Marketing of cultured cod

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1 Marketing of cultured cod Nordisk Forum for Torskeoppdrett Bergen February 2003 Kristján Hjaltason Icelandic Services A part of Icelandic Group

2 Overview The supply of wild and cultured fish The influence of aquaculture on the seafood business. The supply of cod, wild and cultured. Products Markets What price will be paid for cod? Get back.

3 The Icelandic Group A marketing and production company in frozen and chilled seafood. Founded in 1942 Secondary factories in US and UK, marketing companies in Germany, France, Spain and Japan and a sourcing company in Norway. More information on:

Founded in 1942 Secondary factories in US and UK, marketing

4 Supply of major wild and farmed fish (excluding carp) ,0 12,0 10,0 8,0 6,0 m MT 4,0 2,0 0, Major aquaculture finfish Wild groundfish Source: Groundfish Forum

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

5 How did the markets react to farmed salmon? Gunnar Knapp, Professor of Economics University of Alaska, Anchorage: Buyers in most markets say that farmed salmon meets their needs for consistent high quality and year-round dependable supply better than wild salmon. Growing farmed production tends to lower prices for wild fish by expanding total supply. As wild production becomes a smaller part of total supply, prices don t increase as much when wild catches fall Over time, fish prices trend downwards as farming costs fall allowing farmed production to expand.

consistent high quality and year-round dependable supply better than wild salmon.

6 Prof. Gunnar Knapp: Aquaculture expands demand for fish Aquaculture makes fish more widely available and introduces consumers to new fish species Aquaculture creates new products and distribution channels for seafood Aquaculture invests in marketing

consumers to new fish species Aquaculture creates new products

7 The supply of wild and cultured cod: Will this be the trend to 2020? (000) MT Aquaculture estimates Wild, actual and estimates 0 Year Wild Atlantic Aquaculture Norway Aquaculture Scotland Aquaculture Chile Source: Groundfish Forum FAO and est, own estimates Wild Pacific Aquaculture Iceland Aquaculture Canada Aquaculture other

1995 1998 2001 2004 2007 2010 2013 2016 2019 Wild Atlantic Aquaculture Norway Aquaculture Scotland

8 Cod: Product groups 2001 (000) MT Specie Salted/dried Fresh H&g Fillets Total Atlantic cod Pacific cod Total cod supply Distribute h&g Total cod supply Proportion 25% 20% 5% 50% 100% Source: Groundfish Forum, own estimates

9 Cod: Main markets 2001 (000)MT Species N-America Europe E-Asia Other Total Atlantic cod Pacific cod Total cod supply Proportion 28% 63% 6% 3% 100% Source: Groundfish Forum, own estimates

cod 195 69 70 6 339 Total cod supply 353 801 70 38 1.

10 Fresh fish Fresh fillets are the most expensive cod products on the market. Fresh cod has strong and loyal markets, but it is competing with other species that are in good and growing fresh supply. The market is limited, you will not change consumer habits unless you offer them a better price.

Fresh cod has strong and loyal markets, but it is competing with other

11 US Retail fresh USD/kg Feb 2003 UK Retail prepacked fresh prices Feb 2003 USD/kg Haddock Cod Tilapia Salm on Cod loins Salmon fill. Cod fillets Haddock fillets Catfish Trout 5 Trout whole species 4 Species

Tilapia Salm on 11 10 9 8 7 Cod loins Salmon fill.

12 Frozen fillets and blocks UK and US are the important markets. US: Food services sector UK: Retail sector and Fish and Chips market. Reduced catches and high prices US: MT of fillets and blocks were lost from , mainly to deep skinned Alaska pollock UK: Weakening market and new species make inroad. The frozen market is an important volume market. Potential to regain market with lower prices and increased supplies.

13 Market prices of groundfish in the US, fillet portions and blocks, $/kg $/kg Hoki Cod Tilapia AP df Haddock Cod AP ds AP df Cod AP regular AP deep skinned AP double frozen Whiting Hoki defatted Tilapia Haddock Fillet portions Industrial blocks

df Cod AP regular AP deep skinned AP double frozen Whiting Hoki

14 Salted cod Main market is S-Europe Cod is the main specie with 71%. Consumers are dying out. An expensive product in a declining market. Reduced supplies and increased prices. The future: More convenient products, e.g saltbrined fillets. Lower price to increase the market again.

15 Other products Supply 5-6% of total revenue of a fish. Dried heads and bones Roes and liver New industries, e.g. Biotechnics, enzyme production etc..

16 What price can we expect for cultured cod? Supply of cultured cod will be substantial Cost of farming will fall Supply of competing species will increase. And cost of them will fall. This will lead to a huge fall in cod prices, e.g %

will fall Supply of competing species will increase.

17 Marketing companis and producers have to work together: Grow the fresh and saltfish markets. Work with the important frozen markets. Win new markets and regain old ones. Spend on product development. Expand distribution channels. Set clear quality standards. Address environmental concerns. Wild and cultured need to be labelled separately.

Spend on product development. Expand distribution channels.

18 G e t t h e C O D m a r k e t b a c k

CBI Trade Statistics: Fish and Seafood

CBI Trade Statistics: Fish and Seafood Introduction Seafood consumption and production in Europe is relatively stable. The largest seafood consumers live in France, Spain and Italy: the Southern part of