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Global Retail: The price is right
Thrift dictates German seafood sales
By Jason Holland
April 01, 2013
Fish and frugality are not the most natural of bedfellows and yet German retailers have found ways to make the pairing work. Food prices are inherently important to German consumers, an ethos exacerbated in recent years by the Eurozone crisis and high inflation, but it’s perhaps better characterized by the huge success of its discount retailers. Germany is the home turf of Aldi and Lidl, which have built global empires that now total close to 20,000 stores combined.
According to The Food Professionals, German consumers fork out considerably less for their groceries compared with most other Europeans, most notably half of what French consumers pay. The market research group attributes this to the “stiff price competition” within the discounter environment.
Aldi and Lidl, together with the country’s other big discounters like Netto, Penny and Norma, have a grocery market share in excess of 40 percent. It’s widely known that every other product consumed in German homes is bought at a discounter.
Notwithstanding, seafood remains popular with Germany’s 80 million consumers. Per-capita consumption in 2011 was 15.6 kilograms (kg), a figure slightly below the previous year but still the second highest ever achieved. Hamburg-based Fish Information Center (FIZ) does not expect much change for the yet-to-be released 2012 figures.
In 2011, saltwater fish accounted for 10.1 kg or two-thirds of consumption, followed by freshwater fish at 3.6 kg and then shellfish at 1.9 kg. This is reflected in the choice of fish species, the top five being Alaska pollock (23.3 percent of German consumption), herring (18.5 percent), salmon (12.5 percent), tuna (11.2 percent) and pangasius (4.8 percent), says FIZ.
Alaska pollock is the market’s No. 1 species because of its high use in frozen fish fingers and value-added fillet production.
Sandra Kess of FIZ says 31 percent of consumers bought frozen fish and 25 percent purchased canned fish and marinades.
“Frozen fish is the most important to the German market because it’s easily available. Also, the discounters like Lidl and Aldi don’t sell fresh fish and if you want to buy cheaper you shop there,” says Kess, who highlights that the discounters had a 51 percent share of the seafood retail market in 2011.
“Another factor is there are not a lot of fishmongers left in Germany; they have been closing their stores, which has seen frozen fish get even more important and growing in terms of market share.”
While frozen fish sales are growing, fresh market share decreased from 10 percent in 2010 to 9 percent in 2011.
Dr. Tjark Goerges, development and quality advice manager with the Rewe Group, the third-largest food retailer in Germany behind Metro AG and Lidl, believes the fresh category is actually “slightly underdeveloped,” compared with that of the U.K. market (where he previously worked for the Birds Eye Iglo Group).
German fish consumption is stagnating, adds Goerges, and up until 2011 it had been growing year-on-year. In the 1980s it stood at around 11 kg per capita.
The problem boils down to the country’s love affair with meat products.
“The German consumer is deeply influenced by eating meat and the price of it. Quite often, fish cannot compete,” he says.
Currently, a kilogram of pork in a standard wholesaler or discounter will cost between €7 ($9.36) and €8 ($10.70), compared with a fresh fish like North Sea hake, which has a price of €12 to €15 ($16.05 to $20.06) per kg.
Germany’s fish sales tend to be driven by health. But Goerges adds there’s also the negative and often incorrect perception that many fish supplies are limited due to overfishing of European stocks. A lack of government support and communication is also a big problem and he says the market lacks the consumption campaigns that have worked elsewhere in the world.
“The German market needs sufficient fish endorsements. We don’t have a Jamie Oliver, but a celebrity chef-backed campaign encouraging fish consumption would definitely be beneficial,” says Goerges.
Looking ahead, he believes there’s a big opportunity to improve the credibility and public perception of pangasius now that Aquaculture-Stewardship-Council (ASC)-certified products have entered the market.
Pangasius sales are still slow following the broadcast of “The Pangasius Lie” documentary on German television in 2011, in which a World Wildlife Fund expert painted the farming habits of Vietnamese producers in an unsavory light. Vietnamese authorities described the program as inaccurate, but the damage was done.
“Usually after a few months such bad news stories are overhauled by market demand so I think there is an opening again for pangasius, particularly as it’s a better product now. It hasn’t happened yet, but there’s an opportunity for ASC to win over consumers by showing that the fish is now produced in an environmentally responsible way,” says Goerges.
This view is echoed by Metro Cash & Carry, the largest fresh fish distributor in Europe. Metro claims to have focused considerable effort on the transparent labeling of fish products and hails the important market acceptance of eco-labels, particularly the Marine Stewardship Council (MSC).German consumer awareness of the eco-label is currently estimated at around 20 percent.
The group expects an increase in demand for products sourced from aquaculture operations this year because of recent improvements in production technology.
“Our experts also recognize a regional trend in fish consumption. For example, in the region of Berlin, carp, perch or fried ‘havel’ pike perch are popular among customers. In Nürnberg, carp is popular, while an example for [a popular] regional fish in Lower Saxony would be ‘wels’ catfish,” says a Metro spokesman.
Kess confirms that Germans are increasingly looking more for locally produced offerings and also hopes that people will soon recognize that cod stocks are bouncing back and that it’s OK to buy the fish again — obviously at a competitively positioned price.Contributing Editor Jason Holland lives in London