THE FUTURE of the FRESH FISH Market

personnel viewsto

stimulate discussion&

possible actions

the Fresh Fish Market

• Yesterday» When everything was better

• Today» Problems, always problems

• Tomorrow» Surely it cannot get worse !

Yesterdays Fish Market

• Predominantly FRESH

• Local or Regional– shout auction– payment guarantee

• MANY retail outlets

• Exports

PROCESSED– dried– salted– smoked– frozen

Fresh Fish market TODAY

• Globalised• EU imports more

than it catches

• Retail dominated by Supermarket chains

• 75% in Europe

• Auctions– professional– automated– In competition

• Direct Sale• Other auctions• Farmed fish• Imports

• Falling volumes– Fewer fishing boats– Less fish landed– Reduction in buyers

• Prices static – Real value reduced – € = cheap imports

• Exports include fresh– Airfreight– Chill container

• Costs Rise whilst

Income Falls

Demersal Fish Prices

1980

1985

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

firs

t sa

le v

alu

e

Cod

Haddock

Plaice

DEMERSAL

Fish Catch Index - Tonnes

• 1960 111• 1970 147• 1980 100• 1990 72• 2000 66• 2005 55

source FAO statistics

Fish Prices Index - real terms

• 1980 100• 1985 92• 1990 105• 1995 84• 2000 88• 2003 88• 2005 ? ? ?

Based on UK DEFRA statistics

0

500.000

1.000.000

1.500.000

2.000.000

2.500.000

3.000.000

3.500.000

4.000.000

1952 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000

Demersal Catch: North Atlantic

Portugal Spain Ireland United Kingdom France

Belgium Netherlands Germany Denmark

Looking back over 25 years +

EFAD project identified EFAD project identified long term fall in first point long term fall in first point of sale fish prices of sale fish prices in real in real termsterms

European Fish Auction Datanet

Update study by EAFPA Update study by EAFPA (2003-2005) confirmed (2003-2005) confirmed that this problem that this problem continuescontinues

TOMORROW ?

THREATS?• Reduced catch levels• Failure to Rationalise

– Too many independent auctions

• Lack of Identity– no recognised brand for

fresh captured fish

• Low Cost Imports– Farmed product

• Illegal Fishing• Direct Purchase

– By supermarkets

• Chickenisation– Fish as a commodity

fewer fishermen

smaller landings

reduced buyer competition

increased unit costs

Socio-economic FAILURE

OR THE NEXT DECADE

FUTURE of the FRESH FISH Market

IS THERE ONE?

I THINK THERE IS

Provided

WE ACT NOW

To prepare for tomorrow…

Objective: for the fish sales organisation

• Maximise unit values – fish prices per kilogramme

• Minimise unit marketing cost– defray fixed expenditure

• Offset central purchase control– Avoid there being a dominant buyer

• Establish long term markets– To complement long term investment

HOW?

• Replace Volume– With Value

• New business– services– products

• utilising assets

• Embrace Quality– BRAND it

• SELL it– DELIVER IT

• Change price dynamics– repackaging– distribution– vertical selling

own account

partnering others

• Sales platform for – Farmed fish– Imported fish

• Promote WILD fish– as the new organic

Scale EconomiesSupply Volume Leverage

FarmedFish

Imported Fish

CapturedFish

AUCTIONserv

ices

logistics

serv

ices

sales

Marketdevelopment

consumerdirect

auction wholesale

supermarketcontract

BUYERS LIKE VOLUME and CHOICE

EXPERIENCE HAS SHOWN THAT THEY DESERT FAILING AUCTIONS

Auctions (and the ports they operate) have a proven track record in

innovation

• EU regulations• Vessel Design• Premises• Grading• Packaging• Cool Chain • E-commerce

• Money Transfer

SALES are the KEY

Quality can not be compromised

TAC’s are unlikely to increase

Costs continue to rise in real terms

Continuous development and investment needed

Maintaining a viable sector?

Fish Prices at first sale

• Lack elasticity

due to alternative

» species

» sources of supply

» food products

• Do not reflect production cost

• Are subject to globalisation

– and the buying power of the €uro

• Fish is in danger of moving to a commodity basis

– through centralised buying policies

– Homogenisation of products

• “CHICKENISATION”

Can we build on e-commerce

Exploiting existing buyer contact While developing new

Or is it an opportunity missed?

