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Global Retail: Where cod is king

How will the Barents Sea quota boost impact retailers?

Will a larger cod supply affect sales of other fish species throughout Europe? - Photo by Jason Holland
By Jason Holland
February 01, 2013

Atlantic cod (Gadus morhua), Europe’s favorite whitefish, will be available in unprecedented volumes this year thanks to massive quota increases in the two largest market-supplying fisheries, Iceland and the Barents Sea. But while the increased supplies are testament to the good management practices that are in place, there are concerns about what effects the significantly greater total catch will have on cod prices and how these will affect sales of other products in the fish category.

Iceland’s total allowable catch (TAC) for the 2012/2013 season that got under way in September increased 22.5 percent to 196,000 metric tons (MT), while the Barents Sea TAC for 2013 was set at 1 million MT by the Joint Norwegian-Russian Fisheries Commission, an increase of 33 percent or 249,000 MT.

The increased cod supply comes at a time when several important markets are economically weak, which many observers believe limits the amount of additional cod they can absorb, even when factoring in the more competitively priced products. But Johan Kvalheim, Norwegian Seafood Council (NSC) director for France and the United Kingdom, doesn’t believe exporters will endure any major problems.

“The demand is strong and we know that consumers will buy cod if they find it available in stores. And with good supply, a high demand and promotional activities together with the NSC, I am definitely optimistic for 2013,” he says.

With a value of €236.7 million ($314 million) in the first 10 months of 2012, an increase of 7.2 percent year-on-year, cod (all sources) consolidated its position as the second most important fresh fish for the French consumer, behind salmon. It now accounts for 14.9 percent of the country’s total volume of fresh fish sales. 

Making the most of this popularity, along with seven retailers, the NSC embarked upon a total of 15 campaigns in France promoting cod and farmed salmon in 2012 and the council expects to participate in a similar number of projects this year. As most of the cod in the French market comes from Norway in the first six months of the year, in-store activities are at their most intense during that period. 

In addition to traditional store promotions, last year marked the debut of the council’s TV cooking series “Assiette Norvegienne” on channel M6, which already boasts two seasons and focused on cod in several episodes. The marketing body has also been active in social media, both on Facebook where “Saumon de Norvege” has close to 140,000 fans and is one of France’s largest recipe pages, and on YouTube with its “Poisson de Norvege,” where it has posted all its recipe videos. To date, these have been viewed a total of 413,000 times.

These efforts have paid off. According to Kvalheim, 9.3 million French households bought 16,000 MT of fresh cod products and 6,729 MT of frozen fillets with a combined value of €361.8 million ($479.9 million) over this period, an increase of 4.8 percent, and the council believes that history suggests sales volumes can increase further.

“In 2009, we had an increase of 48 percent in volume because of the lower prices and good volumes that were available, so I am not at all worried about increased cod quotas. The demand is there and if every part of the distribution chain makes money on the sales of cod we will see an increased demand in 2013,” he says.

The sector can take further comfort in the fact that the Barents Sea and Icelandic cod fisheries enjoyed larger quotas last year of 8 percent and 10 percent, respectively, but prices were relatively unaffected. The average export price of fresh Norwegian cod to France in the first 11 months of 2012 was NOK 25.77 (€3.52/$4.76) per kilogram (kg), compared with NOK 28 (€3.82/$5.07) in the corresponding period of 2011. The average export price of the same product format to the U.K. market in the first 11 months of 2012 was NOK 20.01 (€2.73/$3.62) per kg, compared with NOK 21.48 (€2.93/$3.89) in the previous year.

However, other whitefish products could suffer from the increased cod supply. And the NSC notes the appetite for pangasius in France has already started to wane. 

NSC says French households bought 1,485 MT of pangasius in the first 44 weeks of 2012, a year-on-year decrease of 24.3 percent. 

While France’s preference is for fresh fish, U.K. cod imports, which typically total more than 100,000 MT, are dominated by frozen products. British households bought 24,615 MT of frozen Norwegian cod in the first 40 weeks of last year as well as 12,347 MT of fresh products. 

Kvalheim thinks the reason for this difference in consumption is largely related to consumer preference. He says fresh local markets still remaina popular point of purchase in France, whereas supermarkets dominate fish sales across the Channel.

“In my opinion, it looks like the French have focused on keeping the fresh market with fresh as possible fish [and] with the challenges linked to seasonality and stable supply,” he says. But he adds that some French retailers have started to sell slacked-out cod fillets. 

“I think that the British retailers’ change toward defrosted fillets is a way to adapt to new demands from consumers. [They] expect to find their favorite products available all year through.

“For retailers to be able to supply cod all year at a stable price and quality, one of the solutions is defrosted fillets. If we then focus on frozen-at-sea (FAS) fish, the quality of the defrosted fillets on the shelves will be as good as the freshest fish. And by sourcing FAS fish, retailers can ensure the quantity and prices before starting national promotions,” says Kvalheim.

The NSC has no immediate plans to promote Norwegian cod in U.K. retail over the coming months, although it has been making some headway in top-end retail with the seasonal cod delicacy “skrei” after a successful launch into high-end U.K. restaurants last year.

However, Sainsbury’s, the market’s second-largest fish retailer, says it will be marketing cod this year in line with its policy of promoting sustainable species.

The supermarket chain, which only sources Norwegian and Icelandic line-caught cod, believes the species could substitute for haddock (Melanogrammus aeglefinus), the market’s No. 2 whitefish, this year if prices of the latter increase by too much over the coming months.

Haddock quotas in both Iceland and the Barents Sea have been slashed. Iceland’s quota for 2012-13 is just 32,000 MT, down from 45,000 MT last year, and is half the quota set in 2010. This year’s Barents Sea haddock catch is set at 200,000 MT, down 38,000 MT.

Buyers are now expecting haddock prices to increase, which could present further opportunities for cod.

“Customers looking for fish do tend to be price sensitive, so we would expect to see a switch from haddock to cod if prices change,” says Sainsbury’s Josephine Simmons.

Contributing Editor Jason Holland lives in London 

Find other SeaFood Business articles discussing cod here.

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