reLAKSation 72.
Christmas Offers: In the run up to Christmas, British supermarkets have again offered salmon at discounted prices. These are summarised as follows, together with the prices recorded for the two previous years:
Asda.
December 2002.
Fresh whole Scottish/ Norwegian salmon £3.22/kg (Save £1.16/kg)
December 2001.
Whole fresh salmon £3.19/kg
Whole prepacked salmon £3.99/kg
December 2000.
Whole prepacked salmon £4.20/kg
Morrisons:
December 2002.
Fresh whole Scottish salmon £3.95/kg. (Save £0.43p/kg)
Chilled whole prepacked Scottish salmon £3.95/kg (Save £0.43/kg)
December 2001.
Whole salmon - fresh and prepack £4.38/kg
December 2000.
Whole salmon - fresh and prepacks £4.48/kg
Safeway:
December 2002.
Fresh whole Scottish salmon £3.99/kg but also £2.99/kg in selected stores as illustrated by following receipt. (Save £1-£2/kg)
Tag from salmon bought on 13th December 2002 at £2.99/kg
Chilled whole prepacked Scottish salmon £3.99/kg (Save £2/kg)
December 2001.
Whole fresh salmon £4.99/kg
Fresh salmon fillet £6.99/kg
December 2000.
Whole prepacked salmon £8.98/kg
Sainsburys:
December 2002.
Fresh whole Scottish salmon £3.99/kg (Save £4/kg)
Chilled whole prepacked Norwegian or Scottish salmon £4.49/kg (Save £2.99/kg)
December 2001.
Fresh whole salmon £3.49/kg
Whole salmon prepack £4.49/kg
December 2000.
Whole fish £4.63/kg
Tesco:
December 2002.
Fresh whole salmon £3.29/kg (Save £3.40/kg)
December 2001.
Fresh whole salmon £3.19/kg
December 2000.
Fresh whole salmon- fresh and prepacked £3.24/kg
Waitrose:
December 2002.
Fresh whole Scottish salmon £4.99/kg (Save £1.50/kg)
Fresh whole Scottish organic salmon £6.79/kg (Save £2/kg)
December 2001.
Fresh whole salmon £4.99/kg
Only Baloney!:Speaking at the recent Bradan conference, Finnian O’Luasa, the Irish Seafood representative in France said that ‘Quality’ is the ‘only way forward’ for Irish salmon. According to Intrafish, many delegates at the meeting support this view believing that Irish salmon producers are unable to compete on volume so that their only option is to play their ‘green card’ – that of quality. However, we, at Callander McDowell, are not convinced that a quality-oriented strategy will be a success. In addition, we have yet to be persuaded that such a strategy is the only way forward.
Mr O’Luasa does make a convincing case highlighting a16.7% increase in sales of quality label products in France. Yet, we wonder how much of this growth is linked to a proliferation of different quality labels rather than increased consumer demand? Certainly, French consumers are now faced with several different and possibly confusing, quality labels. In a recent interview, the fresh food director of leading retailer Carrefour, argued that there were now too many such labels in the marketplace.
With several different quality labels appearing in supermarkets, it would not be surprising if many consumers were confused. The problem is that most consumers have little idea as to what the term quality really means. Equally, some producers think that it is sufficient to label their produce as a quality product to justify asking for a premium price. This is not the case.
According to JJ Connell in his book ‘Control of Fish Quality’ (Fishing Book News 1975), ‘Fish is meant to be eaten and decisions about what constitutes quality rests ultimately with the consumer.’ This means that if the consumer is satisfied with the fish, then it is of sufficient quality to meet their needs. In terms of salmon, this might mean ‘Does it look right?’ ’Does it taste right?’ and ‘Is it safe to eat?’ As long as these criteria are met, the fish is of the right quality. More importantly, consumers are unlikely to want to pay more for fish, which is of greater quality (whatever that is) than their specific need. This is apparent from the limited success of Scottish Label Rouge salmon in the French market.
Of all the French quality marks, Label Rouge is the best known and respected. Mr O’Luasa described to delegates at Bradan, how a recent survey of French consumers showed that 43% cited Label Rouge as a way of identifying a quality product as compared to 18% for the next well-known label. In an attempt to segregate their salmon as a high quality product as compared to other imported salmon, Scottish producers applied for Label Rouge accreditation.
However, after several years of Label Rouge accreditation, only 5,000 tonnes of Scottish salmon now carry the Label Rouge mark. This is only a small percentage of total Scottish production. Presumably, more Scottish fish are not sold under Label Rouge because consumers are unwilling to pay a higher price for Label Rouge salmon, when salmon without the mark meets their requirement. Irish producers considering following the Scottish example, may find it difficult to compete in this limited market.
Currently, Scottish producers are reported to receive a 20% price premium for Label Rouge salmon. At present this may be significantly higher than for salmon in general, but it is a lot less than the margin generated by many other Label Rouge products. This confirms that consumers have yet to be convinced of a significant difference between quality labelled salmon and the rest of the market. The fact is that some customers are willing to pay a higher price for their food because they believe that they are buying into a specific lifestyle, even if the food is not really any different. This effectively blurs the difference between various salmon in the marketplace. Mr O’Luasa illustrated this with further observations of the French market.
He highlighted the wide-ranging price differential of various smoked salmon products in France. He was dismayed to find that Irish smoked salmon generated only a 1% premium over generic Norwegian smoked salmon, whilst this premium increased to 26% for some Norwegian branded products. Similar observations regarding the variation in price can be made in the UK market and these can apply equally to fresh salmon as to smoked. The reality is that pricing can vary significantly due to several different factors. These include the origin, pack size, the individual supermarket, the presentation etc. There is no logic at all to the way that salmon is priced with some of the cheapest available being Scottish quality marked. Clearly, the quality route may not be the most lucrative.
Yet, this price variation does provide a possible clue as to how the Irish industry could take advantage of opportunities within the marketplace. The markets are evolving. Consumers have changing requirements and are often prepared to pay extra for products with a perceived added value. The problem with the quality route is that most consumers do not perceive any extra benefit from the addition of a quality label and therefore are unwilling to pay any extra for it. It is possible to illustrate this perceived extra benefit using mussels as an example.
British supermarkets sell bags of live mussels for between £2.95-£3.50/kg. By comparison, they also sell 500g packs of branded Irish mussels for £2.47, which equates to £4.94/kg or about 40% margin over the bags of live mussels, although admittedly the live mussels are not labelled as a quality product. The main reason for the higher pricing is that the mussels come in garlic butter sauce, for which consumers appear willing to pay extra. The widespread availability of this pack in a number of different supermarkets appears to confirm their popularity.
In addition to the brand name, the pack identifies the mussels as Irish, which has allowed the producer to create its own niche in the marketplace. There is no reason why other producers cannot achieve similar results with other seafood including salmon.
Every producer would like to believe that his products are of the highest possible quality. However, unless consumers are able to perceive a reason for paying a higher price for a labelled quality product, they are unlikely to do so. Instead, there is a huge market opportunity to develop a range of added value products, which can satisfy the required market identity but, more importantly, generate the extra margin.