Callander McDowell
Callander McDowell
reLAKSation no 398
US!!: One of the many visitors to the recent European Seafood Exposition in Brussels was Peter Huh of California based Pacific American Fish Co who was on a mission to source Norwegian salmon for the US market. According to IntraFish, he wasn’t alone as many US buyers also attended the show to look for alternative sources of salmon to that from Chile.
Mr Huh told IntraFish that farmed salmon is in great demand in the US and Chile is not in a position to supply the market properly. He said that the US market has become too dependent on Chile and the current problems have demonstrated that buyers need to source from several countries.
Such interest has prompted the Norwegian Seafood Export Council to reconsider if and how they target the US market. Marine Harvest is already diverting salmon to the US in order to supplement their reduced supplies from Chile. Seafood International reports that exports of Norwegian salmon fillet to the US have so far increased by 151% to nearly 6,000 tonnes.
This increasing interest in Norwegian salmon from the US is expected to keep salmon prices high for the forseeable future. Lars Liabo of Kontali Analyse has suggested that the salmon industry is entering a golden era helped by a weak krona which has boosted sales in Europe. He added that there are also plenty of salmon available for US consumers.
Exchange rates aside, the key question is whether US consumers are prepared to pay any price for European salmon? The disease problems in Chile have certainly had an effect on supply and have pushed prices upwards on the expectation that there will be shortages in the coming months. Yet, at the same time, these higher prices will no doubt suppress demand especially amongst consumers used to salmon as a value for money choice. It is unclear whether US consumers, who are used to such value for money Chilean salmon, will still want salmon if the price continues to go up. We are not even certain whether demand in Europe will remain strong. Certainly, when prices rose in 2006 European demand fell and prices were only maintained by an increasing Russian market.
Peter Huh said that salmon is in great demand in the US market but he does not say whether this is because consumers actually want salmon or whether it is because it is still competitive with other fish choices. We know that US consumers have the choice of many other value species including pangasius and tilapia as well as home grown catfish. These are readily available for those consumers who want to keep a close eye on their spending.
We would suspect that if salmon shortages were starting to affect the US market, then fresh Atlantic salmon would be harder to find with prices to reflect its availability. We, at Callander McDowell, embarked on a tour of US retailers to take a snapshot of exactly what is happening to salmon in US stores.
Rather surprisingly, we found fresh Atlantic salmon on price promotion in 46 US supermarket chains, just under half those visited. Typical promotional prices are in the range $5.99-$6.99/lb (£8.89-£10.37/kg; €10.00-€11.67/kg; NOK86.08-NOK100.4/kg). These prices are comparable if not cheaper than similar promotional offers in the UK market. The full list of promotional offers from all 46 stores is as follows:
Salmon price promotions US supermarkets May 2009
Blooms, North Carolina. Fresh hand cut salmon fillets $6.99/lb
Food Lion, Virginia. Fresh hand cut salmon fillets $4.99/lb
Harveys, Florida. Farm raised salmon fillet $6.99/lb saving $2/lb
Bakers, Nebraska. Fresh Atlantic salmon $5.99/lb
