Predictable!: If there is one thing that is predictable, it is that if British retailers put up the price of  salmon, sales will start to spiral downwards. According to Intrafish, market research company Nielsen have found that in the year to June, sales of salmon dropped by 4.2 percent in volume to 55,462 tonnes whilst unit sales fell by 4.3 percent down to 240.8 million. Intrafish say that this drop can be explained by the near 7 percent increase in price per kilo over the year to an average of £16.06, whilst the average price per unit rose to £3.70.

The fall in consumer decline may actually be much greater than suggested by Nielsen because most of the eye-watering price increases occurred only recently and thus won’t be reflected in sales stretching back a year.

We, at Callander McDowell didn’t need to see the Nielsen figures to know that salmon sales are suffering in the UK because over the past month, most of the major retailers have started to discount salmon in one form or another. Only one of the leading supermarkets has so far resisted price discounting but we suspect it won’t be long. Salmon is such a key part of fish sales that if salmon consumption falls into decline, so will the whole sector.

The best price for counter fillet is around £14/kg and the best chilled prepack deal is about £1/kg more. The two discount stores are selling their salmon around £13/kg which is why they are gaining market share from some of the larger players.

Meanwhile, the way that fish consumption is changing is clearly visible during a visit to one of our key stores this week. Our key stores are those that tend to stock a full range of fish and seafood and if we cannot find something in one of these stores, then it is unlikely we will see it anywhere. This week, the fish counter at one of our key stores had been ripped out This counter was well placed in the store and usually stocked an extensive range of fish. Now, a small replacement counter has been installed next to the butcher’s counter and is not only a shadow of its former self but has a much more limited offering.  In addition, the counter is now tucked away in the back corner and is no longer a main feature of the store. This is not a one-off as the size of fish counters is shrinking across the whole sector, reflecting apparent consumer disinterest in eating fish.

We have argued previously that consumer demand for fish is in decline, even though some indications may suggest otherwise (see later). Rising prices will simply accelerate this decline.

 

Sales Highpoint: According to Seafood News.com, the Grimsby Evening Telegraph recently reported that the UK experienced the highest sales of fresh fish in three years with more than 6.000 tonnes of seafood sold during the fortnight. Sales are up by 188 tonnes or 3.2 % since 2015. This follows on from Christmas when the highest rate of sales was recorded over the last four years.

It is not clear form the article whether an increase of 0.3% by volume and 7.6% by value relates to Christmas last year or the most recent Easter holiday but for this commentary it is not that relevant. The point is that whilst any improvement in sales at Easter or Christmas should be applauded, they are just two points in a whole year and two points when fish sales should be at their peak. The real question is what is happening to sales during the rest of the year?  We would argue that it is not surprising that fish counters are shrinking in size because for much of the time that retail stores are open, they are extremely quiet with very few customers even giving them a second glance. We know of other fish counters that are no longer continuously manned and customers have to ask to be served.

Sales of fish might be up at Easter and Christmas, but these two short holidays cannot sustain a fish counter for the whole year. We wouldn’t be surprised to see more changes in the none too distant future.

 

Growing concern: It is not just the UK that is seeing further declines in fish consumption. Intrafish report that sales of salmon in France are plummeting and are of growing concern to Norway. We are not surprised. In fact, what is of surprise is how long it has taken for this concern to arise.

IntraFish report the concerns of Norwegian Seafood Council analysts who question whether high prices could change long-term consumption trends. We think that it is already happening as we have been seeing evidence over the last three or four years that the salmon market in France is being slowly eroded away.

The present concern arises from a fall in the volume of exports to France from Norway over the first four months of this year. The volume imported was 34,828 tonnes of salmon which represents a decline of 19% on the previous year.

According to NSC, the most significant fall in consumption occurs at home. This is being driven by prices that went up by around 20%. The real concern is that the fall in consumer demand is no longer temporary but that shoppers are turning to other proteins instead. As in the UK, regular visits to stores over the years have led us to conclude that fish is losing out in the retail sector. Many fish counters in the French retail sector are no longer the focus of consumer attention. Like in the UK, counters are being modified to account for reduced interest.

Paul Aandahl of NSC told Intrafish that the challenge is that people who used to buy salmon now buy something else instead. However, he also points out that exports to the US and Asia are increasing as those markets are more willing to pay higher prices than countries in the European Union.

We, at Callander McDowell, believe that this is a dangerous development. We have previously argued that a strong traditional market has been the foundation on which the whole salmon industry has been based. Without markets like France, the salmon industry would have struggled to grow to its current strength. Ignoring these markets now in favour of more distant opportunities is a dangerous strategy. We have seen how the less traditional markets can switch overnight, either for political or economic reasons, leaving the salmon industry floundering to sell its fish.

