Market Demand for Live and Processed Lobster in the EU: An Overview
Richard Stead Counsellor, Seafood – Europe Canadian Embassy in Brussels
Topics for Discussion
• Trade performance • Market profile – Live lobster – Processed lobster
• What can Canada do
Currency Patterns
1.8
1.7
1.6
1.5
1.4
1.3
1.2
1.1
1
EURO
US$
J
M
M
J
N
S
J
M
M
J
N
S
J
M
M
J
N
S
J
M
M
J
N
S
J
M
M
J
N
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M
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JANUARY 2002 – AUGUST 2007 In Canadian dollars
EU Tariffs on Lobster Lobster • • • • •
Frozen in shell whole 6% Frozen in shell excluding whole 16% Live 8% Meat cooked for further processing 0% Meat cooked other 20%
Rock Lobster from Cuba – zero tariff Value-added Tax Other charges – import levy to support local fish market (Greece 2.3%)
7942
8000
7653
9000
7518 8251
EU Lobster Imports (MT)
3000
2658
5000 4000
2312
7000 6000
2004
2005
2000 1000 0
US Canada Cuba Bahamas South Africa Australia Morocco Others
60000
61012
58296
70000
60326
80000
68915
Canadian exports of live lobster to the EU
50000
Value $000 Volume mt 3096
3274
10000 0
3265
20000
3694
40000 30000
2003
2004
2005
2006
Canadian exports of live lobster VALUE $000 Belgium
Denmark
France
Germany
Greece
Italy
Netherlands
Spain
Sweden
UK
25000 20000 15000 10000 5000 0 2003
2004
2005
2006
US exports of live lobster VALUE US $000 Belgium
Denmark
France
Germany
Netherlands
Spain
Sweden
UK
Italy
60000 50000 40000 30000 20000 10000 0 2003
2004
2005
2006
Live Lobster
Canadian image • Canadian lobster known for high quality: – – – – – –
Low perishability Good meat fill Hard shell Abundant resource Safe and secure supply chain Reliable suppliers able to deliver consistently
Competition • Competitive products – – – – – – – – – – –
European lobster from France and Scotland during the summer Smoked salmon Crab including King crab French oysters European turbot Fresh scallops (especially at retail) Warmwater shrimp Rock lobster Tuna Sea bass Halibut
Price • High prices but consumers willing to pay to a point as it is not an impulse purchase – Intent is to buy a lobster supper – BUT high prices in January 2007 caused consumers to shift to other products
• Retail customers calculate the price per portion (400-600 grams) • Price is always an issue for volume buyers • Narrow margins in supply chain despite high prices due to freight, storage and taxes
Transport Issues • Lost original documents during shipments or improper documents • Limited air capacity and high cost • Lack of direct scheduled air routes into markets such as Belgium • Maintain low mortality during shipments • AquaLife ocean container transport by Maersk
Differentiation from Maine Lobster • Maine lobster known for poor meat fill but is cheaper, depressing markets • Maine and Canadian product blended in shipments to reduce average price and produce acceptable overall quality • Maine shell colour noted as too black, rusty colour is better • Need to differentiate from Maine lobster (label cartons as “Real Canadian lobster”, “A1 Quality – 100% Canadian” • Need to build on Canada’s positive reputation at point-of-sale • Canada considered better than Maine on value, continuity of supply, resource management, meeting specifications
Opening New Markets • Dependence on a few small importers to develop new markets – They have to finance sales by offering credit terms – If the importer experiences business problems, it can affect the entire supply in the market – Costly for importers to set up tank storage systems • Are standard tanks available inexpensively from Canada?
