reLAKSation 372. Callander McDowell
Twenty two percent!: FIS.com reports that fresh salmon has become more popular than ever in the UK with an additional 40 million meals being enjoyed over the last two years. New figures from the TNS Worldpanel report that consumption of fresh salmon meals has jumped from 179 million in 2006 to 219 million in 2008, an increase of 22%.
Mark Thomson, Strategic Insight Director of TNS Worldpanel told the Scottish Salmon Producers Organisation, who had commissioned the report, that one of the key priorities for consumers in the current economic climate is health. The popularity of fresh salmon continues to leap as its health benefits are increasingly recognised. The importance of this change is reflected in the headline ‘health wins over the credit crunch’ used in the press release issued by the SSPO.
We, at Callander McDowell, think that the growth in salmon consumption is really positive news that should be welcomed throughout the industry. However, at the same time we are slightly hesitant about linking this growth in consumption with health concerns or the credit crunch.
We have not seen the full report but rather must rely on the edited highlights provided by the SSPO but it does seem over-ambitious to extend the effects of the recent credit crunch to the last two years salmon consumption figures. Equally, we are not so sure that this growth in salmon consumption is directly linked to concerns about health.
There is no doubt that if asked, consumers will express a desire to eat healthily and especially boost their omega-3 consumption, however as we have said many times before what consumers say and what they do are not necessarily the same thing. There has certainly been more emphasis on the omega-3 content of fish in recent months with some of the leading players in the frozen fish sector highlighting the omega-3 content of their products even if the fish is a poor source of omega-3. Species such as cod and haddock are now actively being promoted as a source of omega-3 fatty acids. The only reasoning for this approach is that if consumers who have notoriously rejected oily fish species are not buying them for their omega-3 fatty acids, then at least use the fish species they are buying to convey the omega-3 message.
Yet, consumers are buying salmon and according to TNS Worldpanel, even more of it. Salmon is popular but this is because it is value for money, tasty and versatile. The fact that it is rich in omega-3 fatty acids is an added benefit and not the main driver of consumer purchase.
It is interesting to see that the period covered to show this growth is actually the two years from 2006 to 2008. The salmon industry has seen a lot of change over this period including both the imposition and removal of the MIP. Whilst the MIP did not have any direct effect on the salmon market, its influence undermined confidence in the market and as a result, prices shot up with concerns that supply would be restricted. The effect of these high prices was dramatic with a significant drop in salmon consumption, not just in the UK but across the traditional markets in Europe. The effects of the reduced consumption would have had a much greater impact on the salmon industry had it not been a coincidental rise in demand for salmon from Russia. This kept prices high and continued to suppress demand in the UK market, which only recovered with the removal of the MIP. This brought a renewed confidence to the market and with the easing of demand from Russia prices start to return to a more reasonable level, which in turn boosted demand in the UK and in Europe. This is the growth that the TNS Worldpanel has now recorded.
Whilst we can only see the highlights of the TNS report, other data is available for the UK market from AC Nielsen/SeaFish. Their data for fresh salmon shows that volume has grown by 7% to 31,500 tonnes whilst the price has fallen by 2%.
AC Nielsen/SeaFish price data is difficult to interpret because it is an average value, whilst most of the retailers offer a range of different salmon presentations at different price levels. What is interesting is that during the period of the credit crunch, when supermarkets are reportedly slashing prices to retain customers, we have observed some price increases as well as price cuts. The most notable discounting has been at the cheapest end of the market which suggests that those who believe that they are paying more for quality salmon are continuing to do so.
Whilst the salmon industry is keen to highlight salmon’s health credentials, we must not lose sight of the main reason why consumers buy salmon; it is value for money and tastes good.
Nineteen per cent: The Anchorage Daily News reports that the harvest of Alaskan pollock from the Bering Sea could be the smallest in more than 30 years. Government scientists are have recommended that the pollock quota be set at 815,000 tonnes, down from the current one million tonnes.
The Marine Conservation Alliance, who represent the fishing fleet, suggest that this downturn was expected whereas the conservation group Oceana believe that the industry is counting too heavily on a quick recovery of the pollock stock.
What no-one seems to mention is that the pollock stock is one that is certified as sustainable by the Marine Stewardship Council? We can only wonder how a sustainable fishery that was producing nearly 1.5 million tonnes of pollock only two years ago can now be restricted to nearly half that next year. This is not sustainability but a clear case where the fishery is being over-exploited.
The MSC website lists this fishery as having a catch of 1 million tonnes. Yet, the years following certification in 2004, the catch was clearly much higher in which case it appears that either the MSC or the fishermen were wrong and hence the fish were not being fished in a sustainable manner at all.
