reLAKSation 366. Callander McDowell
No time like the present: Klaus Hatlebrekke has warned the salmon industry against further growth during this time of financial uncertainty. According to IntraFish, Mr Hatlebrekke of DnB Nor Markets is one of Norway’s top finance and share analysts and is currently keeping a close eye on the salmon industry. He says that there is a clear cut correlation between salmon prices and financial growth or decline which is why Norwegian salmon farmers should absolutely not send out more fish to the markets than the market can cope with.
Mr Hatlebrekke speaks with a clear certainty yet for us at Callander McDowell, the only certainty is that we should be extremely cautious of taking any advice from the financial sector. After all, it is due to the financial sector that the world has been plunged into the current financial crisis.
Mr Hatlebrekke comments were in response to an IntraFish article written by former Marine Harvest Chief Executive Atle Eide who is concerned that the financial crisis will bring about a reduction in demand for farmed salmon as consumers have less money to spend. We don’t necessarily agree. One thing for certain is that the world’s finances must totally collapse before consumers stop finding money to spend on food. They may stop buying BMW’s, jewellery, haute-couture and even houses, but there will always be a demand for food.
The big question is whether hard pressed consumers will continue to buy salmon or will they look for more economical alternatives? Jeremy Langley, fish buyer at supermarket group, Waitrose told the Guardian newspaper that consumer belt tightening has coincided with a willingness to try less popular and more economical fish. Waitrose has just started to stock ‘whiting’ after a 15 year absence and their stores are seeing sales rise as consumers are attracted to prices that are a third less than its near relative, the cod. However, for the same price as whiting fillets, Waitrose shoppers could be buying salmon steaks and for not much more, they could have salmon fillet.
Whilst, some of Waitrose’s customers may be willing to forgo cod in favour of cheaper whiting, customers in other retailers are still able to buy cod fillet from the fresh fish counter at prices well below what Waitrose customers pay for whiting. Cod fillet can still be bought in more than one supermarket chain for £8.70/kg (whiting in Waitrose - £9.99/kg) and salmon is even cheaper at £7.94/kg. For those customers who are even more judicious in their shopping, it is possible to buy prepacked salmon, in which the fillets may not be exactly similar in size, for as little as £6.00/kg. Salmon continues to represent good value.
However, it hasn’t always done so. The salmon industry is still plagued by the troublesome question as to its preferred market position. Mr Hatlebrekke says that there is a clear correlation between salmon prices and financial growth or decline (translated – this means the share value of stock exchange listed companies). We have discussed more than once previously about the blinkered vision of analysts who equated high salmon prices as being good and lower prices as bad, which is the justification for Mr Hatlebrekke’s warning to curtail further expansion. The problem is that high prices also stifle demand. This was not so apparent when prices last rose because excess fish were absorbed by the Russian market. The salmon industry did not therefore feel the effects of shrinking European demand following the imposition of the MIP.
Certainly, if prices are too high at a time when consumers have reduced ability to pay, then demand will collapse. If on the other hand, salmon prices are more realistic, consumers will continue to buy salmon as they see it as representing real value for money. Instead of buying whiting, they will opt to buy salmon and thus the industry should continue to produce as much as it can providing consumers with a nutritious and affordable meal choice. We believe that there’s no time like the present for further growth (combined with additional marketing).
The problem with analysts like Mr Hatlebrekke is that whilst they spend their time looking at the markets, they are actually looking at the wrong ones. If they spent more time looking at the consumer market rather than the financial market, then they might get a totally different view of the industry?
Sustainability is not sustainable: According to the latest figures from SeaFish and AC Nielsen, UK sales of cod are down by nearly 15% in volume and 7% in value. It may be argued that this fall is due to changing consumption habits driven by concerns over the sustainability of cod stocks. Equally, the reason that sales are down is due to the fact that consumers have much less choice as many of the coated products which dominate sales are being substituted with MSC approved Alaskan pollock. This change is confirmed by a 150% increase in pollock sales.
