November 2002 Species Focus
Atlantic salmon
Growth hinges on the farmed-salmon industry’s ability to produce and market winning value-added products
The Stew Leonard’s supermarket in Danbury, Conn., put fresh Atlantic salmon fillets on ad for $2.99 a pound early this year, and the store sold around 4,000 pounds per week, more than four times its average weekly amount.
The first week in October, the store had fresh salmon fillets on ad for $3.49 — still a bargain — but moved only around 3,000 pounds.
The days of supermarkets selling enormous quantities of fresh Atlantic salmon fillets for $2.99 or $1.99 are over, at least for the foreseeable future.
Global farmed-salmon production more than doubled from 1995 to 2001, driving prices to historic lows in late 2001. Farmers began stocking fewer fish once prices started dropping below their cost of
production, and prices increased this spring as production slowed. They were holding unseasonably firm through early October.
Now, instead of bargains, buyers can expect an array of new, value-added Atlantic salmon products aimed at meeting time-pressed consumers’ increasing demand for convenience. Farmed-salmon producers are looking to value-added products to grow demand.
Producers are already adding value by portioning and freezing more product. Through July, U.S. imports of frozen Atlantic salmon fillets from Chile, at 27 million pounds, more than doubled last year’s seven-month total. Imports of fresh Chilean fillets through July were up just 13 percent from last year, less than half the previous year’s increase.
Consumers appear to be responding favorably to the frozen products. Sales of frozen salmon portions and nuggets at club stores are through the roof, says Jason Paine, VP of sales for Aquafarms International, a subsidiary of Multiexport of Chile, in Miami.
Other producers are taking Atlantic salmon a few steps closer to plate-ready. For example, Atlantic Salmon of Maine, which is owned by Fjord Seafood of Norway, introduced a line of fresh, vacuum-marinated salmon portions called Fresh Cure last year, and sales in both retail and foodservice markets are increasing steadily this year, reports Stephen Young, VP of sales and marketing for Fjord Seafood USA in Belfast, Maine.
A tray of two vacuum-marinated salmon portions retails for $8.99 to $11.99.
“We need to continue to improve the level of convenience for the consumer,” says Fjord Seafood’s Young.
“Look at what the poultry industry has done,” he notes.
The industry boosted per-capita poultry consumption from less than 80 pounds in 1990 to 95 pounds in 2001 “simply by making their
products more convenient for
consumers.”
A tough transition
As they transition from a production-driven industry to a market-driven one, the companies that produce the bulk of the world’s farmed-salmon supply will have to find effective ways to market their new products.
That may not be easy, given the vertically integrated operations’ financial woes.
Nutreco Aquaculture, parent of Marine Harvest, the world’s largest farmed salmon producer, with about 300 farms in Norway, Scotland, Ireland, Chile and Canada, reported an 89 percent drop in net income in the first half of 2002, compared to the same
period last year.
Pan Fish, with salmon farms in Norway, Scotland, the Faeroe Islands and Canada, posted net losses in the first and second quarters of 2002, compared to net gains in the first and second quarters
of 2001.
And Stolt-Nielsen, parent of Stolt Sea Farm, with salmon farms in Norway, Scotland, Chile, Canada and Maine, reported a 94 percent drop in net income in the first half of 2002, compared to the same
period last year.
To recover from such financial hits, salmon farmers will have to develop products that expand their markets. And the time has never been better to promote seafood to health-conscious consumers.
“The real marketing is being done by the medical community,” notes Bert Bachmann, VP and general manager for Camanchaca, one of Chile’s largest farmed-salmon producers, in Miami.
When marketing its new products, the industry mustn’t overlook the heart-health benefits of eating fish high in omega-3 fatty acids like salmon, Bachmann adds.
Three studies released early this year, published in the Journal of the American Medical Association, the New England Journal of Medicine and the journal Circulation, support the heart-health benefits of consuming salmon.
“Growth will come from health-conscious baby boomers,” stresses Bachmann.
More than 63 million Americans are projected to be in their 50s and 60s by 2007, 15 percent more than this year, according to the U.S. Census Bureau.
Producers’ ability to reach their target audience will dictate whether demand will grow beyond its current annual rate of 10 to 15 percent.
Steady supply
Even though global farmed salmon production has slowed this year, supply is still keeping pace with demand. Chile is expected
to export ar-ound 300,000 metric tons of farmed sal- mon this year, roughly the same as last year, according to the Association of Chilean Salmon and Trout Farmers. The country’s production is projected to rise at an annual rate of 10 to 15 percent.
British Columbia’s government lifted a two-year moratorium on new fish-farm sites in September after provincial waste control regulations were drafted.
But the industry will grow only modestly next year, says Odd Grydeland, president of the British Columbia Salmon Farmers Asso-ciation, because the process of relocating defunct salmon farms to environmentally suitable sites has been slow so far.
British Columbia’s 90 salmon farms are expected to yield only 10 to 15 percent more than last year’s total of 73,000 metric tons, in response to current market conditions and isolated outbreaks of infectious hematopoietic necrosis and kudoa, adds Grydeland.
Production jumped 50 percent from 2000 to 2001.
In the Northeast, infectious salmon anemia is still affecting farms. Maine farmers restocked 1.9 million fish in the lower portion of Cobscook Bay this past spring and summer after the spread of ISA forced them to remove all farmed salmon from the bay, says Andrew Fisk, aquaculture coordinator for the Maine Department of Marine Resources.
Meanwhile, U.S. imports of fresh Norwegian fillets, at 5.7 million pounds through July, were up 62 percent from last year.
Two Norwegian producers assessed relatively low tariffs in the 1991 antidumping suit brought by several U.S. producers are taking advantage of the low tariffs and exporting more product to the U.S. market this year, says Tore Arildsen, U.S. director of marketing and operations for the Norwegian Seafood Export Council.
Norway is expected to harvest more than 400,000 metric tons this year, up slightly from last year, notes Arildsen. But Norwegian salmon accounts for only a fraction of the U.S. farmed salmon supply.
The farmed-salmon industry as a whole is finally moving away from over-production. Rest assured, production will continue to rise, but at a gradual, more manageable rate.
The industry’s success now hinges on its ability to produce and market winning value-added products.
Senior Writer Steven Hedlund can be e-mailed at shedlund@divcom.com
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