It seems to us at, Callander McDowell, that, using the catch data below, the certification of the Alaskan pollock fishery has actually placed more fishing pressure on the fishery than occurred prior to certification. Demand for MSC certified fish from Europe has increased the fishing pressure and has in effect changed what used to be a previously sustainable fishery into one that is not. The effect of certification is proving more damaging to the fish stock than if it hadn’t been certified.
Whether the fish stock will recover is at this stage unclear. The National Marine Fisheries Service suggests that their modelling did indicate a decline in stock which should be remedied when the 2006 begin to reach adult size. However, what may help the stock recover is that the reduced catch will push up the price of pollock. John Bundy of Glacier Fish Co thinks that customers will see price increases, but whether they are prepared to pay the extra remains to be seen. The widespread use of Alaskan pollock in the European frozen fish sector has been promoted by its sustainable credentials but at the same time, comment has been made that the processors have been encouraged to switch by the much lower prices than local fish. If the prices rise, then we will see whether it is price or sustainability which is really driving sales.
It doesn’t really matter what happens to the Alaskan pollock stock in future years, the fact that quotas have been cut to such low levels shows that the fishery is clearly not sustainable, irrespective of whether it is certified or not. The term sustainable is already well overused. It’s time to rethink what sustainability really means. We are sure it doesn’t mean a nineteen percent cut in catch.
One point five percent: After a period of rising prices, the price of food and drink at Britain’s major supermarkets has fallen for the first time this year according to the Scotsman newspaper. Asda showed the greatest reduction with prices down by 1.5%. By comparison, Tesco’s prices fell by 1%, Morrison’s remain unchanged and Sainsbury’s prices rose by 2.5%. Asda were also found to have the cheapest prices which were on average 3.5% lower than those of Tesco’s and Morrisons. These price falls compare with a price rise of 12.6% over the previous 12 months.
There has been much discussion how the price changes and the economic crunch have affected the major retailers. Much has been made of the record growth of the discount shops. For example, Aldi achieved record year on year growth of 23.9% in the twelve weeks to 2nd November. This implies that many shoppers are deserting the large supermarkets to shop at the discounters but our observations suggest that the number of shoppers visiting the typical discount store has not increased greatly. We have noticed that when one of the stores opens in a city centre location it does attract a much higher volume of customers and this may have helped boost their recent sales.
Observations made in all the other supermarkets suggest that there are just as many customers with trolleys that are just as full, although it is possible that shoppers are selecting cheaper alternatives than they used to buy. Some of the supermarkets have entered a war of words as to their performance over these difficult trading conditions.
Asda, for example, have claimed that customer numbers and spend per visit are both up and their performance is greater than any of their competitors. They say that their growth is 6.9% in the third quarter compared with 6% and 5% previously. This compares with 4% for Tesco and 3.9% for Sainsbury’s.
Asda claim that one of their strongest areas has been the growth of AB shoppers who have swapped from the high end stores such as M&S and Waitrose. They say that this is reflected in increased sales of organic and Extra Special ranges, which is attributed to a growing number of wealthier shoppers. Interestingly, our observations over the last six months would indicate that these ranges, especially of fish products, have significantly diminished in all the Asda stores that we visit.
Sainsbury’s also claim to see an increase in their premium products as well as their basic range. They say that their customers trade both up and down to get the best value. Sainsbury’s say that they aim to cater for and appeal to the full range of customer needs and budgets. They too imply that they are taking customers away from the premium sector such as M&S and Waitrose
One point that all seem to agree is that M&S have suffered most from the downturn. The implication is that even premium consumers are trading down. What is more likely is that M&S customers must also visit other supermarkets as they only offer a limited range of their own label foods. This means that some customers who would do a second shop at M&S now shop for all their needs in just one supermarket and no longer visit M&S at all.
Meanwhile Waitrose claim to be holding their own in the marketplace. Mark Price, Chief Executive of Waitrose argues that the whole market is contracting in volume as customers seek to make their money go further. He says that the figures suggest Sainsbury’s customer base has remained flat as whilst they may be gaining customers from M&S and Somerfield, they are losing others to Tesco and Morrisons.
At least the salmon industry can take comfort from the fact that it doesn’t matter where consumers shop, with the exception of the discounters, all the leading supermarkets offer a choice of fresh salmon products at prices to suit all budgets from £6/kg upwards. The credit crunch is no reason why the public cannot enjoy a ‘value for money’ meal made with salmon whatever their budget.