Callander McDowell

reLAKSation no 414

All that glistens…: Here in the UK, potential investors, whether in stocks shares or even gold, are always warned that the ‘Value of your investment can go down as well as up’. Nothing comes with an iron cast guarantee.

Gold was very much in evidence at last week’s Aqua Nor meeting with the salmon industry being described more than once as entering its golden period. NSEC market analyst Paul Aandahl told IntraFish that the Norwegian salmon industry has never had brighter prospects that those it has had this year. This he attributes to the melt down in Chilean salmon farming as well as the weak krona against the euro and the dollar.

Frank Asche of the University of Stavanger endorsed this view saying that the industry is better equipped than ever to tackle both the good times and bad although he said it will be quite a while before the bad times reappear.

Even more optimistic, Nordea analyst Kolbjørn Giskeødegård has indicated that as it will be some years before Chile properly recovers, there will be at least three golden years ahead with margins over 25% if not reaching 35%.

It is very easy to get carried away by Chile’s misfortune but in an industry that is dependent on live animals, nothing can be guaranteed. No one knows what is round the next corner – hopefully nothing at all, but nothing is certain and least of all that the current situation will remain unchanged. Certainly a lot can happen in three years.

If we exclude potential problems related to the farming process, who forecasted that we would be in an international economic recession right now. Last year it wasn’t even on the agenda and those who warned of possible difficulties ahead were dismissed as scare mongering. This year, there have been questions about the supply of wild caught Pacific salmon  but what will happen if next year is a bumper harvest. There are just so many unknowns.

We would be more impressed if the golden returns were the result of the Norwegian investment in market development but instead they have been built on the misfortunes of the Chilean industry. It is worth remembering that even gold can become tarnished…..

Consuming issue: In the last issue of reLAKSation we mentioned the latest US consumption figures from the National Fisheries Institute. These show that whilst salmon remains popular as the third most eaten seafood behind shrimp and canned tuna, the amount consumed has fallen from 2.4 lbs (1.08kg) in 2007 to 1.8 lbs (0.82kg) in 2008. However of more interest is that the total consumption of the top ten species has fallen from 16.5lbs in 2006 to 16.3lbs in 2007 and to 16.0/lbs in 2008.

This decline is not unique to the US market. According to the Scottish Executive, fish consumption across the UK fell from 185g per week in 2006 to 178g in 2007 compared to the recommended 280g. In Scotland, the figure is just 155g per week.

Responding to the US figures, an IntraFish editorial blames fish fatigue. The suggestion is that during the last ten years, the popularity of fish increased due to a wave of cooking and celebrity chef programmes. This spurred consumers with large disposable incomes to try cooking fish at home and eat more at restaurants. However the novelty is now wearing off resulting in a fall in consumption. We, at Callander McDowell, are not so sure.

We wonder whether this fall in consumption is part of a wider trend in some countries. According to a recent EU report, the European Union is the largest market for fish and seafood but two thirds of total expenditure on fish and seafood is concentrated in just three countries, Spain, France and Italy. Even though the UK is in the top six markets for fish, fish consumption, as reported by Scottish Fisheries Secretary Richard Lochhead, is in decline.

We have discussed consumer patterns of fish consumption in previous issues of reLAKSation but believe that the subject merits a revisit here. Over the years, research has shown that those who eat most fish and seafood tend to be in the older age groups. The general view is younger consumers tend not have the resources to buy and cook fish and seafood either in terms of cash or time but as they age and their growing families leave home then a higher disposable income and more free time means that they do have the time to cook fish and the cash to buy it.

Our view is that older consumers grew up at a time when convenience food was not so readily available and thus they developed a familiarity with buying and cooking fish which they continue throughout their lives. By comparison, younger consumers have grown up with the choice offered by the large retailers so avoid fish as they have not developed that familiarity. The big question is that as these younger consumers age will they suddenly start buying fish, having never done so before, or continue to buy the foods with which they are most familiar? We suspect that the majority will only buy fish if it is in the most convenient forms and these will not be products like wet fish from the fresh fish counter.

Callander McDowell produces monthly reports of fish and seafood products found in the retail sector. This involves regular visits to a wide range of different supermarkets. One interesting observation we have repeatedly made involves those supermarkets stores that have been modernised, expanded or refitted. In every single case, irrespective of the specific supermarket chain, the size of the fish counter has been reduced, even in stores which we perceive to be key fish stores. We can only assume that such reductions reflect a decline in the actual demand for fish. Before and after photos of the latest store that we have seen refitted can be seen below.

