Taxed: ‘This is Money’ news website reports that British shoppers face a fresh blow with a prospective 10% leap in the price of salmon. According to industry analysts, the Norwegian Government are due to impose a new tax on successful salmon farmers to help pay for schools and hospitals. As a result, prices could rise by as much as 10% or higher and in turn this could deter the average shopper from buying salmon. The leaders of the salmon farming companies in Norway have described the proposed tax as ‘a dark cloud for the Norwegian salmon industry.’
I am not convinced that British shoppers, or shoppers anywhere will see a 10% price rise as a result of this salmon tax. It is not as simple as the cost of the tax being passed down the supply chain to the end consumer. Instead. the Norwegian salmon industry will need to rethink their business model, especially as the existing model for a large part of the Norwegian industry is just wrong. The focus on the stock market and shareholders has already seriously damaged the consumer market for salmon. The emphasis is achieving the highest price possible which in turn boosts share prices and thus shareholder wealth. However, high prices generally deter consumers and without consumers, there is no market for salmon.
The problem for the Norwegian salmon industry is that salmon prices have been high for some time and although costs have risen too, the returns have been sufficiently good to attract the Government taxman. Of course, higher taxes are the last thing the salmon industry needs for a whole variety of reasons, but one cannot blame the Government for seeing an opportunity to help the Norwegian public.
Demand for salmon in the traditional markets is in decline, not just because the retail price is too high, as are all food prices, but the high price has eroded the potential to diversify the market and demand. Smokers, such as H Forman & Sons fear further rises in price. They know that the cost of transforming fresh salmon to their range of smoked salmon together with some profit will put their offerings out of the range of many consumers. They simply cannot afford to process high-cost raw material into their branded products.
Back in the late 1980s, I wrote that a collapse in market prices was brought about due to a change form a high-margin, low-volume industry to one that was low-margin but high-volume. This change allowed the development of a huge range of added value products. As prices increased, this diversified market and product range slowly disappeared until we reached the point we are at today. I have never been convinced that the high-volume high margin model is continually sustainable. Something would eventually give and now it seems that something might be the new Norwegian tax. I guess it will be a matter of wait and see.
Demand: Intrafish reports that UK retail seafood sales continue to slide as consumer prices keep rising. Just this week, low price Asda increased the price of fresh salmon packs across the range.
Essential salmon £11.49/kg Up 50p/kg
Salmon fillet 240g £4.80 Up 40p
Half salmon side 500g £9.80 Up 80p
Salmon side 800g £15.50 Up £1.50
ES lightly smoked salmon filet 240g £6.00 Up £1.00
Salmon bag 720g £13.00 Up £1.40
I would never have thought that I would see the price of a two-fillet pack equate to £20/kg at the cheaper end of the market.
Intrafish refer to data from the Nielsen IQ Scan Track, courtesy of Seafish, and highlight that over a 52-week period the average price per kilo of all seafood was £10.79/g and this was 6.8% higher than last year. My own view is that reference to total seafood can be misleading except as a headline figure. This is because it includes both canned, and frozen. I prefer to look at chilled fish and seafood sales only although even these figures need to be treated with caution. After all, where can you buy fresh tuna at £13.24/kg, just £2.37/kg above the price of mackerel.
The total average cost for UK chilled fish is £14.68/kg with fresh salmon priced at £19.90/kg – not far off the Asda price – although this figure will include some sockeye and keta salmon. Intrafish say that salmon sales have fallen by 11% whilst prices have risen, also by 11%. This is also true for chilled; however, the total spend on salmon remains largely unchanged.
What is more surprising is that for those people who think cod is the national fish, volumes sales of chilled cod were 17,900 tonnes compared to 54,371 tonnes of salmon. Despite the high price, salmon is still driving the market for chilled fish by a massive amount.
Finally, it is interesting that the American author of the Intrafish piece should mention shrimp saying it was hardest hit over the 52-week period with a fall of 22%. Of course, here in the UK, we are more likely to refer to shrimp as prawns and the popular warmwater prawn species sold over 25,000 tonnes compared to less than 500 tonnes of shrimp. Unfortunately, the title for the greatest fall in sales goes to trout with volumes falling by over 41%. It is unclear whether this is due to falls of sea grown or freshwater table fish. I suspect the latter as small whole trout were most likely to be seen on the fish counter and it is these that have disappeared with declining trout sales.
