reLAKSation 434
Just one percent?: Seafood Source asks ‘Do seafood eco-labels confuse consumers?’ The answer, according to a report recently issued by the University of Stirling, is yes.’
We, at Callander McDowell, disagree. We believe that the answer is a resounding no, at least within the context of this report. The 194 page study fails to provide the slightest shred of evidence that consumers are confused by eco-labels. Instead, the authors can only surmise that: ‘As schemes have proliferated, the potential for confusion has increased.’
The report’s moderator, Professor James Young of the University of Stirling, has written in Longliner, the SeaFish magazine that ‘Time and time again, consumers complain that they do not understand what eco-labels mean’. Yet again we would disagree. Our experience of talking to those consumers who regularly eat fish is not that they are confused by eco-labels but rather they are just not interested in them or what they mean. Instead, they put their trust in their fishmonger or retailer to supply only those fish which are OK to eat. (We use the term ‘OK’ because use of the word sustainability implies a higher level of consumer awareness than there actually is.)
This over-stated emphasis of supposed consumer confusion is not really that surprising since whilst the authors of the report MRAG (Marine Resources and Fisheries Consultants) say that they aimed to produce an objective (as in impartial, neutral, detached, unbiased etc) assessment of a selection of certification schemes, they are actually involved in the certification process on behalf of the Marine Stewardship Council. They thus have a vested interest to ensure that such schemes proliferate. This is perhaps why their review of consumer awareness and priorities doesn’t appear until page 53, where it is buried deep inside their lengthy report.
Having reviewed the current research findings, MRAG admit that sustainability is of minor concern to most consumers when buying fish and seafood. Price, ‘best before date’, freshness, physical appearance and food safety were all considered to be more important than sustainability. This view was endorsed by the UK’s SeaFish, who found just 1% (one percent) of consumers listed sustainability as influencing their decision of which fish to purchase. Clearly, if consumers don’t consider sustainability to be an issue, then they are unlikely to complain that sustainability labelling is confusing.
MRAG have also referred to research from Germany in which the WWF found that some of the fisheries sustainability labels are the least recognised amongst consumers. Only 11% of consumers were aware of the MSC label whilst organic labels were recognised by over 95% of consumers. This is attributed to the fact that organic labels have been around for much longer and are used on many more products.
As German consumers exhibit a high level of recognition and organic products are now so widely available in UK supermarkets, it might be expected that organic labelling should provide an ideal model for fish sustainability labelling. Yet, this does not seem to the case. The dominant ‘label’ on most organic meat is actually the word ‘organic’. Most consumers seem to trust the word organic to mean what it says and thus require no further proof of its provenance. Some labels do carry the symbol of the ‘Soil Association’ or the ‘Organic Farmers and Growers’ but these can be hidden away on the back of the pack or on the reverse of the label only to be seen when the pack is opened.
The International Directory of Organic Food Wholesalers and Supplier Companies lists two certification schemes mentioned above for the UK but there are actually thirteen different certifications and it is guaranteed that virtually all consumers have never heard of most. What will be even less known is that the standards of each are probably different and what one certification body deems to be organic is not necessarily considered organic by another. Such differences came to light when the now failed ‘No Catch’ organic cod farming venture was not given organic certification by the ‘Soil Association’ but by one of the other certification companies instead.
Most UK consumers seem happy enough to accept that minor differences do not significantly affect the overall fact that the product is produced organically and do not need that extra reassurance of a separate label to guarantee that it is organic. The umbrella use of the word ‘organic’ provides sufficient reassurance.
In much the same way, consumers are happy to trust the retailers they use that the fish stocked in their stores is fished sustainably. They do not need the extra reassurance of another label to reinforce the message. This is why 99% of consumers are uninterested in whether an eco-label is present or not. They are certainly not confused in much the same way that purchasers of organic produce are not confused.
The only confusion about the use of eco-labels is why we bother with them at all?
Congratulations: FishfarmingXpert report that the Norwegian salmon industry has experienced another record breaking year. Exports have risen by NOK 5.8 billion to NOK 23.7 billion in 2009. The average price of salmon has also increased NOK 3.77/kg to NOK 30.72/kg. France is still the biggest single market for Norwegian salmon whilst the US is the fastest growing.
According to IntraFish, analyst Aslak Berge of First Securities believes that 2010 will be yet another golden year with average prices remaining the same as in 2009. He even thinks that they could peak at over NOK 40/kg during the summer as production growth will slow down. By comparison, Mr Berge thinks that the improving economic climate will bring increased demand for salmon.
It is not really possible to argue with Mr Berge’s forecast. The fact is that Chilean production remains low leaving a shortfall in the existing global marketplace. There’s no reason to expect the current situation to change this year unless perhaps there is a bumper catch of the wild Pacific salmon in Alaska. This would undoubtedly affect the dynamics of salmon consumption in the US forcing salmon prices down.
Wild salmon harvest aside, Mr Berge’s job of forecasting the marketing has proved relatively easy. Yet, whilst he and the salmon industry revel in self-congratulation for a bumper year and the prospect of a similar bonanza this year, it is worth considering the potential for a market backlash.
The improving economic climate may help boost demand for salmon but consumers are unlikely to be frivolous with their spending. Instead, they will continue to be cautious in case the recovery proves to be a false dawn. Consumers may want to buy salmon but not at any price. Even before the onset of the recession, consumers refused to pay soaring prices for salmon and retailers found that demand actually declined. There is no reason why it should be any different now.
