Salmon demand ‘not what it used to be’

DEMAND for salmon is not what it used to be, with falling prices accompanying low supply growth, said DNB Bank seafood analyst Alexander Aukner yesterday.
In an eve of exhibition seminar, held in Brussels by DNB and the commodity exchange Fish Pool, he told an audience drawn from across the industry that he saw the market differently from other analysts, and his price estimates were the lowest.
Between 2017 and 2018, there was marginal supply growth but the price dropped in both those years, suggesting demand is not quite as it has been.
Negative developments have happened before but they can be easily explained (for instance, when the Russian market was closed); there is a difference in today’s current global value of salmon.
Looking at prices historically, he said between 1996 and 2012, the value increase was 10 per cent, driven by volume.
From 2012 t0 2012 the value increase was 20 per cent, driven by price. In 2017 and 2018, the value increase was between two and five per cent. Aukner said it was ‘quite natural’ that demand was not what it used to be because the price was twice as high.
Looking ahead, he said an 8.1 per cent supply growth was expected in 2019 – ‘if our estimates are correct, the market will have to absorb 150,00 and 200,000 tonnes of new volumes’.
Production in Chile was likely to continue to grow, the average mortality in the first quarter this year was down to 0.65 per cent.
There had also been a 10 per cent increase in smolt release, an 18 per cent increase in biomass and harvest weights were ‘fantastic – Chile is doing very well’ and will grow more.
Norway, too, seems to have turned a corner after a very challenging summer last year, and has a good basis for further growth.
Looking at new ways to sell salmon, Tom Brouwer, general manager of Dutch processor Visscher Seafood, said the industry had to overcome growing consumer criticism, particularly of fish farming. This, he said, was ‘one of the biggest challenges ahead’.
‘Consumer criticism, in my opinion, not in all but in most cases, is based on valid objections. Too often these objections are trivialised or even denied by the salmon industry. We say the problem is not as big as you think it is, or deny there is a problem at all.’
Brouwer spoke of encountering ‘very severe’ quality issues with some farmers. On top of this, there is criticism from the media; ‘in general, opinions towards salmon are not getting better’.
This is resulting in governments in the Nordic countries changing their policies towards salmon. They used to say eat salmon every day of the week and they have now changed this to once a week.
But it is not all doom and gloom in the industry and the criticism provided great opportunities for companies to distinguish themselves, with new brands for example.
Brouwer said he was curious to see how the new Mowi strategy will unfold, but he thought it was better to have several specific brands targeting specific customers, instead of having one big brand.
‘I believe in the end of big food brands as we have known them for the last 50 years.’
The biggest trends in seafood were around clean eating – ‘we want to know where our fish is coming from’.
There are many great farmers in Norway and they have great opportunities to set themselves apart. To this end, his company changed its focus to customers with high standards, and sources its salmon not just from Norwegian farmers, but also from Scottish, Irish, Icelandic, and Faroese producers.
Visscher is launching Varlak premium ‘natural salmon’ at Seafood Expo Global.
There was sympathy for salmon farmers earlier in the seminar from Tom Bundgaard, chief analyst at Kairos Commodities.
Comparing the prices of a range of commodities, he said salmon was top of the list in terms of volatility – higher than all other food products and higher than copper, zinc and tin.
‘It takes nerves of steel to work in an industry this volatile,’ he said, adding that the only prediction he could guarantee was that prices would continue to go up and down.
Seafood Expo Global, the world’s biggest seafood show, begins in Brussels at 10am this morning and runs until Thursday.
Picture: DNB analyst Alexander Aukner at yesterday’s Fish Pool seminar in Brussels