Dillons, Kansas Fresh Atlantic salmon $5.99/1b
Hilander, Illinois. Atlantic salmon fillets $5.99/lb
Smiths, Utah. Farmed raised Atlantic salmon $5.99/lb
Pavillions, California. Fresh Atlantic salmon fillets $5.99/lb
Randalls, Texas. Fresh Norwegian salmon fillets $5.99/lb
Tom Thumb, Texas. Fresh Norwegian salmon fillets $5.99/lb
Vons, California, Fresh Atlantic salmon $5.99/lb
Biggs Ohio, Fresh Atlantic salmon fillets $6.99/lb
Farm Fresh, Virginia. Farm raised fresh Atlantic salmon fillets $7.99/lb
Hornbachers, Minnesota. Norwegian salmon fillets farm raised $8.98/lb
Lucky, California. Fresh Atlantic salmon filets or steaks $5.99/lb
Shaws, Massachusetts. Fresh Atlantic salmon fillets $6.99/lb
Shop n save, Illinois. Whole salmon fillet 1.5lb $4.99 each
Shoppers, Virginia. Salmon fillet portion 6oz $3.99 each
Pathmark, New Jersey. Fresh Atlantic salmon fillet $7.99/lb
The Food Emporium, New York City. Fresh Atlantic salmon fillet $11.99/lb
Big Y, Connecticut. Fresh farm raised salmon fillet $6.99/lb
Dierbergs, Missouri. Norwegian salmon $9.99/lb
Grand Union, Massachusetts. Fresh farm raised salmon fillet $7.99/lb
Ukrops, Virginia. Whole farm raised salmon side fillet $6.98/lb
BiLo, Georgia. Fresh salmon fillet 5oz $2.99 each save $1.60 each
Karns Foods, Pennsylvania. Fresh Chilean salmon fillets $5.98/lb
Brookshire Brothers, Texas. Atlantic salmon fillets (imported) $5.98/lb
Food King, New Jersey. Fresh Atlantic salmon fillet $7.99/lb
Price Chopper, New Hampshire. Whole Canadian salmon $6.99/lb Ocean raised Canadian salmon fillet $8.99/lb
Meijer, Michigan. Fresh skinless Atlantic salmon fillets $6.99/lb
Key Food, New York City, Fresh farm raised Atlantic salmon steaks $6.99/lb
King Cullen, New York Fresh Atlantic salmon steak $7.99/lb
Foodland, Hawaii. Atlantic salmon steak or roast $7.99/lb
Heinens, Ohio. Fresh farm raised Norwegian salmon fillets $9.99/lb
Hugo’s, North Dakota. Fresh Atlantic salmon fillets $5.98/lb
Magruders, Maryland. Fresh salmon fillet $5.99/lb
Stew Leonards, Connecticut. Fresh Atlantic salmon fillets $5.99/lb save $3/lb
ShopRite, New Jersey. Fresh farm raised salmon fillet $7.99/lb
Brunos, Alabama. Fresh farm raised salmon fillets $6.99/lb
Marsh, Indiana. Fresh salmon fillets $6.99/kg
Redners, Maryland. Atlantic salmon fillet $6.98/lb
Rouses, Louisiana. Jet fresh Scottish salmon $5.98/lb
Martins Foods, West Virginia. Fresh salmon fillet $5.99/lb min 2lbs
Giant, Washington DC. Fresh salmon fillets $5.99/lb
Savemart, California. Fresh Atlantic salmon fillets $5.99/lb
Schnuks, Missouri. Fresh Atlantic salmon fillets $6.99/lb
Although the savings are not stated, most are either one or two dollars per pound.
Most interestingly, at least five of the stores are advertising Norwegian salmon which can be bought at a variety of prices, which, as with all the offers, probably reflect differences in the target market of each store rather than any differences in the salmon. One store was specifically advertising Canadian salmon whilst another had Scottish salmon on offer at what cannot be described as a premium price.
The large choice of promotional offers on fresh salmon suggest that demand for salmon may be strong but it is a demand seemingly fuelled by value pricing. Consumers do have a choice and if farmed salmon becomes too expensive, then there are alternatives fish choices available. One such alternative is wild Pacific salmon from Alaska. Fifteen store groups offer a selection of different Pacific salmon on price promotion ranging from King to Keta salmon. Although, most of these fish are advertised as being previously frozen prices are higher than for farmed salmon.