We would like to report that the reduced size of the fish counter has been offset by a greater space given over to prepacked chilled fish, but this has not been the case. We can only wonder if this consumer trend continues with no replacement of older consumers as they pass away, then it won’t be too long before fresh fish counters may disappear from supermarkets altogether.

Postscript

One store that has significantly reduced the size of its fish counter is the flagship Whole Foods store in London’s Kensington High Street. In this case, the change to the store was not prompted by this decline in fish consumption but due instead of the failure of Whole Foods management to understand the UK retail sector.

Whole Foods opted to open their first UK outlet in part of the former Barkers department store. There is no doubt that it was a magnificent store with fantastic displays, especially of fresh food. However, the management failed to appreciate that most people carrying out a large shop visit their supermarket by car. Kensington is not a particularly car friendly location and so many customers visiting the store only bought a small selection of items. It didn’t help that prices were much higher than anywhere else. At the beginning of August Whole Foods announced a loss for the year of £35.9 million. It’s enough to put anyone off their food.!!

Choose another: In this week’s green gauge published on the ethical living page in the Observer magazine, environmental journalist, Lucy Siegle, advocates that despite a 5% rise in cod stocks, cod should still be avoided because stocks are still exceptionally low. Instead, she recommends that consumers should choose a different fish.

We, at Callander McDowell wonder whether Lucy Siegle has actually investigated the story behind this advice or whether she has simply repeated the recommendations issued by various environmental groups. We say this because it was only at the beginning of the month that she wrote ‘the dietary recommendation to eat three portions of oily fish a week – we manage one third of this’ when the actual Food Standard Agency advice is to eat two portions of fish a week, one of which should be of an oily fish. How can such a respected journalist, as well as part time TV presenter on ethical issues get it so wrong on such a basic issue? And can consumers really trust her advice on other matters.

The problem with Lucy Siegle’s advice on cod stocks is that whilst stocks have increased by 5% as reported by the Times at the end of June, the figure relates to North Sea stocks only. Elsewhere the picture is very different. In the Barents Sea, the overall cod biomass is the largest since 1968 and the spawning stock is the highest since the early 1950’s. Of course, this does not mean that the stock should be plundered wholesale and there is no reason to believe that it will be. The Barents Sea cod fishery is currently in assessment as a sustainable fishery for Marine Stewardship Council certification.

For those consumers concerned about sustainability, MSC certified cod is already available in the marketplace. Fish caught by Domstein Longliners and sold under the ‘Perfect Catch’ label is available in Asda stores (£14.38/kg) whilst MSC certified Pacific cod is available in various added value products in Sainsbury’s. Iceland is often praised for its own work on its sustainable fishing methods and Icelandic cod is widely available in several supermarkets.

Given these sustainable options, we are surprised that Lucy Siegle has advised Observer readers to avoid cod altogether, especially as she wrote in a previous column that consumers who want to distance themselves from the lunatics* should look out for fish carrying the blue label of the Marine Stewardship Council. Perhaps in the case of cod, she doesn’t think that MSC certification is enough.

*Lucy quotes Charles Clover, who wrote that ‘the sea is presided over by lunatics who believe there should be commercial fishing in 100% of the sea’.

We should not also forget that those consumers who want to avoid wild cod now have the option of buying farmed cod which do not impact on wild stocks at all. Currently, farmed cod is available in Booths for £12/kg. Unfortunately, Lucy Siegle is not a fan of fish farming but then as someone whose view of fish and fisheries is based on that of the environmental lobby, we should not be too surprised. Of course the $30 million that Pew spend together with the $35 million from the Packard Foundation as well as large amounts from other charitable foundations help ensure that fish farming is given as much negative publicity as possible. It’s a pity that journalists like Lucy Siegle cannot make up their own mind instead, rather than rely on the dissemination of misleading information.

Back in 2006, Lucy Siegle wrote that 'Farmed' fish must once have seemed like a miracle solution to declining wild stocks, but they're fraught with environmental problems. The fish are kept in small cages, sprayed with pesticide, and fed antibiotics; sometimes they escape and breed with the remaining wild fish and the waste contaminates the sea. Oh, and it takes 3kg of wild fish to feed 1kg of farmed fish.

We all know that this view of aquaculture is not a true representation of the fish farming industry but that it comes from someone who cannot even quote the Government’s advice on fish consumption correctly, then we know that she has simply repeated the message of  those who have their own age

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