reLAKSation 436
Billi(n)g(s): The city of Billings is the largest city in the US state of Montana with a population of just over 100,000. According to the magazine Men’s Health, it is the third best place to raise a family in the US. It was founded as a railway town in 1882 and named after Frederick H Billings, president of the North Pacific Railway.
Billings Montana is the 259th largest city in the US so was not the most likely place for the Norwegian Seafood Export Council to launch their latest campaign to promote Norwegian salmon in the US. This coincided with the opening of a new Sam’s Club (a member’s warehouse owned by WalMart) in the city. Unfortunately, we were unable to get to Billings on Thursday so we cannot report what form the promotion took (and even if we had been there, it is unlikely we would have paid the $40 membership just to found out). What we do know is that members were able to sample fresh Norwegian salmon and to meet Nicole, star of the promotional videos that can be found on the NSEC website ‘Salmon in Seconds’. Nicole resulted from the process initiated by the ‘The Food Group’, on behalf or NSEC, to front the campaign to promote Norwegian salmon in the US. This began with adverts on the website Craigs List but whether this is how Nicole was ‘discovered’ is not clear.
Nicole is described as ‘a mom who loves to cook’. We don’t know whether her fame has reached Billings or whether a significant part (or any, for that matter) of the city turned out to meet her. However, we suspect that there are many people in Billings who already know ‘a mom who loves to cook’ so the idea of meeting another one might not have been that appealing as if she had been a real celebrity.
Sam’s Club regularly hold promotions in their stores. There is no mention of any promotion of Norwegian salmon but members visiting the Billings store on Thursday were treated to the Montana Designs Wooden Furniture road show. At least they would have somewhere to sit whilst they sampled the salmon!!
The news of this latest salmon promotion was given by NSEC’s US representative Børge Grønbech in an interview with IntraFish. He said that building the US salmon market will be a challenge, given that not only has global production fallen but so has US salmon consumption. Mr Grønbech seems to think that the US market will be challenging because he attributes this decline in consumption directly with the reduced availability of salmon. This is not necessarily true.
According to figures from the National Fisheries Institute salmon consumption is the US has fallen from 2.36lbs per head in 2007 to 1.84lbs in 2008. Yet, consumption of other species has also fallen. Cod consumption is 0.44lbs from 0.46lbs, pollock from 1.73lbs to 1.34lbs and flatfish from 0.45lbs to 0.43lbs. The overall consumption of the top ten most consumed species has also fallen from 16.3lbs to 16.0lbs, although some species have increased slightly or remained constant.
These figures are for 2007 to 2008 so until the figures for 2009 are released, it is unclear whether this fall was a blip or the start of a worrying trend but what is certain is that this fall in consumption began well before the problems in Chile really started to effect exports. We will further discuss this drop in consumption later in this comment.
However, Mr Grønbech is right to think that the market will be challenging. Many commentators have suggested that the supply of salmon from Chile will decline further during 2010 although recovery is forecast in subsequent years. Meanwhile, Mr Grønbech expects Norway to fill the gap. He describes Norway as the joker in the pack. We, at Callander McDowell are not so sure. In our view, the ‘Joker’ is wild salmon from Alaska.
From January to November 2009, Norway grabbed 15% of the US market simply because of the problems in Chile. Mr Grønbech hopes that this can be increased to 30% in time. However, there are some major obstacles to overcome first if this figure is to be achieved. Ragnar Nystoyl of Kontali Analyse told IntraFish that the US imported 278,800 tonnes of salmon but this is forecast to drop to 237,000 tonnes this year. Mr Nystoyl doesn’t think that Norway is capable of meeting this shortfall without damaging its European market. At the same time, the dollar is expected to depreciate against Norwegian currency leading to the possibility that salmon will become even more expensive.