King Soopers, Colorado. Wild coho salmon (prev frozen) $7.99/lb save $3/lb
City Market, Colorado. Wild coho salmon (prev frozen) $7.99/lb save $3/lb
Fred Meyer, Oregon. Wild sockeye salmon fillet $7.99/lb
Fry’s, Arizona. Wild sockeye fillets $5.99/lb
QFC, Washington. Sockeye fillet $9.99/lb
Carrs, Alaska. King salmon fillets $18.99/lb
Dominicks, Illinois. Sockeye fillet $7.99/lb
Genuardis, Pennsylvania. Sockeye salmon fillet $7.99/lb
Harris Teeter, Delaware. Sockeye salmon fillets $8.99/lb
Bristol Farms, California. Wild King salmon (prev frozen) $16.99/lb
Buehlers, Ohio. Wild Coho salmon $7.99/lb save $3/lb
HEB, Texas. Keta salmon fillets (prev frozen) $3.49/lb
Kings Grocery, New York. Wild Coho salmon fillet $13.99/kg
Raleys, California. Coho salmon fillets (prev frozen) $7.99/lb
Yokes Fresh Markets, Washington. Whole sockeye salmon (prev frozen) $3.79/lb
We will take another look at the US market in a couple of months to see if the situation is any different.
Labelled red: During her visit to the European Seafood Exposition, Scottish Aquaculture Minister, Roseanna Cunningham announced that 39 companies are to share £2.9 million from the European Fisheries Fund. According to Fish Farming Xpert, one of the recipients of this EEF money is Scottish Quality Salmon who will receive £203,000 to further promote Label Rouge Scottish salmon. The money is primarily to be used to target additional consumers, wholesalers, retailers and restaurants in France.
This news to increase the promotion of Scottish Label Rouge salmon in France follows the recent report that French consumption of Norwegian salmon reached an all time high during 2008. According to IntraFish, fresh salmon sales increased by 4% to 57,341 tonnes whilst sales of smoked salmon rose to 20,839 tonnes, an increase of 6%. By comparison, exports of Scottish Label Rouge salmon remain under 10,000 tonnes in total, although definite figures are hard to come by.
It might be expected that sales of Scottish salmon would have also increased on the back of wider salmon consumption, but it is worth remembering that Scottish Label Rouge salmon is sold as a premium product whilst most consumers appear to be seeking a value for money choice. Certainly, our experience of Scottish Label Rouge salmon is that it has largely disappeared from the supermarket sector and now is mostly available from small independent retailers where consumers have a more restricted choice of the salmon they buy.
According to Scott Landsburgh, Chief Executive of the SSPO, Scottish Label Rouge salmon is the fish of choice in Paris, the gourmet capital of Europe. The question is the choice of whom? Certainly, the majority of Parisians who eat salmon don’t buy Scottish Label Rouge salmon, preferring salmon of Norwegian origin. Instead, it appears that Scottish Label Rouge salmon is the choice of the Master Chefs of France, whose Parisian members’ number less than a dozen.
Whether this input of funding will help change this perception of Scottish Label Rouge salmon remains to be seen. However, Scottish salmon producers are not the only seafood producers keen to change the perception of their Label Rouge produce.
During the European Seafood Exposition, one of the stands that caught our eye was that in the French section belonging to Aqualabel. According to their literature, the Aqualabel Association brings together groups of producers with the aim to produce a plan to promote Label Rouge seafood. The association includes producers of oysters, scallops, turbot, bass and Scottish salmon. The helpful representative from the association manning the stand however pointed that whilst Scottish Quality Salmon were members of the association, they are not planning to participate in any joint promotional activity because ‘they have their own money’.
Since the Aqualabel Association is financed by the same fisheries fund, it does seem that this is a missed opportunity to promote Scottish Label Rouge salmon on the back of other Label Rouge products and thus gain even greater exposure. As the industry is keen to point out at every opportunity, Scottish salmon were the first non-French food to achieve Label Rouge status. This was as long ago as 1992. Surprisingly, only 43% of French consumers spontaneously recognise Label Rouge as an official sign of quality and origin. It is thus even more surprising that SQS intend to use some of the EFF money to help break into new markets in other European countries.
Scottish salmon is exported to several European countries in its own right. It seems a strange strategy to promote it using Label Rouge certification in countries that do not recognise Label Rouge (especially given the low level of recognition in France). Scottish salmon already has its own quality label, the Tartan Quality Mark (TQM). Surely it would be better to promote Scottish salmon as a Scottish product in overseas markets rather than using a French quality label to do so.