We, at Callander McDowell recently completed our Christmas survey of the French market and were surprised by how high some salmon prices had become. For example a prepack of salmon portions in one mid range supermarket was selling at € 5.95 for 300g. This is equivalent to £17.83/kg. Prepacked salmon in Marks & Spencers or Waitrose is not even this price and more typically around £16/kg. Prepacks in the mid range supermarkets are lower around the £12/kg mark. We found a single salmon portion in one supermarket selling for € 3.90 each which is more than any salmon currently being sold in the UK. The difference for organic salmon is even greater with French consumers paying around £28/kg whilst the price in mid-range British supermarkets is only £13/kg. The price goes up to around £22/kg in the top end supermarkets which is still much lower than in France. It is unlikely that British consumers would be willing to pay so much to buy salmon and certainly if these prices were transplanted to the UK market, sales would undoubtedly suffer as a result.
Yet, there are already calls this year that retailers should put up prices. Xavier Govare of Alfesca has warned that the Norwegian kroner has strengthened against the Pound and Euro making salmon much more expensive. It is unlikely that the retailers will pay much heed to such calls especially as they are still in a battle against each to retain customers. For example, WalMart owned Asda has promised it would lower the price of 3600 essential products this month whilst Tesco has said that it would cut prices on 12000 grocery products through special offers. This does not seem the background for higher prices.
Yet, if salmon prices do go up for any sustained time, there will be pressure for retailers to raise their prices too. In her New Year interview with IntraFish, CEO of Marine Harvest, Åse Aulie Michelet suggested that prices are unlikely to become so high that they will adversely affect sales. However, they already have. It is only necessary to look at the value added sector to see that salmon products have disappeared from many supermarket shelves. This is because salmon has become too expensive to process into many added value products. Salmon has either been delisted or has been substituted with cheaper Pacific salmon. This is evident in both the UK and French markets. The problem for the salmon industry is that when salmon prices fall again, which they will, there will be no incentive to change back from Pacific salmon to Atlantic salmon although it could be that sustainability will be used as the excuse not price.
Whilst it is clear that 2010 will be another bumper year, the current higher prices levels will not remain for ever. Sooner or later, more salmon will come to market, whether it comes from Chile or from Europe, prices will inevitably fall. This is not necessarily a problem as demand will increase as a result. Yet, at the same time, the salmon industry should be investing the current financial rewards in market development. The Norwegian Seafood Export Council has just increased its marketing budget in the US by NOK 5 million because of increased demand resulting from Chile’s inability to supply salmon. However, this budget is more about a share of the market rather than its overall expansion. The salmon industry now needs to be laying down the market foundations to its longer term future.
We only hope that the salmon industry is not blinded by the short-term gains that it forgets that the current bonanza cannot last forever.
Spinning cod: We didn’t see any farmed cod during our last visit to France just prior to Christmas but then the festive season is more geared towards salmon than cod. Fish counters still had cod for sale but it seemed to be all wild caught. A number of counters also were also displaying pangasius filet, which seems to becoming increasingly popular although we suspect volumes are still small. It was therefore interesting to read in IntraFish that one Vietnamese company had been contracted to supply breaded pangasius fillets to French schools. Jean-Charles Diener of OFCO expects to be supplying 30 tonnes a month by the middle of the year.
That one individual company could well be supplying 360 tonnes of pangasius to one French customer can be compared to the 454 tonnes of farmed cod fillet exported to France by the whole of the Norwegian cod farming industry. In her end of the year review, Karin Olsen of NSCE told Kyst.no that whilst there is not a lot for cod farmers to boast about, there is at least reason to look positively at what is happening in France. Exports of cod fillet have increased from 91 tonnes in 2008 to 454 tonnes last year although average fillet prices fell from NOK 78.91/kg to NOK 61.49/kg. Yet, even this positive view of the French market may not be all it seems since it is likely that this growth of the fillet market may be matched by a fall in exports of whole fish as more filleting capability has come on line.
However much spin is applied to farmed cod, it cannot hide the fact cod farming faces major difficulties. Not only is there plenty of wild cod reaching the marketplace but demand still remains low. This is the result of consumers being told to avoid cod at all costs and to change to alternative species. Having done so, consumers, or at least the processors who help dictate consumer taste, seem reluctant to change back. However, Bird’s Eye has now recognised that they should try to capitalise again on the renewed availability of cod by extending its Baked to Perfection range to include cod.
Bird’s Eye told the Grocer magazine that cod remains the nation’s favourite fish and that most shoppers are species loyal, at least when it comes to plain fish rather than coated. This could be true since coated fish products tend to mask the taste and texture of the fish. Bird’s Eye claim that they are able to return to cod as their policy of using Alaskan pollock in fish fingers instead of cod has help repopulate cod stocks and their recovery will become even more apparent as the year progresses (although Bird’s Eye cod fish fingers have never been completely removed from supermarket freezers). It’s good to know that Bird’s Eye have been instrumental in cod’s recovery and this has influenced their decision to use the fish again and not the fact that it is now much cheaper than it used to be.
Bird’s Eye decision may help increase demand again for cod and thus push up prices which would certainly help cod farmers. However, this is not going to happen overnight. Cod prices are likely to remain low for the foreseeable future so the fundamental problem of low prices for cod farming is not going to go away for some time.
The immediate future of cod farming is in the hands of cod farmers themselves. The market is unlikely to change so they must change it themselves by creating new market demand for their fish, as distinct from cheaper wild fish. This has been the challenge for cod farming for the past three to four years but as there has been no sign of such change happening yet, we cannot see it will happen at all.