Mr Grønbech has indicated that he has received feedback from a few ‘players’ in the retail sector that local demand has dropped off because salmon is too dear. He still believes that salmon is competitive with other fish and that salmon has become such an important part of the seafood counter that it will take a lot for it too disappear. He said that with an average price of $8.99/lb, farmed salmon is still competitive.
Yet, evidence from the UK suggests that such confidence could be misplaced. Salmon has always remained a fixture on the supermarket shelves only because the retailers have held prices irrespective of the market price. Just this week, one UK supermarket has cut the price of one of its salmon presentations, just a few days after it had increased the price. Most consumers are simply unwilling to pay any price for salmon. There is no reason to believe that US consumers are any different.
The main change in the UK is that higher prices have meant that farmed salmon has disappeared from many added value products to be replaced by cheaper Pacific salmon, sold on its sustainability supported by the MSC logo. It is likely that the same could happen in the US, not with added value products but with raw salmon flesh.
This week, we have conducted another round of our regular review of salmon price promotions in US supermarkets. What is most apparent this time is that there is little price differential between previously frozen Sockeye salmon fillet and farmed Atlantic salmon (irrespective of origin). If the standard price of farmed salmon should increase then American consumers could well turn to wild Pacific salmon instead since it is likely to be more competitively priced than in the past. If Alaskan fishermen decide to freeze more of their catch than put it into cans, they could significantly affect the balance in the market and make previously frozen Pacific salmon fillet more attractive than the farmed fish. Pacific salmon have the added benefit that they can be promoted as a locally produced, home grown product rather than imported, as is the case with Norwegian salmon.
However, Mr Grønbech prefers to ignore the ‘Wild’ card focusing on the issue of origin. This is understandable since the Norwegian Seafood Export Council’s role is to promote the Norwegian origin of its fish and seafood. Mr Grønbech’s primary aim is to ensure that Norwegian salmon will remain as part of the US salmon market once the Chilean salmon industry recovers and export volumes approach former levels.
He said that it is his job to make consumers more aware of Norwegian salmon with more market activities aimed at telling the ‘history’ of the fish and the story behind it. The problem for Mr Grønbech is that most consumers don’t care about origin. Time after time, consumer surveys have shown that consumers buy salmon on its price and appearance. Consumers don’t have this perceived allegiance mainly because one bit of salmon looks just like any other. This is why Norwegian salmon is widely available in Scotland even though the fish is farmed locally.
Mr Grønbech has compared the pricing of Canadian, Scottish, Norwegian and Chilean salmon in the US market and concluded that once price differences between different retail chains has been discounted, the price of Norwegian salmon is similar to Canadian and Scottish whilst Chilean salmon is cheaper. The implication is that the story of Chilean salmon is not as good as that of the other salmon which is why the Chilean price is lower. Whilst there are always exceptions, a better explanation could well be simply due to the import volumes. Scottish salmon is priced higher because there is so little available in the US, although the Scottish heritage of many US consumers probably helps. Chilean salmon is available in much higher volumes and therefore is cheaper in much the same way that high volume production will lead to lower prices irrespective of the country of origin.
Our view is that as Chilean salmon exports to the US increase, the battle for market share will be fought over price. Whilst the top end of the market might be prepared to listen to the story and be willing to pay more just as some consumers will pay more for a Cadillac than for a Ford, the bulk of the market will be driven by price. Mr Grønbech only has to look at the French market to see what will happen. Scottish and Irish salmon does receive a better price than Norwegian but the volumes are insignificant compared to the amount of Norwegian fish sold.
Of course, there is always the possibility that the good folk of Billings will prove us wrong.
Salmon promotions: Our regular trawl of the US retail sector continues to show that salmon remains a feature of supermarket promotions despite questions about the supply and price. What is most noticeable is that compared to recent months, there are less stores offering farmed salmon fillet at $5.99/lb and more at $7.99/lb. More stores appear to be declaring the Norwegian origin of the salmon, but the majority are content to label the fish as Atlantic salmon.