• first ‘auction clock’ was made in Utrecht 1902 (electro-mechanical)

• Dutch Auction (falling price)

• Effective for fresh products– Flowers– Vegetables– Fish…

• Physical presence required

Computers arrive

• first for administration

– Records

– Accounts

• then as the auction ‘engine’

• linking sales . to billing

Today there are many Fish e-auctions

• Fair• Transparent• Efficient• Effectiveaiding

• Traceability• Business

Some Fish e-auctions

e-auctions

• Technology has changed what we do • and how we do it

• Electronic Retail is now ‘normal’• ebay has brought internet auctions into the

home

• Flights and Travel are booked online

• In UK Tesco, supermarket chain, has 5 million internet customers

– Shop Online – Store delivers

• e-commerce now valued at €7 trillion pa (Forrester Research Inc.)

• Fish Auctions have used Electronic Auction for decades

– Present systems well established

– Potential still to be realised…

ee-commerce upward trend continues

• UK online purchases in 2003

– B2C €170 per capita– fish is bought online

• by Trade B2B• by CONSUMER B2C

• 300% growth in B2C by 2008 (Forrester Research)

• EU B2B e-commerce

in 2004 €250.000.000.000– Fish Auctions are B2B

• What is growth path?

– NEW product– B2C ?

Can fresh fish Auctions and their suppliers, fishermen and fish farmers, benefit from the growth of direct consumer buying over the internet

• Consumers will not pay more – Introducing efficiencies through direct supply

should increase producer income • Auctions provide a secondary sale outlet

– Adopting volume internet trade terms• Investing in systems, staff and service

• On the back of this– Quality products could be delivered

• To the ‘upper quartile’ of consumers that will pay a premium for “the best”

• From a mobile phone tomorrow’s fresh fish could be ordered today– Cheap, simple to use, tomorrow is here today!

Buying Unseen

• Consumers will buy based on description – Where this is backed by a ‘standard’

• Witness ebay sales

• EAFPA has considered developing an EAN code based on product not processor

– This could form a common ‘standard’– Providing:

• Information on what it is and where it came from– Not a subjective ‘quality’ but just data facts

• As ever funding is the prime issue– But can we wait, doing nothing

• Or make a start as part of a certification scheme– Ecolabel – Traceability – Service Quality

Future e-commerce ???

• Direct Sale – to end customer

• Seamless Buying– Buy many places– Delivery inclusive

• Track & Trace– RFid

• SMS (mobile phone)• 3G web systems• ebXML (OASIS)

Smart Sales systems help but they are no substitute for

understanding, and meeting Product DemandProduct Demand

• Auctions may only receive information on consumer trends ‘second hand’

• Large supermarket chains are taking an ever growing share of fish retail supply

• Perceived ‘wisdom’ may be false– e.g. fish is ‘price capped’ by the consumer

• Unfulfilled demand may exist• The customer (consumer)

» is King (and Queen)» Do they know what could be available…

Retail Trends – Consumer Choice

Supermarket chains70% of chilled fresh90% of frozen fish90% of pre-prepared

Consumers Price driven purchasesOrganic Healthy Food

Quality & Eco Labels Fresh and Traceable

0

10

20

30

40

50

60

70

80

1999 2000 2001 2002 2003 2004

Chains Public Markets Fishmongers

%

Supermarkets can control Local pricesSupermarkets can control Local prices

Consumers look for Quality labelsConsumers look for Quality labels

Supermarkets promote THEIR OWN Supermarkets promote THEIR OWN brandsbrands

Fish bought (imported) at lowest cost Fish bought (imported) at lowest cost

Organic produce has captured a small, but significant, share of the fresh food market: those willing to pay a premium for quality food from an environmentally acceptable source.

• An EU directive has decreed that nothing captured or harvested from the wild can be labeled as 'organic'.

• Currently only farmed fish can be given the organic label

– Natural feeding being uncontrolled and unsupervised

• Certification bodies contend with:

– pollution levels in the sea– over-fishing and depleted fish

stocks– environmentally aware fishing

techniques– pesticides treatments in

conventional fish farms

• Wild, captured fish, if they can not be organic (!?!) can be

– Environmentally acceptable– Ecologically sound– Traceable– Certified as ‘free range’

• Ecolabeling must not become the province of the retailer

– They promote Own Brands• Not source products

• Traceability can be used as a tool to promote wild fish

In combination an 'eco-friendly' labelling system that give guidance for the concerned consumer could be the NEW ORGANIC

In an increasingly Globalised marketplace

Auctions must be proactive delivering what the buyer wants

Even if they do not know what this is until it is supplied

Working with fishermen to maximise QualityProviding the essential link for Traceabilitypromotingend consumer confidence

ensuring that Fishermen make a reasonable Return(on their catch)and

Buyers also Return