportunity to be creative. Seemingly, his advice is falling on deaf ears. One of the more noticeable trends is the increasing replacement of cod with both imported and previously frozen Pacific cod and also Alaskan pollock. In much the same way, many salmon products are now made with wild Pink and Chum salmon. The justification for these changes is the supposed sustainable provenance of these fish but the reality is that they are much cheaper and help boost lost margins. In some cases, the sustainable credentials are not even apparent to consumers.
Mr Banks advises companies not to reduce their efforts in new produce development nor in advertising. He reckons that now is a good time to do new things as companies that make huge efforts in times like these tend to come out much stronger and are better placed in the long run. Yet, it is not easy to take on board such advice when margins are tight and spare money is in short supply.
Interestingly, new products have appeared in the supermarket this week and we will be watching to see whether they are favoured by consumers or whether consumers prefer to keep buying the basics.