reLAKSation 374. Callander McDowell
Bream there before: If the European market had been importing sea bass and sea bream from outside the European Community, we wonder whether we would now be writing about the possibility of a yet another dumping case. However, as the main producers of sea bass and sea bream are from EU Member States, we hear that the Federation of European Fish Producers has written not to DG Trade but rather DG Fish. According to IntraFish, the letter to Dr Borg of DG Fish appeals for help as bass and bream prices plummet fifty percent below production costs raising the spectre of possible bankruptcy for many farms. Sea bream prices have fallen to €2-2.5/kg compared to production costs of between €4.5-5/kg.
FEAP President John Stephanis has written to Dr Borg to request an urgent meeting to discuss long and short term solutions and especially to consider how to ‘remove’ 20,000 tonnes of fish from a flooded market. He added that the situation has already led to the financial failure of several companies in almost all of the producing companies. The latest casualty has been the major Greek company, Hellenic Fish Farming.
This situation is very reminiscent of the past problems of the salmon industry with repeated claims of over-production; the request to remove fish from the market and reports of bankruptcies. The Scottish salmon industry blamed Norway for their problems but as we already indicated that as all production occurs within the EU, sea bass and sea bream producers have only themselves to blame.
In his letter, Mr Stephanis told Dr Borg that a lack of accurate and timely data in the marketplace has contributed to an imbalance between market supply and demand. This is also reminiscent of claims made by the salmon industry but as the salmon industry improves, the continued absence of such data does not seem to have held them back. Instead, Mr Stephanis also alludes to the real reason for the current problem. He says that the incredible rapid growth of production and inefficient marketing efforts have contributed to the situation.
Mr Stephanis suggests that inefficient marketing efforts may have contributed to the situation. We, at Callander McDowell disagree. Inefficient marketing is the problem, as it has been with salmon production. We might suggest that inefficient market may even equate with the absence of any marketing effort at all, at least in some markets.
Even though every prediction and forecast suggest that demand for fish and seafood will grow for many years to come, fish farmers cannot just expand production and expect the market to scramble for every fish produced. The industry firstly needs to be sure that the fish they produce are the same fish that the market wants and then it needs to tell the market that these fish are available, and for a price the market is prepared to pay.
The problem for the bass and bream industry is that production growth has meant that they can no longer rely on their local market to take the fish. They have had to seek new markets, which may not be used to these species. The UK is one such market where the presence of these species has become much more noticeable in recent years. Unfortunately, the British consumer is extremely conservative when it comes to fish and prefers to buy traditional species such as cod, haddock and salmon. Sea bass and sea bream will always face difficulties competing against these traditional species, especially as they are usually sold whole, whereas British consumers prefer boneless fillets. Bass fillets are available from some fish counters and in prepacked form, priced from around £17 to £30/kg. This is not cheap considering that salmon fillets can now be bought for as little as £6/kg. According to AC Nielsen/ SeaFish data the UK bought about 1200 tonnes of sea bass last year. By comparison, sea bream sales have been too low to register, despite some recent half price offers.
UK consumers have a great deal of choice when buying fish, despite their conservative tastes. Other new species such as tilapia and basa are appearing on counters at more competitive prices yet even these species face difficulties attracting consumers. One leading supermarket has stopping selling tilapia fillets presumably because of low consumer interest. Yet, the same consumers have not been targeted with any marketing activity so the lack of sales is not surprising. You can’t expect consumers to buy new species if they don’t know anything about them.
We have heard the argument before that it is the responsibility of the supermarkets to promote the fish but if consumers don’t buy the new species and chose something else instead, then the supermarket will still make a sale. We are in no doubt that the farming companies produce the fish and therefore are responsible to make sure that they sell. They are still their fish even when on the supermarket counter.
This week, Fish Farming International also reported that Danish fish farmers have launched a campaign to encourage fish consumption in Denmark with a ‘Twice a Week’ campaign. They hope to increase demand for fish by 40,000 tonnes a year.
Danish Aquaculture Director has said that the EU is a huge importer of fish and imports are expected to grow from 3 million tonnes to 12 million by 2025. This means that there will not be enough fish leading to a global shortfall which will be met by aquaculture. He hopes that sustainable and environmentally sound Danish aquaculture will spearhead this demand.
Against this background, claims from FEAP that the sea bass and sea bream industry is in crisis, are difficult to understand. The answer is simple. Get out there and market your fish.
Meanwhile, we doubt that Mr Borg will provide a solution to the excess fish in the marketplace. Hopefully, no one will suggest that the fish should be frozen and stored as happened in the salmon industry. This is not a solution and can only end in disaster. The New Year is usually a time when many consumers reflect on their lifestyles with a lasting desire to become healthier, especially after the excesses of Christmas. January would therefore be an ideal time to invest in a healthy eating campaign based on sea bass and bream, backed by some form of financial incentive.
Scotland’s Minister for Aquaculture, Michael Russell has just told the Scottish aquaculture industry that they should be taking advantage of the new European Fisheries Fund which can be used amongst other things to develop new markets and promotional campaigns. The sea bass and bream industries should be accessing this funding now to promote consumption of their fish and then before they produce more they should review whether the fish they produce is exactly what the consumer wants.
Of course, none of this is new. The aquaculture industry has been there before!!!
Rethink or just think: Seafoodintelligence.com have reported that Norwegian and Faeroe Island researchers have been pondering as to why and how Irish salmon farmers have achieved a competitive edge and significantly higher average export prices than their colleagues in Norway. In 2006/7, prices for Irish salmon rose whilst Scottish, Norwegian and Faeroe Island salmon all suffered a price fall. In response, scientists from Norway’s Nofima and Faeroe’s Havsbrún have sought to uncover what the Irish industry has done to achieve these higher prices for their salmon?
