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Global Retail - A tigerish approach
A 5.2 percent retail sales increase gives Ireland’s seafood industry fresh ambition
By jason holland
June 01, 2013
A few months ago, the Irish Sea Fisheries Board, An Bord Iascaigh Mhara (BIM), announced there would be a radical overhaul of the country’s seafood industry aimed at helping it become more competitive in terms of exports, particularly in new markets.
The strategy dovetails with the Irish government’s Food Harvest 2020 program, which stresses that it’s within the reach of Ireland’s seafood industry to generate sales of €1 billion ($1.3 billion) by 2020 — up from its current level of €822 million ($1.1 billion) — and in doing so create 3,000 new jobs.
While there is considerable optimism about the opportunities overseas and Asia is earmarked as a lucrative export target, BIM believes there’s also plenty of scope to grow the home market, which comprises 4.7 million people and 1.47 million households.
“The €1 billion sales target includes growth in the domestic market. Currently, Irish exports are around the €500 million ($651.5 million) mark and we get sales of €320 million ($417 million) in the domestic market,” says BIM’s CEO Jason Whooley.
“Unfortunately, foodservice is struggling and that’s really because of where we are in terms of the economy, but retail seems to be holding steady.”
In fact, the retail seafood category enjoyed something of a renaissance last year, outperforming poultry, beef and pork with total sales up 5.2 percent last year, including a 7.6 percent increase in fresh fish and a 1.7 percent increase in frozen fish sales. The only sector that saw any decline was the ready-to-eat fish category, with sales dropping 5.5 percent.
Ireland’s per-capita consumption is now in the region of 17 kilograms (kg) and on an upward trajectory.
This has been achieved despite the economic frailty of the Republic and fresh fish being the most expensive protein in retail with an average price of €12.73 ($16.59) per kg, compared with lamb and beef at €11.12 ($14.49) and €8.74 ($11.39), respectively. Frozen fish, meanwhile, is the fourth most expensive protein, with an average price of €8.37 ($10.91) per kg.
According to a Kantar Worldpanel report, Irish consumption of seafood grew during 2012 as consumers purchased within the category more frequently. Kantar finds Irish shoppers increased their retail spending on fish by 5 percent to €193 million ($251.5 million) compared to the previous year, and around 95 percent of households are now buying fish every two to three weeks.
Fresh fish accounted for 60 percent of total fish sales or €116 million ($151.2 million), says the report.
Tesco is the dominant supermarket in Ireland with a market share of around 29 percent. It is followed by Dunnes Stores with 22 percent market share and SuperValu with 20 percent. However, budget grocer Aldi has been gaining the most ground in the last two years and now enjoys a 6 percent market share.
“Ireland is a price-sensitive market and we are seeing more value shopping. Discount retailers like Aldi and Lidl are making more of an effort in terms of their seafood offerings and I think that has helped consumption. It might not be the best scenario in terms of pricing for the producers but now there’s a wider variety of stores providing fish,” says Whooley.
“There have been a lot of adjustments on the supply side with consumers looking for more value. We are seeing an increase in consumption of fish in Ireland and I expect that to continue but it will be very much driven by value.”
In terms of the highest value share, salmon represents 50 percent of fresh fish sales followed by cod (9 percent), prawns (8 percent) and haddock (5 percent).
The real success story is hake, which has become the fastest-growing fresh fish in the market in terms of sales and is seen by consumers as a good alternative to cod. Last year, Irish shoppers spent €3.5 million ($4.6 million) on fresh hake, an increase of 83 percent on 2011 levels.
The growth of hake sales initially came out of necessity, explains Whooley. Less than two years ago, Irish fishermen were confronted by depressed export prices for the product, primarily from the important Spanish market.
“As a result, we found ourselves with large volumes of product — a very good fish but no market. But through a promotion agency in Ireland, in conjunction with the seafood industry, there was a highly successful promotional campaign with the result that hake is now hugely popular in the Irish market,” says Whooley.
“It has gone from being exclusively an export to a situation where now the majority of restaurant menus and most fish counters in Ireland feature it.”
The challenge now is to replicate that success with other species and one of the tools at the industry’s disposal is the industry-led initiative called Responsible Irish Fish (RIF), where fishermen have taken on a very strict environmental management system and are using it to differentiate their products in the marketplace and to promote Irish fish caught in a responsible manner.
RIF has the support of Donegal Catch, the largest purchaser and processor of whitefish in Ireland and the leading retail seafood brand in the country. This company is now sourcing the majority of its fish from vessels in the program and displaying the logo on many of its product packs.
While BIM applauds RIF, it feels sales growth is hindered because the country’s processing sector is lacking in its ability to deal with the biggest seafood buyers.
There are 138 registered seafood companies with processing facilities in Ireland but just two of those have a turnover greater than €45 million ($58.6 million), 30 companies have an average turnover of between €10 million ($13 million) and €25 million ($32.6 million), while the remainder have a turnover of less than €1 million ($1.3 million).Contributing Editor Jason Holland lives in London