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Global Retail - Smoked on fire
UK retail downturn can’t slow smoked salmon sales
by Jason Holland
October 01, 2012
The origins of the smoked salmon industry predate the arrival of the U.K.’s first retail stores by many centuries, yet the appeal of the product has never been stronger than at present.
According to figures from Nielsen Scantrack, the country’s total smoked seafood retail market is currently valued at around £346.3 million (€438.6 million; $549.2 million) per year, including more than £171 million (€216.6 million; $271.2 million) worth of smoked salmon.
In volume terms, smoked salmon accounts for 8 million metric tons (MT) of the total 26.4 million MT of smoked fish sold in the market. And despite the volume of smoked salmon sold increasing by 4.1 percent in the 12 months ending June 25, the average retail price still grew to £21.26 (€26.87; $33.77) per kilogram, a year-on-year increase of 2.7 percent, which is all the more impressive when factoring in that retail food sales have been flat for several quarters.
Tesco, the country’s biggest supermarket chain, has a 28 percent share of the smoked salmon retail market, followed by Sainsbury’s with 21.1 percent and Waitrose in third place with 13 percent. Tesco’s market share of smoked salmon has actually decreased by 2 percent in the last 12 months, but Sainsbury’s and Waitrose have achieved increases of 1.2 percent and 0.3 percent, respectively. Also making a noteworthy advance is fourth-placed Morrisons, which has grown its market share from 8.6 percent to 10.4 percent.
One of the most successful private-label retail launches in the U.K. in the past two years is the Heston from Waitrose Lapsang Souchong Tea Smoked Salmon, created for Waitrose by celebrity chef Heston Blumenthal as part of his tie-in with the upper-end supermarket chain that began in 2010 and manufactured by Scottish processor Macrae Edinburgh Ltd.
Using farmed salmon from Scotland, Waitrose’s product is cured in a mixture of sea salt and sugar and then smoked for 10 hours over a mix of oak chippings and Lapsang Souchong tea, which is a black tea originally from the Wuyi region of the Chinese province of Fujian. Waitrose says the manufacturing process “imparts a complex, but delicate smoky flavor.”
Sold in 100-gram packs as part of the fast expanding Heston from Waitrose range, the product retails at £4.49 (€5.67; $7.13), which places it at the upper-end of the retail spectrum. Nevertheless, buoyed by the feel-good factor of the London 2012 Olympics, sales of the product surged by more than 600 percent in the first week of August and sources expected the trend to continue at least into September.
While supermarket private-label products underpin the smoked salmon retail category, the market is also awash with other successful brands.
“Smoked salmon is a fiercely competitive market and over the years that competiveness has grown; there are more producers now than there were 25 years ago,” confirms Vicky Leigh, sales director with John Ross Jr., which produces Scottish smoked salmon in traditional, 150-year-old brick kilns and is the largest producer of Scottish smoked salmon in the world.
The company was founded 25 years ago by Leigh’s father and remains a family-owned and operated business. Its U.K. customer base includes longstanding contracts with Waitrose and Harrods and it also exports to more than 30 countries.
“He spotted a gap in the market for a premium product — not premium in the sense of an expensive product but premium high-quality. We have stuck to that to this day,” says Leigh.
“Our entire business is growing, both domestically and in international markets. Our business model was originally based on exporting but the U.K. market has grown more in recent years. This is the second recession that John Ross has been through — as far as we are concerned, it’s about being clever about things and working with customers on a long-term basis,” says Leigh.
John Ross Jr., which holds the Royal Warrant that allows it to supply products to the British Royal Family, has eight key cold-smoked salmon products as well as two hot-smoked products, but there are at least 30 different specifications in its range, says Leigh. But she says that while flavor innovation has been important to the company’s success, it’s not a “clinical, lab-coat” producer.
“I think when people buy smoked salmon they want it to taste of smoked salmon. All these quirky twists on convention are good and well, but when we do ‘specialty smoked,’ as we call it, we’re not looking to increase our sales by producing something for the sake of it or as a marketing ploy; we only look to create a product that is truly enhanced by the process.”
While the U.K.’s smoked salmon sector is booming, the country’s ailing smoked whitefish industry struggles to attract new, younger consumers to the category. This stagnation has not gone unnoticed by the industry and a new project was launched in August upon receipt of £60,000 (€75,830; $95,290) European and industry funding to tackle the problem.
Led by an offshoot of the Grimsby Fish Merchants Association (GFMA), the project’s main aims are to improve consumer awareness of traditional smoking methods and to enhance the profile of this niche industry in high-end retail and foodservice markets. It plans to achieve this by creating a brand identity, an interactive website and attendance at specialty food events.
The project, which runs through December 2013, has fostered a collaboration of industry partners, including the GFMA, Alfred Enderby, Sealord (Caistor) Ltd., Seachill, The Smokeyard Artisan Smokehouse, Arbroath Smokies, The Fish Mongers Co., as well as smoked salmon producers John Ross Jr. and Coln Valley.
GFMA Chief Executive Steve Norton believes the broader smoked fish sector could learn from smoked salmon producers. Smoked salmon is in the “upper quartile of luxury foods,” he says, but because of modern pricing and strong branding it remains popular.
“Unfortunately, the smoked whitefish sector has been in the doldrums for some time because the products are largely overlooked and undervalued by U.K. consumers,” says Norton.
“We want to get to the sub-35-year-olds. The smoked sector tends to have an older demographic so a lot of this will be education — letting people know that there’s a history and also a future,” he says.
Andy Gray of the Sea Fish Industry Authority (Seafish), which provided part of the funding, says the project is geared toward increasing the market for smoked whitefish, but will inevitably end up promoting smoked salmon.
“It’s unavoidable because when U.K. shoppers think of fish, most probably think of salmon; and when it comes to smoked fish, most people think of smoked salmon and usually of the cold-smoked variety. They don’t understand there are different forms and different production techniques involved,” he says.Contributing Editor Jason Holland lives in London
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