One of the reasons that Alaskan Pollock has been adjudged to be sustainable and be awarded MSC certification is because demand reflected supply. However the award of MSC certification has meant that demand has suddenly increased as the supply chain changes species in order to be perceived as being sustainable. This increased demand has increased the fishing pressure on these sustainable stocks making them as unsustainable as the well-publicised stocks of cod they have replaced.
IntraFish reports that a new survey of Alaskan pollock population in the Bering Sea estimates that its numbers are down more than 50% from last year at 0.94 million tones from 1.8 million tonnes. The Russian zone is down from 0.10 million tonnes to 0.03 million tonnes. Greenpeace say that ‘we are on the cusp of one of the largest fishery collapses in history’.
Is it not time to end this fantasy of certifiable approved sustainable fisheries? The use of a logo does not provide any guarantee of sustainability and if anything it is more damaging than fisheries without. The sustainability movement is a sham. The reality of current global demand means that we either need to reduce demand or find alternative supplies. Such supplies are available through aquaculture. Unfortunately, the environmental groups who have lobbied for sustainable fisheries object to the further development of aquaculture. However, it is time these environmental groups realised their complicity in the collapse of these sustainable fisheries by recommending the consumption only of sustainable stocks. It is worth remembering that the WWF were instrumental in establishing the MSC and causing the subsequent stampede to devastate these fish stocks.
Simon says: Over the past two issues of reLAKSation, we have looked at whether Paris remains the Gastronomic capital of Europe, at least in relation to farmed salmon. This week, the Norwegian Seafood Export Council is celebrating the export of the two hundred and fifty millionth salmon to France with its transport from the Island of Froya in Norway to Rungis wholesale market in Paris and then on to the restaurant at the Ritz. According to NSEC, over 113,000 tonnes of salmon has been exported to France since salmon was classified as a separate export product in 1974. The export data indicates that by mid October this will equates to 250,000,000 salmon and to celebrate the occasion, a week long festival is in progress culminating in the presence of Norwegian salmon at two of Paris’s main markets over the weekend. The intention is to provide, information, tasting and cooking demonstrations to the public. The demonstrations will be run by the French l’Atelier des Chefs who will cook salmon brochettes.
The Norwegian industry should be congratulated on such a milestone. It goes to confirm that farmed seafood is now such an important part of the wider fish supply, in fact far beyond the original gastronomic aspirations for farmed salmon. Farmed salmon is now an everyday meal choice and not just something for special occasions. However, this wide spread means that it can be difficult to know exactly where to pitch salmon in the marketplace. On one hand, there is still an enthusiasm to promote salmon as a high quality premium product, hence the Hotel Ritz as the final destination for salmon number 250 million and the use of the l’Ateliers des Chefs to give the cookery demonstrations. At the same time, the events at the two Parisian markets is the finale of a week-long promotion, that focuses on five Smart cars decorated with a model salmon and posing the question ‘where is Simon’ travelling around the streets of Paris?
This links in to a radio advert featuring ‘Simon the Salmon’ which (if our French translation is correct) gives the impression that ‘Simon the Salmon’ is a secret agent and that the public are on a mission to find him.
This all seems a bit reminiscent of ‘Tony the Tiger’ who appears on Kellogg’s Frosties breakfast cereal. Tony is really aiming his product at the children’s market and we wonder whether ‘Simon the Salmon’ is not a step too far from the French Gastronomy. Could Simon devalue the image of salmon to a caricature of the industry’s aspirations? Instead, salmon’s real potential lies in the middle ground for everyday consumption and in the midst of all this celebration it is easy to forget the consumer.
Most consumers couldn’t care less whether the salmon they buy is the 250 millionth or the 250th. This is more important to the industry than the consumer. It’s worth remembering that consumers just want good tasty food that represents value for money.