Last month, my column was about the array of cod products — and products of some other species often substituted for cod – available for different prices at retail stores in St. John’s, N.L.
Stores in larger cities undoubtedly offer an even broader range of fish products and prices. And, of course, fish competes with other protein foods, such as beef, pork and poultry.
Given the array of choices offered to them, I asked, how do consumers decide which products to buy, take home and turn into a meal?
At the end of the seafood value chain are literally billions of individual consumers who make those choices for very personal reasons, based on their own needs, wants, likes and dislikes, those of others they expect to eat with, their knowledge of the products offered, their ability to prepare and cook those products and how they assess the value for money relative to other products available.
It is a very complex process, but decisions are often made quickly, based on how attractive the different options in front of them appear at the time. Each consumer thinks, for any one day and time, that one option is better than all the others, buys it and takes it home. But others choose differently and take home something else. Furthermore, even the same consumer will most likely make a different choice at another time.
Suppliers first must compete to get their products onto retailers’ limited display space and then must stand out to consumers to be the one chosen. Because everyone eats, selling food is probably the biggest, but also the most competitive business in the world. It’s a battle out there, country by country, community by community, store by store, day by day and meal by meal.
Here in Atlantic Canada, as we go about our daily activities of catching and processing fish and shipping the products to market, it is easy to forget just how challenging it is to get our products onto retailers’ shelves and then convince consumers to take them home to include in their meals. But we should never forget that the end result of all the work we do in this industry is that someone has a meal and hopefully, enjoys it.
We should also never forget that, in the battle to be chosen, we lose many more times than we win. For our industry to be successful, we have to hope enough people choose our products to buy and consume all we produce, at favourable prices.
Let me illustrate just how difficult that challenge is.
Norway is a relatively small country, with just over five million people. Canada has slightly more than 35 million, so our population is seven times larger. Atlantic Canada alone has over 40 per cent of Norway’s population. But Norway is the second largest exporter of seafood in the world, by value, because it has a large capture fishery and a large aquaculture industry.
Although Canada was the world’s leading exporter for a period during the 1980s, we ranked tenth in 2014, so we are now small players by comparison.
The Norwegian Seafood Council promotes sales of Norway’s fish products around the world. But it does not talk about truckloads or tonnes shipped — it understands that it has to compete for one customer and one meal at a time.
For many years, Norwegians have talked in terms of “meal occasions” and the number of meals of local produced seafood products served each day. They have actively tried to position their products to be the ones chosen for breakfast, lunch or dinner in about 130 countries. That means they try to understand the eating habits and food preferences of people in all those countries and have products that fit into their eating patterns at different meals.
In 2015, Norway exported 2.6 million tonnes of seafood, representing more than 11 billion main courses, assuming each main course is approximately a quarter of a kilogram or half a pound. Just think about that. For Norway to sell all its output of seafood for a year, it has to win the battle of consumer choice over 11 billion times. That is about 1.5 times the number of people in the world.
If the 7.5 billion people in the world eat three meals a day, that is 22.5 billion meals per day. Norway’s entire output for a year represents about half of one day’s meals for everyone in the world. People make a lot of food choices and Norway wins a very small percentage of the time.
Of course, not everyone in the world eats Norwegian seafood. Even though the products are widely distributed, the vast majority of people are not offered them or do not choose to eat them. That means Norway depends on a substantial group of customers who show preference for their products repeatedly and consume them several times each year. But that will only happen if those people enjoy their meals, remember them favourably and want to buy Norwegian products again.
Here in Atlantic Canada, we have a much smaller quantity of seafood to sell than Norway has.
In 2015, we captured 673,495 tonnes of fish and harvested another 76,952 tonnes from aquaculture. These numbers represent whole-fish equivalents, not product weights, so it is difficult to say just how many meals they translate into. The calculation would have to be done on a species-by-species basis. But it is clear we offer a much smaller quantity than Norway, making it that much harder to stand out in a crowd. And we lose the battle of consumer choice much more often.