The one outstanding observation this month is that whilst promotional prices do seem to have risen, one supermarket has offered salmon fillets at the lowest price we have recorded in the US over the past twelve months. Sunflower Markets have salmon fillets on offer at just $4.77/lb. This equates to £6.52/kg/ NOK61/kg.
Farmed salmon
A&P: Fresh Atlantic salmon fillet $6.99/lb
Biggs: Fresh Atlantic salmon side $7.99/lb
Big Y: Atlantic salmon fillet $7.98/lb
Bloom: Salmon fillet $6.99/lb
Brookshire Brothers: Atlantic salmon fillet $6.49/lb
Butera Markets: Norwegian salmon fillet $6.99/lb
City Market: Norwegian salmon fillet $7.99/lb
Dierbergs: Norwegian salmon fillet $9.99/lb
Dominicks: Norwegian salmon fillet $6.99/lb
Food Emporium: Scottish salmon fillet $12.99/lb
Foodland: Atlantic salmon fillet $7.99/lb
Foodtown: Atlantic salmon fillet $7.99/lb
Fresh & Easy: Atlantic salmon fillet $6.99/lb
Fry’s: Atlantic salmon fillet $6.99/lb
Giant Eagle: Canadian salmon fillet $7.99/lb
Grand Market: Norwegian salmon fillet $7.99/lb
Hannafords: Atlantic salmon fillet $5.99/lb
Harveys: Salmon fillet $6.99/lb
Heinens: Norwegian salmon fillet $9.99/lb
Hilander; Atlantic salmon fillet $5.99/lb
Hornbachers: Norwegian salmon fillet $8.98/lb
Jewel Osco: Salmon portions farm raised 6oz $3.99 each
Jons Marketplace: Whole salmon farm raised $3.99/lb/ Salmon fillet $5.99/lb
Karms: Salmon fillet $6.98/lb
Key Food: Atlantic salmon fillet $7.99/lb
King Soopers: Norwegian salmon fillet $7.99/lb
Kuhns: North Atlantic salmon fillet $6.99/lb
Market Basket: Premium salmon fillet $7.99/lb/ Premium Scottish salmon steak $6.99/lb (Doesn’t say if the Premium fillet is Scottish or not)
Met Foodmarkets: Atlantic salmon fillet $7.99/lb
Pathmark: Atlantic salmon fillet $7.99/lb
Raley’s: Atlantic salmon fillets $7.99/lb
Reasors: Norwegian salmon fillet $8.98/lb
Roche Brothers: Atlantic salmon fillet $5.99/lb
Roths: Atlantic salmon fillets $6.99/lb
Save Mart: Atlantic salmon fillet $5.99/lb
Scolaris: Salmon fillet farm raised $6.99/lb
Shoppers: Atlantic salmon fillet $7.99/lb
Shoprite: Atlantic salmon fillet $7.99/lb/ steaks $6.99/lb
Sunflower Markets: Salmon fillet $4.77/lb
SuperFresh: Atlantic salmon fillet $6.99/lb
Times: Atlantic salmon fillet $7.99/lb
Waldbaums: Atlantic salmon fillet $6.99/lb
Westborn: Chilean salmon fillet $5.99/lb
Wiseway: Atlantic salmon fillet $5.99/lb
Wild Salmon
Acme Stores: Sockeye salmon fillet $6.99/lb
Andronicos: Sockeye salmon fillet $8.99/kg
Carrs: Sockeye salmon fillet $7.99/lb
Fred Meyer: Whole sockeye salmon $3.99/lb
Giant: Sockeye salmon fillets $7.99/lb
Ingles Markets: Sockeye salmon fillets $7.48/lb
Marsh: Sockeye salmon fillets $8.99/lb
QFC: Sockeye salmon fillets $8.99/lb
Roche Brothers: Coho salmon fillet $8.99/lb
Super One Foods: Keta salmon fillets $5.99/lb
The Markets: Sockeye salmon fillet $7.98/lb
Ukrops: Sockeye salmon fillet $8.98/lb
Yokes: Sockeye salmon fillet $8.49/lb
Consuming issues: Writing in an editorial in Seafood Source, Steven Headlund asks what’s holding back consumption of seafood in the US. He suggests that the indications are that consumption will remain the same as 2008 at 16lbs per person although he believes that seafood’s image as a healthy food will help consumption break the 17lb barrier by 2020.
