Henrik Vikjaer Andersen of Codfarmers told the conference that the cod farming industry cannot live with the lower prices that are paid for wild cod and thus farmed cod must be separated from the wild fish. Mr Andersen said that this separation is essential because farmed and wild cod are two very different products. We are not sure whether they are or not and it is largely irrelevant anyway. What is important is they must be distinctive in the marketplace rather than being perceived as being the same.

We, at Callander McDowell, have previously commented on the approach taken by the Norwegian Seafood Export Council to promote Norwegian cod to the marketplace. Mr Andersen told the conference delegates that ‘Norwegian fresh cod’ was a good starting point but that it was just a starting point and that it must be developed so that the industry does not fall into a trap in which all Norwegian fresh cod is treated alike.

We have already discussed the presentation that Karin Olsen, white fish marketing manager at NSEC gave to the cod farming conference in Reykjavik last October in which she said that the main promotional story for Norwegian cod is ‘Norwegian Fresh Cod’. Under that single banner, Ms Olsen has divided ‘Norwegian fresh cod’ into four different types:

Wild – caught in the cold clear waters of Norway

Farmed – farmed in the cold clear fjords of Norway

Sea ranched – ranched in the cold clear waters of Norway

Skrei – Cod from the Barents Sea that comes to the coast of Norway and becomes the Miracle Fish

Skrei cod are seasonal and sea ranched fish are a niche market that both can be discounted from the general promotion leaving just farmed and wild fish. Under this regime, it would appear that both are given an equal billing. This is hardly surprising. 

The decision to farm cod was prompted by the news that stocks of wild cod were on the point of collapse. It was envisaged that farmed cod would supplement the diminishing wild stock in order to maintain supplies on a year round basis. It was even conceived that farmed cod could even replace wild supplies altogether. Therefore there was some sense in grouping farmed and wild cod together under one single banner.

However…..

Stocks of wild cod have not collapsed as the environmental groups had predicted and supplies to market have been maintained. In part this is because some of the fishing pressure was diverted away from wild cod stocks. Demand for locally caught cod therefore declined as processors increasingly substituted Pacific cod and Alaskan pollock in many products that had traditionally been made with cod. Some of this trend now appears to be reversing as we demonstrated in the last issue of reLAKSation as cod seems to be back in fashion.

The increasing supply of locally caught cod means that farming is now under the cosh. Improved supplies and reduced demand have led to falling prices which have impacted most on the farming industry. Production costs are much higher than the lower selling price and producers face growing losses. These changing circumstances mean that the original strategy to market farmed cod alongside wild is doomed. Rather than accentuate the similarities, it is now increasingly important to highlight the differences with the hope that the markets will be prepared to pay a premium for them.

The simplest way to differentiate the two is to label them as wild and farmed. However as we have previously discussed, the term farmed can have negative connotations especially due to the efforts of some of the environmental groups to denigrate the aquaculture industry in the media. The effects of this are most apparent when wild and farmed cod are sold alongside each other since consumers actively select the wild fish believing them to be most acceptable (even though the same environmental groups have warned that consumers should not be buying cod at all). This problem is exacerbated if farmed cod is more expensive (to help cover the high production costs) because consumers simply opt for the cheaper option. The difficulties of labelling and higher prices diminish if consumers are not offered a choice and farmed cod is the only format available on the fish counter, then the choice is either to buy or not. 

Interestingly, having observed that most farmed cod was being labelled using the term ‘Farmed’ as the main descriptor rather than just Cod – Farmed in Norway, a couple of stores have now changed some of their labelling for sea bass to say ‘Farmed sea bass’. Since they generally do not sell wild sea bass, this is not such a problem but on the odd occasion when they do, the buying decision is based on different criteria such as size. In the case of cod, farmed fillets look pretty much the same as those from a wild fish so the decision is based solely on the price and method of production.

One of the main points of differences promoted for farmed cod is the ability to supply super fresh fish however, if wild fish is also being promoted as fresh as in ‘Norwegian fresh cod’, it is going to cause difficulties with the wild fish suppliers since whilst it is inferred that their fish are fresh, the implication is that they are not.