Added value: Having written about high salmon prices acting as a deterrent for added value processing, Mowi Scotland launched a range of four added value products into Sainsbury’s and Asda at the end of last week (April 20th). According to the Grocer magazine the new range will be supported with advertising, point of sale and other incentives to encourage consumer trial.
I hadn’t actually seen the Grocer article when I encountered the products by chance on April 19th in a Sainsbury’s store. However, they didn’t stand out on the shelves, I just happened to be looking for something else. I wasn’t that surprised to see these new Mowi products because this would be a natural progression for the company in Scotland, although the former Marine Harvest used to produce added value dishes in Europe under different brand names.
The Grocer reports that the new range is called Mowi Bistro Bakes and the range is available as four products which are Salmon Pastries, Salmon & Cheese Melts, Salmon & Spicy Tomato Bake and a Zesty Salmon Roasting Joint. Prices start from £4.50.
According to Mowi, the range has been developed ‘to take the hard work out of preparing delicious meals for a special occasion’. The brief was to help consumers recreate a restaurant quality meal to enjoy at home. The packs include the statement: ‘Restaurant Quality Food’.
With the definition of a restaurant being somewhere that cooks and serves meals on the premises, I am not sure what restaurant quality actually means. After all, restaurants can be described as anything from fast food to a three Michelin star. There is clearly a very big difference, especially when it comes to price.
During the pandemic, some chefs resorted to developing meals that could be cooked at home. A number still operate, the most notable being Tommy Banks with his Made in Oldstead brand. His current three course menu for two costs £70. His food was really attractive during the pandemic but now that I can travel anywhere, I would rather go out to a restaurant rather than cook at home, especially if it is a special occasion. The fact that despite higher costs, it is still extremely difficult to get a table at many well-known restaurants, clearly shows that other consumers think so too.
My own view is that consumers buying added value dishes do not place restaurant quality as a priority. Instead, cost, taste and value are likely to take precedent. In addition, the market for special occasion dishes is clearly not as great as for those destined for everyday consumption.
I congratulate Mowi on this development, however, whilst I am a great fan of diversified added value products, I am sorry to say that I am not sure that this is the right route for Mowi. Of course, I could be proved totally wrong, and I hope for Mowi’s plans that I am.
Of the four products, I have seen three. The fourth is a zesty salmon side so is more of a party dish than for a special occasion for two. I believe it is based on a similar product made under own label, which was available just at Easter and Christmas. This is perhaps an indication of its potential appeal.
Unlike other consumers, I did not need any encouragement to try these dishes. I have tasted many added value dishes over the years and as there are so few coming to market now, this was not an opportunity to miss.
The three other dishes are very different. The one that reminds me most of a special occasion dish is the salmon pastries. This is described as salmon chunks on a roasted pepper mousse on a light puff pastry, garnished with roasted tomato and parsley.
The dish was pleasant enough, but it was dominated by the red pepper mousse. In my opinion there was just too much of it and it somewhat overpowered the salmon. Perhaps, the mousse should have been spread more over the pastry to thin it out. At the same time, it would have reduced the amount of just plain pastry. I can see this presented as an alternative to salmon en-croute but for a special occasion, I think that I would prefer to serve the en-croute.
The second dish is salmon and spicy tomato which is described as salmon baked with chickpeas and black beans in a spicy tomato sauce. Of the three, this is the one I most enjoyed, although I would not describe it as designed for a special occasion. Mowi suggest that it is served with nutty mixed grains or a fresh ciabatta, neither of which make it special. This could be a good everyday dish if half was accompanied by a vegetable and made into a meal for one.
The third dish is a salmon and cheese melt which is lightly smoked salmon mixed with a crumb and leeks formed into a cake and topped with a soft cheese melt and a parsley crumb. Mowi suggest serving with a salad and herby new potatoes. Unfortunately, I cannot say anything good about this dish so will not offer any other opinion.
Mowi have a major advantage over other processors in that they don’t have to buy in the salmon they use, so the cost can be kept down. The profit can then come at the end of the chain. This should give Mowi significant flexibility regarding new product development. I am just not sure that trying to produce special occasion dishes of restaurant quality is the way forward. On this range, I believe that the jury is still out.