Senior scientist at Nofima, Geir Sogn-Grundvåg has suggested that problems with disease and higher production costs have forced the Irish industry towards organic production and strong branding strategies. He said that the Irish were the first to appreciate the benefits of organic production, although we think that there will be some producers in Scotland who disagree. Mr Sogn-Grundvåg believes that this focus on organic is probably the main reason why the Irish industry has achieved good prices. We are not so sure.
Irish salmon had already achieved a premium position in some markets before organic production came to such prominence (although organic production is still a relatively small niche market). In France for example, there is a well defined hierarchy of value which relates to country of origin. This is especially noticeable in smoked salmon. Norwegian salmon is the least valued, followed by Scottish with salmon of origin realising the best prices. It is not so easy to make a similar comparison in the fresh market since most Irish salmon is now organic (although volumes are still very small). In the UK, organic Irish salmon sells at the same price as Scottish, which suggests that it is the organic provenance and not the country of origin that governs the price.
Mr Sogn-Grundvåg says that besides organic, Irish salmon is backed by strong brand identities, especially in the UK and Germany. We are not in a position to comment on Germany but in the UK where we monitor the market on a regular basis, the only Irish salmon we have seen is organic and is sold as private label. We have not seen any Irish salmon brands in the UK for quite a number of years, except in Ireland. Even in France, a key market for Irish salmon, it is difficult to find evidence of Irish branding.
Mr Sogn-Grundvåg says that there is a strong loyal domestic market for Irish salmon and this is understandable. It would make little sense for other producers to target Ireland as it has its own industry. The only reason why Norwegian salmon finds its way in the UK market is that the Scottish industry cannot yet produce enough to satisfy local demand so despite being a producing nation it is also an importer of farmed salmon.
The results of this study seem to suggest that the Irish salmon industry relies on organic production and brand identity to boost their prices. We, at Callander McDowell, are not convinced. We would suggest that there is another and much more obvious reason why Irish salmon can command a premium price and that is because of its intrinsic rarity value, especially in the French market.
We are not sure why the French market is still fixated with country of origin as a differentiator of farmed salmon. There are undoubtedly examples of high quality salmon from every producing nation. We have eaten good Norwegian salmon, good Scottish salmon and good Irish salmon. We are not sure if there is any real difference between them, and certainly not enough difference to merit paying more for one than another. Yet, whilst the French market continues to show a willingness to pay more for one than another then the Irish and Scots can certainly benefit. Whilst the Irish have developed a quality story to help with this differentiation, as have the Scots, the real measure is simply its availability. The Norwegian industry now produces around 500,000 tonnes of salmon, the Scots 130,000 tonnes and the Irish less than 15,000 tonnes. Backed by its quality story, there is simply not enough Irish salmon to satisfy the sections of the market that want to buy it. We are in no doubt that if all three producing nations exported exactly the same amount of salmon to the French market, the differences in price would diminish.
As we have repeated on many occasions, we have yet to see identical portions of fresh salmon being sold off the same fish counter for different prices based on the country of origin alone. Any suggestions would be welcome. We’d be happy to take Mr Sogn-Grundvåg along with us.
Pointing the finger: The Daily Mail recently reported that the staple constituent of many children’s suppers, the fish finger, is set to become more sophisticated with the launch of the Bird’s Eye salmon fish finger. The company has said that the launch was timed to coincide with Prince Charles’s 60th birthday on November 14th although they would not say whether the future King was a fan of the fish finger or would be eating any of the new product. Bird’s Eye say that they had developed the fish finger on hearing the results of a survey of 1000 parents showed that children are developing more sophisticated palates. Salmon, along with Feta cheese, lentils and asparagus were amongst foods that they said their youngsters now enjoyed.
Youngsters may very well enjoy salmon but we wonder whether Bird’s Eye may have a struggle on their hands to eat their salmon in a fish finger? This is because despite their market hype, Bird’s Eye salmon fish fingers are not the first salmon fish fingers to hit the market. Young’s have previously launched a salmon fish finger aimed specifically at kids in their Young Un’s range. Sadly, this product did not succeed and was eventually delisted, presumably because not many people bought it.
The problem is that fish fingers are by their very nature a cheap and cheerful way to encourage children to eat fish. Once they are taken ‘up-market’, they no longer fulfil this purpose. It doesn’t help that because there is only a small amount of fish in each finger, changes to the fish used don’t really affect the overall taste. This may be in part due to the use of cheaper Pacific Pink salmon, rather than the more flavoursome Atlantics.
The fish finger market had been in the doldrums but has recently received a boost by the development of functional fish fingers promoting their omega-3 content. According to AC Nielsen/SeaFish, fish finger sales are up by around 5%. This is probably due to the widespread TV promotion of Bird’s Eye omega-3 product.
What we find puzzling is that Bird’s Eye have not tried to capitalise on any of the potential marketing opportunities offered by these new salmon fish fingers. Packs do not mention the MSC certification as a sustainable fish, nor even more surprising, they make nothing of the omega-3 content. Perhaps having sold the story that their Alaskan pollock fish fingers are rich in omega-3, they now cannot suggest that the salmon fish fingers have a significantly higher content. Instead, they are left to focus on the supposed up-market image of salmon.
Interestingly, we, at Callander McDowell have argued repeatedly that the salmon industry should be producing what consumers actually want. Many years ago, we suggested that if this meant that we should be producing salmon fish fingers then that is what the industry should produce. We even had some samples made up. Yet, this suggestion almost produced cries of heresy of those who could not see their noble salmon being used in such a down-market product.
Unfortunately, the real opportunity for salmon fish fingers is as a super-charged source of omega-3 but it seems that the way that this idea has already been utilised means that rather than being a fantastic opportunity to promote salmon, it is now just another lost opportunity.