Henrik Vikjaer Andersen said that the solution is to find a ‘sexy’ name that will not detract from the idea of farmed. We, at Callander McDowell, are puzzled why this is still an issue after all its’ not rocket science!

We are not great fans of generic promotion since it is too generalised lacking any specific targets but sometimes it can boost the efforts of individual producers. We consider that it is up to companies to develop their own market strategy and promote their fish accordingly. However, in the absence of such individual attempts, then as Mr Andersen says, generic promotion is a starting point.

In the case of Norwegian farmed cod, the solution is staring the industry in the face. It is simply a matter of rearranging the words used by Karin Olsen in her conference presentation.

We’ve amended a NSEC promotional poster to show how this might look.

The use of the term Fjord fresh means that wild cod can be promoted as ‘Norwegian fresh’ or even ‘wild fresh’. Many people already associate the Fjords with Norway so the identity is maintained despite the removal of obvious geographic link. However, if the Norwegian authorities cannot live without the immediate Norwegian connection then it is still possible to go with the less snappy.

High price, low quality: IntraFish reports that you need to go back to the year 2000 to match the bumper start to salmon prices. The first seven weeks of 2009 have seen extraordinarily strong prices with an average of NOK 27.18/kg.

In a totally different article, Trond Davidsen of FHL warns that increased imports of pangasius to the EU could undermine the reputation of the entire seafood industry. He highlights that the quality of their Vietnamese fish is not equal to that of marine caught fish such as cod, something that consumers are not aware of. However, whilst increased imports of pangasius to the European market are understandable, what is surprising is the news that the fish is now finding its way onto Norwegian retail fish counters. After all Norway is a key fishing country with an economy that is dependent on fish exports. Surely, Norway should not need to import fish from Vietnam?

What links these two stories is that whilst we applaud high prices for salmon and high quality Norwegian marine fish, the reality is that there are many consumers, even in Norway, who live on a budget and simply cannot afford to pay over the top prices for the best fish. In this credit crunch economy, this is truer than ever.

Demand for salmon may be strong at the moment but the high prices are also proving to be a deterrent for many consumers and instead they are turning to other species that are offering better value for money. Pangasius may not be comparable with other white fish but it is available and it is cheap. Equally, salmon may still be desirable but retail prices do not currently match the market prices. If they do, then demand will is bound to fall.

We, at Callander McDowell, keep a close watch to what is happening in the retail sector and one major retailer has been repeatedly trying to push up the price of the salmon they sell. Every time they have tried to increase the price of salmon, they have been forced to reduce it a short time later, presumably because sales have dropped off. It has made little difference whether the salmon is labeled at the premium or value end of their ranges, increased prices have not been maintained. Consumers have shown their reluctance to pay more for the salmon their buy.

The latest attempt to force higher prices on consumers has involved a change in strategy towards fixed price products. We shall continue to watch to see whether this succeeds when others have failed.

There have been other indications that high prices can damage demand and we will discuss these in future issues of reLAKSation.

SOTA says: Salmon of the Americas (SOTA) are not pleased that the food editor of the newspaper ‘USA Today’ is not prepared to correct a story that appeared in the January 23^rd issue of the paper.

The problem is that the paper quotes Spring Randolph, a food safety officer, who said that when you cook wild salmon, the colour is retained but in farm raised fish, the colour leaks out.

The newspaper’s Food Safety editor, Sue Kelly said that she will stand by the story because ‘salmon loses some of its colour when cooked’. Neither Kelly, the reporter, Elisabeth Weise nor the accuracy editor, Brent Jones, were willing to issue a correction.

We, at Callander McDowell, think that SOTA are wasting time and effort in pursuing a correction. Many newspapers put corrections together in a small column hidden deep within the paper, where they are missed by most readers. Corrections are a waste of time.

It is equally a waste of time trying to persuade the paper to pursue the same story again, especially general interest papers like USA Today. To them, the story has been and gone. It’s now old news.