However, if consumption is to increase, then Mr Headlund argues that the seafood industry must clear five hurdles. These are:
1. The Economy – Seafood is more expensive than competing proteins so the downturn has hit seafood sales. Mr Headlund believes that an improving economy will help improve seafood consumption.
2. Food Safety – The negative reports about mercury and other contaminants in the media are wrongly equated with food related illnesses.
3. Trade barriers – Fights between domestic producers and imported produce have restricted the flow of seafood to market.
4. Lack of supply – Falling imports equates to falling consumption.
5. Seafood education – Poorly trained staff are unable to educate consumers and better educated consumers eat more seafood.
Mr Headlund may well be correct in his assessment but we, at Callander McDowell, would suggest that it might not be quite so simple.
Børge Grønbech told Kyst.no that the US has a population of 310 million who consume around 2.6 million tonnes of food every day of which just seven percent is seafood. This means that there are a lot of US citizens who probably never eat seafood at all.
There are two ways that seafood consumption can be increased. One is by persuading those who do eat seafood to eat more whilst the second is to try to encourage those who never eat seafood to start doing so. Most efforts to improve seafood consumption tend to focus on existing consumers because this is the much easier option. This can be illustrated by Mr Headlund’s suggestion that improved education will help boost consumption. Certainly if retail staff were better trained then they can pass on better information to consumers. However, only existing consumers are likely to approach seafood counter staff. Those who never eat seafood would never even stop at the fish counter so are unlikely to ever discover whether staff are poorly or well trained.
The real challenge is to find ways to relate to those potential consumers who never eat seafood and Mr Headlund’s suggestions will make no impact on them.
Our view, at Callander McDowell, is that the seafood industry will always fight a losing battle if it focuses on trying to get the non-consumer to visit the fish counter and buy fish and seafood. In much the same way trying to ram home the message that fish and seafood is a good healthy option is falling on deaf ears. If the public at large was interested in eating a healthy diet, the there would not be the growing problem of obesity and ill-health. Rather than come round to the industry’s way of thinking, we believe that the industry should try to adapt its offering to the type of products that those who never eat fish and seafood do eat.
In much the same way Seafood.com reported recently that the 24th Annual Report on Eating Patterns in American published by the NPD Group has found that many Americans have now found a way to eat at home and not cook Last year, more Americans than ever turned to the microwave as a way of preparing their food. From 1990 to 2007, about twenty per cent of meals prepared in US homes involved a microwave but last year usage rose by ten percent. At the same time, the number of main meals prepared on a stove fell from 52 percent in 1985 to 33 percent in 2009.
The most telling finding was that most microwaves were used to warm and heat food rather than prepare meals from scratch. Harry Balzer of the NPG Group said that some commentators might blame the downturn in the economy for the move to microwave cooking but he said that he has observed eating patterns through both good and bad economies and the one constant is that there is no recession in eating and Americans simply don’t want to cook what they eat.
Whilst this is just one aspect of understanding what and how US consumers eat, it shows that a focus on fresh fish and seafood misses the real opportunity for expanding the market. Simply, if consumers are not preparing fresh produce at home but buying foods that can be heated in the microwave then surely, the seafood industry needs to look at presenting its offerings in this way.
Of course, this is not just about microwaves cookery, the industry needs to take its products to the public rather than trying to find ways to bring the public to its products. This is just as true for the salmon market as it is for the wider fish and seafood industry. The opportunities are waiting out there.