We have been fortunate here in that most of our output is in high-value species — lobsters, crab, shrimp, scallops, mussels and salmon — that are in limited supply relative to market demand.
Our sales of shellfish, mainly into the United States market, make us the world’s largest exporter of shellfish by value. That has helped us stand out and be chosen, at least by consumers willing to pay the relatively high prices for those species. We shouldn’t take that for granted, as we saw what happened during the Great Recession that started in 2008, when prices for many products, especially lobsters, fell dramatically from historical levels.
In some respects, Norway is not as fortunate as we are. Their farmed salmon industry is the largest and most advanced in the world and their shipments of farmed salmon into the European Union represent the largest, most valuable seafood trade flow globally. They are also developing fisheries for shellfish, including king crab, snow crab and shrimp. But most of their output of captured fish is lower-valued groundfish and pelagic species, such as cod and herring.
A lot of their output of cod has been frozen at sea in headed-and-gutted form and shipped to China or former Soviet-bloc countries for processing and re-export to markets around the world, including Canada. Much of their pelagic catch is sold in the EU, but much has been turned into fishmeal to feed their salmon aquaculture.
With global warming now increasing water temperatures in the Northwest Atlantic, we have benefited from an increase in abundance of lobster, but we have seen decreases in abundance of shrimp and crab. Stocks of cod and other groundfish are re-building but are not yet at levels to support a large commercial fishery. If we do get back into a large commercial fishery for cod in the future, we may well have a problem finding customers.
There is no shortage of cod or other white-fleshed fish in the world. Indeed, the whitefish sector, of which cod is a part, is one of the largest and most diverse sub-segments of the seafood industry and includes both wild and farmed species. In volume terms, it is the most traded category, with exports of over four-million tonnes.
Most of the catches come from the Bering Sea off Alaska and Russia and the Barents Sea off Russia and Norway. Most of the farmed supplies come from Asia and supply consumer markets in Europe and the United States. In the U.S., tilapia is consumed in much greater quantities than more traditional species, such as cod. Latin American producers are now looking to farm tilapia for sale fresh into the U.S., to take advantage of their location, availability of feed and the higher prices they can get by selling their products fresh.
As I have said in previous columns, Iceland has stood out by targeting high-value markets for fresh cod and organized its industry to serve those markets very well. Markets for lower-priced frozen cod are dominated by products from Russia, Norway and Alaska — usually processed in China or other low-wage countries —which have much larger quantities than we do and can catch and process them at lower cost than we can.
So how can we stand out in a crowd against one competitor that offers a consistent supply of high-quality fresh products and other competitors that offer an abundant supply of good-quality frozen products at inexpensive prices? Who will be the customers who buy and eat our products? Why will they choose our products over those offered by others?
We need to know the answers to these questions for all our output. But we especially need to know the answers when it comes to developing a new fishery based on cod.
Essentially, we need marketing.
Most people in our industry seem to think marketing is simply selling your product, so as long as we have a buyer, we don’t have a marketing problem. But marketing is much more than selling and will be extremely important, if we want to get good value for our cod products.
Wikipedia says “marketing is the study and management of exchange relationships.” The American Marketing Association has defined marketing as, “the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large.” In other words, it is much more than selling fish products by the container or truckload.
Essentially, what all these words mean is that marketing involves targeting particular customers, understanding their needs, wants, buying patterns, and motivations, then developing products and services to meet those requirements, distributing the products and services to make them conveniently available to the target group, pricing them to fit customers’ ability and willingness to pay and undertaking advertising and promotional efforts to make the intended customers aware of what is offered.
That is, more or less, what the Norwegian Seafood Council has been doing for Norway’s seafood products for many years and why such a small country can become a powerhouse in supplying seafood to world markets.
Unless we know who our intended customers are, what they expect from our products, what they are willing to pay, how we intend to meet their requirements and how we will win the battle of consumer choice, we are not marketing our products in any meaningful sense of that word. Thus, we won’t be serving our customers well and the prices we get for our products will be less than we want or need.