• Market segmentation – Addition of uncooked meat
Impact of Large Retailers • Large retailers ordering great volumes feature lobster as a loss leader to generate store traffic, but depress markets for specialty seafood importers • Large retailer viewpoint – Country-of-origin is not important as they buy using specifications – Recognize quality depends on fishing season and place of origin – Hardshell essential but they have two qualities (hard and medium) with different sale prices – Retailer concerns – Metro retail sale price is euro 9.99/kg – Retail consumer price barrier is euro 20/kg
Promotion • •
Need to create a quality image to extract a premium from the market Lack of local promotional support by Canadian exporters – Promotional materials – Chef demos
•
Origin or trade mark would be useful to add value if it comes with a real communications plan
•
Provenance – tell the story of lobster and its origin
•
Problem identifying product at consumption once claw elastic bands are removed – Consumer does not know where product is from at present
Market Peaks • Diversify selling periods from current peaks – – – – – –
Christmas New Year’s Valentine’s week Easter Mother’s Day early May-June (new lobster – homard nouveau - season in May-June)
Homard Nouveau Promotion
Large Lobsters • Premium market exists for large lobsters – during holiday season – it is small but increasing, especially with Asian customers
System Issues in Europe • Fishery management practices of supplying country • Eco-labelling • Traceability • Carbon footprint • Food miles (distance a product travels to market) • Humane shipping, holding and killing of lobsters is a looming issue for Greenpeace • Plant standards for high risk products
Processed Lobster
36677
Canadian exports of lobster in brine to the EU
25000
26277
30000
24801
35000
28012
40000
Value $000 Volume mt
20000
1757
1989
5000
1641
10000
1967
15000
2003
2004
2005
2006
0
Canadian exports of lobster in brine VALUE $000 Belgium
Denmark
France
Germany
Netherlands
Spain
Sweden
UK
Italy
12000 10000 8000 6000 4000 2000 0 2003
2004
2005
2006
17506
2023
Value $000 Volume mt
895
903
2249
12272
21605
35000 30000 25000 20000 15000 10000 5000 0
32697
Canadian exports of lobster, frozen, in shell, nes to the EU
2003 2004 2005 2006
Canadian exports of frozen lobster in shell, nes VALUE $000 Belgium
Denmark
France
Germany
Netherlands
Spain
Sweden
UK
Italy
10000 8000 6000 4000 2000 0 2003
2004
2005
2006
6148
Canadian exports of frozen lobster meat, boiled to the EU 7000
4136
6000 5000 4000
98
1187
429
709
1000
173
2000
1553
3000
Value $000 Volume mt
0 2003
2004
2005
2006
Canadian exports of frozen lobster meat, boiled RECENT TRADE PATTERNS - VALUE $000 Belgium
Denmark
France
Germany
Netherlands
Spain
Sweden
UK
Italy
2500 2000 1500 1000 500 0 2003
2004
2005
2006
US exports of processed lobster VALUE US $000 Belgium
Denmark
France
Germany
Netherlands
Spain
Sweden
UK
Italy
4000 3500 3000 2500 2000 1500 1000 500 0 2003
2004
2005
2006
Popsicle pack • Remain popular with consumers due to price point • For importers, price is key as popsicle pack lobsters are very similar between processors • Retail market can be sold out after Christmas/New Year’s, the peak season • Importers play a key role in supplying the market after New Year’s
Market Channels •
Importers perceive a lack of respect for different trade channels
•
Importer must buy in May-June for the next 12 months and take the price risk as well as financing costs for processed products which can’t be bought later
•
Retailers also see product delivered too early and don’t like to pay storage costs (would prefer that exporters hold the product in Europe)
•
Volume handled by importers declining as more retailers buy direct
•
Importer margins come from post-New Year’s sales where prices typically rise as retail stocks are depleted
•
Current system discourages importers from taking any risk to grow the market
•
Why do Canadians compete amongst themselves to produce the lowest possible price for a product that the retailers need at Christmas and is only produced in one region of the world?
Market Position/Image • Lobster is positioned as a high end luxury product in Europe • European consumers don’t know how to eat/prepare lobster – Seen as only for white table cloth restaurants – A more mainstream approach would build volume but would it build value?
New Product Development • Shift away from canned lobster has helped improve the image • Some see a need for a better presentation than popsicle pack • Hypobaric lobster meat • East Coast Seafood’s Paturel Brand Triple Scored Lobster Claws & Arms
Challenges • Cadmium in lobster (limit is 0.5 mg per kg) – Violations result in an EU-wide rapid alert
• Competition from langoustes and rock lobster tails • Greenpeace have raised concern in Austria/Germany over method of producing raw lobster tails – Greenpeace may take the issue to retailers
What can Canada do? • • •
Explain hard shell quality Differentiate, for example taking advantage of the abundant resource, provenance Communicate about the product to consumers – Some think lobsters are farmed
•
Take advantage of the sustainability of the fishery – Maine is pursuing MSC certification which may add value if the MSC can be marketed to customers
• •
Work to understand the buyers’ point of view Become better organized to address supply issues – Set a minimum size for exports from Canada – Address storage cost concerns of buyers for processed product – Introduce new products (e.g. tails) – Frozen raw products are viewed as higher quality – French buyers would prefer to have French-speaking sellers
Thank you