The British market has already had experience of how consumers react to Label Rouge in different markets. During the last outbreak of bird flu, a couple of British supermarkets imported Label Rouge chicken into the UK and sold it with the Label Rouge symbol predominantly displayed. Interestingly, most consumers considered it to be a brand mark rather than any indication of quality and thus it was just another chicken product on the shelf. The true meaning of the label was simply lost.
The reduced relevance of quality marks and symbols in different markets can be illustrated using the promotional material displayed by Rouses supermarket in Louisiana who are currently offering Scottish salmon in their stores (see our website). The material displays a heading of the SSPO logo above a photo of salmon complete with Label Rouge tags. Firstly, it is unclear why the Scottish Salmon Producers Organisation is being promoted since they are not supposed to have a role in marketing salmon and secondly, we are unsure what relevance Label Rouge has in selling salmon in the US retail sector. We can only wonder what Louisiana consumers make of it all.
Cod – again!: Seafoodnews.com report that the most striking things they learnt during the European Seafood Exposition was the strength of the resurgence of cod in the Atlantic. Spawning cod biomass in the Barents Sea is reported to be at levels not seen since the early 1950’s. They say that this is a welcome development and puts an end to the lie from those who were calling cod endangered and demonstrating against its sale just a couple of years ago.
IntraFish report that the Barents Sea cod quota could increase next year to 577,500 tonnes, an increase of 10%. They also report that North Sea cod stocks are also up for the third year in a row.
According to new consumption figures from TNS Europanel, French consumption of cod has increased by nearly 50% in the first couple of months of this year. Sales have increased from 2,274 tonnes in 2008 to 3,336 tonnes in 2009. At the same time, there are increasing calls for consumers to eat more cod. Icelandic cod importer, Atlantic Fresh Ltd has said their quotas are also set to increase and more fish than ever is expected to reach markets. Prices are already low so the possibility of even more fish coming to market does little to improve the prospects of any significant price increases.
This may be very good news for cod consumers but does little to help the viability of the cod farming industry. Just this week, Leif Helmic Pedersen of cod farming company SponFish AS told IntraFish that they cannot live with the current low prices. Prices may have recovered a little but they are still well below that of previous years and more importantly there is a huge divide between prices and the cost of production. Mr Pedersen said against a background of low market prices, such high production costs may yet strangle the cod farming industry.
Yet, earlier this year, Kolbjørn Giskeødegård, senior analyst at Nordea Markets told the North Atlantic Seafood Conference that he did not think that the current low prices will signify the end for cod farmers. Instead, he believes that the next decade will be the decade for cod farming.
It is easy to make such predictions since by the time the next decade begins no-one is likely to remember Mr Giskeødegård’s predictions. Even if his prediction turns out to be incorrect in the first year or so, a whole decade is a long time to be proved wrong. Even he admits that such forecasts are not guaranteed. A year or so ago he considered that cod was the Rolls Royce of the sea and well able to withstand competition from cheap white fish from Asia. He told the conference that he is now not so confident.
The difficulties in the cod market have little to do with cheap Asian fish but rather that the market has been told to avoid cod and consumers are doing exactly that. Demand has to be increased by increased promotion, although no doubt low prices will continue to encourage consumers to return to cod. However, Mr Giskeødegård offers little in the way of a solution to the cod farming industry as to how they can make the next decade their own.
We, at Callander McDowell, have always argued that as an industry, cod farming is likely to struggle whilst wild fish dominate the marketplace. This does not mean that it is the end of cod farming. Individual companies hold their future in their own hands in the way that they can separate their fish from the wild catch. Farmed cod can be developed to serve a niche market and with the right market-led strategy, it may be even expanded to a wider audience. What happens from then on will ultimately depend on what happens to wild stocks. Neither we nor Mr Giskeødegård can predict what this will be.