In the US for example, how much of growing Norwegian business is completely new or is the Norwegian salmon taking market share from another producer because the reverse can happen just as easily. Undercurrent News reported this weekend that Chilean farmers are ramping up fillet production for export to the US. As a result, spot prices for Norwegian salmon have started to freefall. If Norwegian prices are lower, then the US market is less attractive and more salmon will have to find a home elsewhere. By this time, European consumers may be off to other parts of the store to buy chicken or another protein.

We believe that if the changes in the French market are starting to ring alarm bells then the salmon industry should be worried.

 

Confused:  We suspect that if many consumers were asked if they ate their cod and chips with a clear conscience, they might reply that they prefer to eat theirs with salt and vinegar! In our experience, most consumers have little or no interest in issues of sustainability. They prefer to let their retailer or fish and chippy to deal with such issues. The only thing that they want stuffed down their throat is the fish not the baggage that goes with it. As we have regularly pointed out, we believe that if all fish sustainability logos were removed from a supermarket overnight, no-one would even notice.

The news that North Sea cod is now certified by the MSC appears to have been of more interest to the media than to the public. MSC certified cod is already widely available in most stores so the only difference is where the fish is landed and whether the payment goes to a British fisherman or one in Norway or Iceland. May be in the run up to Brexit, that might be important to some consumers.

BBC News reports that Toby Middleton of the MSC said that the award of the MSC blue tick logo ends the confusion over whether cod is sustainable or not. He said if the fish has a MSC logo then it comes from a sustainable source. However, far from ending any confusion, the award of the MSC blue tick logo to North Sea cod has fuelled the confusion.

BBC News spoke to the WWF (who after all were responsible for establishing the MSC). Lyndsey Dodds of the WWF said that the population levels of North Sea cod remained low and that the amount of fish at a breeding age is still low and recovery of the stock remains fragile.  She said that if North Sea cod is to be permanently on British plates, then much needs to be done including embracing new technology and installing cameras on UK boats. Anyone reading the BBC News might be forgiven for thinking that the WWF are not yet convinced by North Sea cod’s sustainable credentials.

Professor Callum Roberts of the University of York also says that whilst the revival of North Sea cod stocks can be celebrated, sustainability can only be achieved if fishing methods are changed to those that are less destructive. Professor Roberts, writing in the Guardian, argues that whilst the MSC might award their logo to North Sea cod on the basis of the stock level, the methods used to harvest this sustainable stock are not sustainable. We wonder does this mean whether a fish stock that is considered sustainable in terms of numbers might not be sustainable if it is fished in a manner that is not considered sustainable.  Professor Roberts says that heavy trawl nets can damage and destroy sensitive seabed life. He said that when oil companies discovered cold-water coral reefs in the North Sea in the 1980s, they found that half had already been turned to rubble by the long-term impact of trawling.

This question is not new. A number of years ago, we were asked about this very issue after pointing out that one retailer was selling frozen MSC certified cod in two different pack sizes. One pack was labelled as line caught but the other wasn’t. It seems that the packs came from different suppliers, one who had access to line caught fish whilst the other sourced fish that was trawled. The store in question actually promoted the sustainability of line caught fish so why sell trawled fish as well. The answer was never forthcoming.

More recently, we have seen a store selling two packs of chilled smoked haddock. Again, one was line caught and the other not. This time the origin of the fish was also highlighted with line caught fish coming from Norway and the other locally produced fish from Scotland. This poses an interesting choice about origin and sustainability or at the end of the day, does the consumers choose simply on the basis of how the fish looks and the price.

The award of MSC logo to North Sea cod may not have failed to attract consumer attention in the UK but it clearly must be of concern to the industry in Norway. Over the last couple of weeks, the Norwegian Seafood Council have taken out full page adverts in some weekend newspaper magazines. One is headlined ‘Enjoy Norwegian seafood with a conscience as clear as our waters’ whilst the second states: ‘Kjell-Gunnar fell for fishing at a young age. Hook line and sinker.’ and relates the story of Kjell-Gunnar Hoddevik, skipper of the boat Atlantic.

The message is clear but we think that it is rather pointless because other than one or two specific examples, most consumers wouldn’t be able to tell whether the fish they buy is Norwegian or not since most retailers do not state origin but just the sea area where the fish was caught, as they are legally obliged to do. As we have already pointed out, issues about sustainability are considered a matter for the retailer or supplier not the consumer.

North Sea cod may be coming back to the UK market as certified sustainable but we doubt that any consumer will be willing to change the shop in which they shop just to buy it.

In our opinion, if we want consumers to eat fish, then sustainability is not the focus of the message that should be sent out.