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Know your customer: a matter of life and death.

This past summer, more Alaskans than usual nervously followed the Japanese celebration of Obon, an ancient Buddhist festival of the dead, during which families visit the graves of their ancestors. The festival takes on national holiday proportions and involves millions of people bullet-training around the country. Alaskans are interested because all these Japanese get hungry honoring the deceased, and -- over the millennia -- the pilgrims have developed a ritual of eating huge quantities of salmon.

Interest in salmon probably comes from the Buddhist injunction against eating the red meat of four-legged animals. In the old days, before anyone there knew about Alaska, salmon were plentiful in the rivers of Japan. Lady Murasaki, author of the steamy novel Tale of Genji, had her salary at the Kyoto imperial court paid in salmon. Maybe that was her comeuppance for tattling on the rich and famous in her tabloid-free day.

Anyway, Japanese demand for Alaska salmon strengthened this summer because inventories decreased during the winter and spring, Japanese fish farms produced fewer salmon, and Russian and Norwegians stocks were lower than expected. So Alaska salmon prices rose from last year's levels, and Bristol Bay and other fisheries breathed a collective sigh of relief that could almost be heard by Obon celebrants in Yokohama.

Next year's prices can't be predicted, but will depend on Japan's now wheezing economy and the efforts of Alaska salmon producers to stimulate worldwide demand. Encouraging signs for our industry include renewed interest by German smokehouses in troll-caught cohos and reports that Dutch and other European buyers have been scouting prospects for larger salmon purchases in the future.

Other encouragement and advice for expanding markets are included in a recent study by the University of Alaska Anchorage's Center for International Business for the Alaska Seafood Marketing Institute (ASMI). The study looked at promising markets in seven countries. Here are some highlights.

Australia

Throw another salmon on the "barbie?" Not yet. Aussies like their salmon canned. Canned sockeye sales set a record in 1990, but the United State's share has slipped in the face of stiff competition from Canada. Industry sources Down Under say the Canadians are promoting their product like crazy, emphasizing premium quality and Canadian origin. Chile is now supplying skinless, boneless canned salmon, but it's not clear whether this product will capture a significant share of the market.

We need to:

* Consider using "Product of Alaska Waters" labels to take advantage of consumer preference for cold water. This approach appears to have worked for Canadian canned salmon.

* Develop in-store sampling and recipe promotions highlighting pure Alaska waters and clean environment.

* Emphasize the health aspects of canned salmon during in-store promotion.

Korea

Salmon isn't exactly the kim chee of the deep, but Koreans eat more than 87 pounds of seafood per capita annually, and consumption of salmon is increasing. The United States' share of Korea's salmon stands at 56 percent, up from 24 percent in 1989. Korea imports primarily headed and gutted sockeye, cohos, chums and pinks. Norwegian salmon farmers sense the opportunity in Korea and have increased their marketing efforts accordingly. We can't let our guard down and, instead, need to:

* Emphasize to the consumer the prestige and value of Alaska salmon.

* Develop salmon recipes consistent with peppery methods for preparing traditional foods.

* Focus on the booming hotel, restaurant and institutional market. (Many Koreans like Sunday hotel brunches, and a lot of cold lox is consumed there.)

* Target the lucrative gift market during holiday seasons.

Germany

German salmon imports from the United States have slipped from 10 percent in 1981 to 2.5 percent in 1991. Norway's share has increased during the same period from about 35 percent to more than 60 percent. Further, the American product has been clobbered as a raw material for the smoked salmon market. Buyers complain of erratic supply, high prices and generally poor quality.

Some promotion options:

* Price promotion is important both to counter lower prices for farmed salmon and to increase demand for affordable products in the midst of a growing recession.

* Aggressive non-price promotion is needed to reposition Alaska salmon. For example, leverage the already familiar image of Alaska as "wild and pure."

* Focus promotional efforts on the large hotel, restaurant and institutional segment, where 80 percent of all seafood is consumed.

* Assist the frozen food industry to introduce new convenience foods using Alaska salmon. Because of changing lifestyles and the increased acceptance of microwave ovens, the home consumption market segment has substantial room for growth.

Spain

In 1990 the United States had less than 1 percent of the $2.3 billion-and-growing import market. While American suppliers took a siesta, Norwegian farmed salmon producers developed the market, which is growing an average 53 percent per year on still modest volume. The good news for Alaskans is that while Norwegians maintain a commanding lead, competitors are nibbling away at the edges -- and Spaniards are not loyal to Norwegian fish.

Alaska promoters should:

* Develop materials in Spanish on Alaska salmon species and their characteristics. Distribute to wholesalers, smokers and large supermarkets. Focus on tradespeople, not consumers.

* Use success and recognition of Alaska groundfish to build awareness of Alaska salmon.

Salmon consumption is up, but in many of the countries studied, Alaska's market share is falling. In Europe, aggressive competitors are starting to integrate themselves more deeply into distribution and product development networks. The Norwegian industry, despite its recent financial problems and production cutbacks, is rapidly developing new value-added products, such as salmon chunks for stir frying.

When all the numbers are in, 1992 may go down as a decent year for the sockeye fishery and another nightmare for the Prince William Sound pink fishery. But when we do have fish to sell again next year, life should continue for those in the industry who closely study and respond to how customers do things like celebrate their dead.

Doug Barry is deputy director of the Alaska Center for International Business and the World Trade Center, both operated by the University of Alaska Anchorage.
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Title Annotation:Seize the Opportunity; Alaska's salmon industry
Author:Barry, Doug
Publication:Alaska Business Monthly
Article Type:Industry Overview
Date:Nov 1, 1992
Words:999
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