reLAKSation 37.
Organic growth: UK consumption of organic produce grew by 35% last year accounting for 1.5% of the total in-home food and drink market. However, research by market research organisation Mintel has found that British consumers are increasingly sceptical about whether organic food is either safer or better for you than non-organic products. There is also a growing scepticism amongst younger consumers. Most interestingly, overall market penetration of organic foods has largely remained static, which can be attributed to existing consumers, rather than new ones.
The key question is whether organics are still regarded as just a novelty or whether they can make significant in-roads into the wider marketplace?
The answer really depends on price. Our view is t hat consumers would willingly buy into the organic philosophy, but they want to see it as the norm, not as a higher priced option. The same applies to the various food quality schemes. Consumers do not see that they should have to pay more for safe, environmentally friendly and humanely produced food. These are all things, which they expect as a matter of right. Yet, faced with the choice, consumers are usually swayed by price.
Organic salmon can now regularly be found in most British supermarkets, although the commitment to organic fish varies greatly from company to company. However, all supermarkets sell their organic salmon at a significantly higher price. The following examples are cited where only direct comparison between organic and non-organic can be made:
Marks & Spencer - Chilled prepacks
Salmon fillet £15.05/kg
Organic salmon fillet £18.83/kg
(25% difference)
Sainsbury - Chilled prepacks
Salmon fillet £13.30/kg
Organic salmon fillet £17.35/kg
(30% difference)
Tesco - Chilled prepacks
Salmon fillet £11.50/kg
Organic salmon fillet £13.49/kg
(17% difference)
Waitrose - Fresh fish counter
Whole salmon £6.59/kg
Whole organic salmon £8.49/kg
(29% difference)
Salmon steak £6.79/kg
Organic salmon steak £10.99/kg
(61% difference)
Salmon fillet £10.99/kg
Organic salmon fillet £14.29/kg
(30% difference)
This price differential is clearly a significant deterrent to wider consumption of organic salmon. If more consumers are to be persuaded to buy organic fish, then ultimately prices must fall. Yet, for many farmers, the incentive to produce organic fish is this higher price. If the price differential should disappear, then there may be little advantage in growing these fish, unless, the organic standard can be produced to meet the existing market price.
Although price is a major determinant of whether consumers buy organic fish or not, there are other influences of consumer choice.
The concept of organic food is that it be produced in an environmentally friendly way with no or minimal use of artificial pesticides and fertilisers. Constraints also apply to the intensity of production. In the case of poultry, free range would be preferable to barn reared. Yet with salmon, wild fish, swimming freely at sea and feeding off totally natural food are not considered organic, but fish, which are reared in cages on artificially produced food are. This is a very difficult concept for the average consumer to accept.
Clearly, even the organic industry has some difficulty in adjusting to the idea of organic fish. The industry regulators, the Soil Association hold an annual Organic Food Award in association with the Mail on Sunday and despite a wide range of categories, fish do not feature at all.
Clearly, organic producers must yet persuade consumers, as well as their own industry colleagues, that they have a much wider potential than their current niche market.
One of the main reasons that consumers bought into the organic ethos was the large number of food scares, especially BSE. However, as consumer awareness of the problem has diminished, the drive to buy organic food has lessened. It is only the hard core of dedicated organic consumers, who continue to demand these products. As long as the public remain free of concerns about their food, that is until the next food scare, it is likely that price will win the consumers vote over any message that the organic industry will to promote.
Labels - who cares?: As from January 1st, new European labelling laws mean that fish must be labelled with the correct name, the country of origin or catch area and whether it is farmed or wild caught. Whilst consumers are entitled to as much information about the food t hey buy, these changes to labelling regulations will be perceived as being relatively unimportant.
Of course, this is not the view of some sections of the industry, who have expressed the view that confusing labelling has misled consumers. Some Scottish producers believe that cheap imported salmon has been passed off as being Scottish and this is the main reason that the image of Scottish salmon has been so devalued in the marketplace. This has not been the case, as discussed in the reports section of this website.
This new labelling will make little difference to consumers, since the information is only useful if consumers are faced with an alternative from which to choose. However, in most retail situations, consumers have little choice at all. This is because most retailers obtain single species of fish from one source. It is therefore unlikely that a retailer would offer identical fish from different origins at the same time. The rare exception would be if the fish were of different sizes and each could only be obtained from different sources. Otherwise, there is no incentive to do so.
Research has already shown that most consumers are not really interested in the geographic area from which the fish come. After all, fish come from the sea and are able to swim freely. It is just a matter of chance as to where caught fish are caught and landed. Origin is therefore meaningless.
Farmed fish are easier to attribute to a country of origin. However, faced with a choice, it is impossible for consumers to gauge whether there is any difference. Any awareness really only comes from previously publicised producer preconceptions, which may not be borne out in the marketplace.
This new legislation may be well intentioned, but it may also have implications for the farming industry. Research by SeaFish has identified that consumers have a negative attitude to farmed product and therefore it may be necessary to use alternative wording such as cultivated. This in itself is misleading to the consumer as it is dressing up the reality.
Even though most retailers have not labelled farmed salmon as farmed, they do label wild salmon as wild. This is because of the price premium, which wild fish can command.
It is still early days, so it is impossible to tell whether these new labelling regulations will have any effect on consumer choice or more importantly, on sales.
Balanced prices: Paul Birger Torgnes, Managing Director of Fjord Seafood, has told IntraFish that the Norwegian industry is confident that there will be an improved balance between supply and demand in the salmon market. This balance is expected to bring an up-turn in prices.
Yet, to achieve any balance in the marketplace it is necessary to know the size of the market, so production levels can be adjusted accordingly. However, there is very little discussion about how large the market really is. This is because no one really knows.
The only reason that there is supposed to be an imbalance in the market is because prices have fallen to levels below the industry's prior expectation. Yet, these low prices are not necessarily a reflection of any imbalance, but rather the result of a production-led strategy, which gives little consideration of the needs of the market.
This reliance on production-led strategies is illustrated by the fact that it is supply, which is being considered for adjustment rather than demand. By comparison, a market-led strategy would aim to adjust this so-called imbalance by increasing demand.
Whichever route the industry decides to adopt, the reality is that the salmon market is now so diverse, it is almost impossible to put a figure on the potential demand. The only figure available is how much salmon has actually been sold. This gives no clear indication as to real market size, but rather simply confirmation of the amount of fish produced and then taken up by the consumer.
It is this diversity of the marketplace, which is the real key to future industry development. The salmon industry must look to diversify its market if it is to find a lasting solution to low prices.
Low prices are now a feature of the salmon industry and therefore it will make little difference whether this alleged imbalance is addressed or not. Prices will still fluctuate up and down but the underlying trend will not change.