reLAKSation
52.
Icy
summer?: As predicted, salmon prices have begun to weaken, failing to
reach the level achieved in 2001. This is illustrated by the graph provided on
the IntraFish website. The question now is whether they will follow the trends
of previous years and continue to weaken in the run up to Christmas or start to
rise as some commentators suggest?
One
reason for an expected price rise is that the Norwegian biomass is slightly down
on previous years. According to the Norwegian banks, their count of the biomass
would indicate that there could be 60,000 tonnes less salmon available for the
autumn than at the same time in 2001. The shortage is mainly in the largest size
groups, which would suggest that the salmon in the cages are smaller than they
were last year.
We,
at Callander McDowell, are not yet convinced that this will be sufficient reason
to stimulate any major rise in prices. This is because whilst there may not be a
significant increase in global production this year, there is increasing
movement of fish around the world. If Norway is unable to meet European demand,
buyers will look to other suppliers. Fresh Chilean salmon is already available
in the UK retail sector in addition to the more usual Scottish, Irish and
Norwegian fish.
In
addition, the larger fish are intended to supply a specific market demand. Large
fish look unattractive when cut up into steaks and fillets and displayed on the
fish counter. They are better suited to smoking and to export to those markets
where quality is not necessarily the highest priority. The Norwegian Seafood
Export Council (NSEC) reports that half the frozen salmon from Norway is being
sent to Russia.
According
to IntraFish, some Norwegian exporters are optimistic that the shortage of these
larger fish will mean that prices will ‘go through the roof’ this autumn,
especially as the more fish that are sent for freezing might be expected to
further reduce the overall biomass available later in the year.
However,
most of the salmon in freezers is production fish that normally does not
generate a high market price. It is unlikely that the market will be prepared to
pay a high price for these fish if they become in short supply. Evidence for the
European retail market has shown that if the price should rise, customers are
reluctant to buy. This could mean that exporters may be left with freezers full
of unwanted salmon, unless they are prepared to sell it cheaply.
Yet,
Arne Nore, Managing Director of Pan Fish has suggested that frozen salmon is now
obtaining better prices than those sold fresh. Speaking to IntraFish, he said
that this is stealing some of the market from fresh. This is quite possible
since the larger fish do have a more specific market than that sold as fresh,
however, it is unlikely to be sustained. Mr Nore has said that it is too late to
gamble on the frozen market, as there are not enough fish. It is therefore now a
case of wait and see.
Thrice
the price?: The Norwegian Seafood Export Council have conducted an
assessment of their past marketing activities and have found that every NOK
invested has generated an average profit of three NOK. This ranged from a
seven-fold return from a baccalo promotion in Portugal to a loss on salmon
marketing in Poland.
However,
whilst any attempt to boost sales of seafood must be applauded, the question
arises as to how sales would have progressed if the promotion had not taken
place at all? This is actually difficult to assess since it is likely that the
seafood would have found a market elsewhere. The true measure is whether any of
the seafood remains unsold.
It
could be argued that the aim of these promotions is not only to boost sales, but
also to push up the price. Yet, many supermarket promotions, certainly in the
UK, focus on price discounting or other similar offers. The aim is to encourage
consumers to try different seafood in the hope that once the promotion has come
to an end they continue to buy the product. This can work, but often does not.
Any
assessment of market performance in the fisheries sector will ultimately depend
on the availability of the specific product promoted. This differs from the
salmon market because the availability can be increased to meet market demand.
This is the major difference between wild caught and farmed product.
It
will be interesting to see how promotions and the resulting sales in these
various market sectors perform once the EU salmon agreement comes to an end.
This is because the salmon agreement raised a significant contribution towards
NSEC’s marketing budget. This is expected to drop from NOK 19 million to only
NOK 10 million next year and this will greatly affect the ensuing marketing
activity.
Last
year, an assessment of the salmon marketing campaign showed that a Euro 39.7
million investment produced Euro 96.8 million sales, yet it is debatable as to
how much of these increased sales can be actually attributed to the campaign and
how much due to other factors. These include, the lower price of salmon as
compared to other more traditional fish species and its widespread availability,
which contrasts to the reduced supplies of marine fish. In addition, salmon has
become more widely used in added value products, which has expanded the
potential customer base including many who had not considered eating salmon
previously. Salmon is increasingly becoming the fish of choice for many
consumers and this should be welcomed.
If
salmon promotions have been so successful, it is surprising that the industry
has not responded positively to the forthcoming loss of the marketing budget
with a proposal for some form of replacement. However, this has not been
forthcoming. Perhaps, the claims of success are not fully supported. This is
borne out by the fact that the campaign continues with regular e-mail recipes,
which should be expected to boost demand and therefore the price. Yet, prices
have shown a clear downturn.
Promotions
are only part of the marketing mix and now with the end of the salmon agreement
funding, perhaps it is time to look at the overall market strategy and focus on
expanding market demand by responding more to consumer needs.
Dead
to the world: Fishupdate.com report that seafood industry leaders have
made a last ditch call for proposals to use Latin species name at the point of
sale. They say the idea is impractical.
It
is not only impractical but pointless, as such labelling would go way above the
heads of most consumers. We, at Callander McDowell, can understand that there is
scope for confusion, especially as more and more Pacific salmon enters the
European market. There is also the potential for misunderstanding between
halibut and black halibut, but all these can be avoided with clear labelling at
the point of sale. Many fishmongers will find that display labels may have to be
so large to contain all the information now required that they may even obscure
the view of the fish. Clear information should be available to all consumers,
but there is a limit as to how much should be displayed. Latin is a dead
language, which should be left to the scientists.