Canned Fish for Human Consumption Study of the UK Industry

Transcription

1 MAFF Commission Technical Report No. 293 Author(s): D A Edwards M A Myers Date: December 1986 Retyped September 2006 Canned Fish for Human Consumption Study of the UK Industry Summary: This report provides an overview of the UK canning industry from supply of raw material, to retail sales as a basis of information upon which the Sea Fish Industry Authority may develop policy with regard to support of UK production in either a technical or marketing sense. The work is sponsored by MAFF under Commission QAA 16. It reviews published information, such that exists, on market volumes and values, products, market trends, imports and UK production, provides details of raw material availability and cost, and gives short profiles of the major canners and discusses the prospects for increased UK production. Demand in general is strong with growth reported by the major brokers in almost all canned fish products. The market is worth 217 million (retail 1984) of which the UK producers share is approximately 4%. Unfortunately over 75% of the UK market is in Pacific salmon. and tuna steak in which UK canners have little prospect of any volume sales. There is however opportunity for export, or import substitution of pelagic fillets, shellfish and molluscs. Further opportunities exist in seafood recipe dishes, in supply to catering services and by use of microwaveable plastic 2-piece ring pull flat cans. Prospects for individual companies are seen to depend on convenient access to raw materials and the company's ability to handle a range of can types. In these respects the short term prospects for the canning industry in the NE of Scotland look good but the canning industry in the South West remains vulnerable until the supply position can be improved.

2 Table of Contents: Summary 1. Introduction Purpose and Scope The UK Market for Canned Fish Retail Sales by Species UK Producer Share of Market Imports to the U.K Imports by country of origin (1984) Imports- of Canned Mackerel, Pilchard, Herring and Sprat (1984) Mackerel, Pilchard, Herring & Sprat Products Dominant in the UK Market Trends in Mackerel, Pilchard, Sprat & Herring UK Production & Values (1985) U K Export Levels & Values Raw Material Supply Sources and Prices Freezing & Cold Storage Mackerel Herring Pilchard Trout Soft herring roe Sprats Seasonal variation of supply Mackerel Sprat Pilchard Herring... 13

3 7. UK Producers British Fish Canners (BFC) Fraserburgh Summary of Annual Production (1985) Summary of products (1985) International Fish Canners, (IFC) Fraserburgh Summary of annual production (1985) Summary of products C. Shippams Ltd., Newlyn Summary of annual production (1985) Summary of products Shetland Norse Fish Preserving Co. Ltd J. Van Smirren Ltd Hot Dish Ltd Distribution Prospects for UK Producers General Prospects British Fish Canners International Fish Canners Shippams Prospects for Products Salmon and Tuna Mackerel Herring Pilchard Sprats Roe Shellfish and Molluscs Seafood recipe dishes Catering and secondary processing Microwave 'cans' Acknowledgements... 29

4 1. Introduction The value of the UK retail market (1984) of canned fish was 217 million (compared, for example, to retail sales of fresh shellfish and fish, including cured, eaten in the home in Great Britain of million for the same year). The market is dominated by imports, with UK producers sharing an estimated 4% by volume of the domestic market. The market is reported to be growing and is a sector in which the pelagic species available to the UK fleet might have some prospects. The UK canning industry consists of three major companies: International Fish Canners Ltd. (IFC), British Fish Canners Ltd. (BFC) and C. Shippams Ltd. They concentrate on the pelagic species of mackerel, sprat and pilchard. Two smaller canners J. Van Smirren and Shetland Norse Preserving Co. can crab meat. IFC and BFC are based at Fraserburgh, Shippams at Newlyn, Van Smirren at Boston and Shetland Norse on Yell in the Shetlands. U.K. canned fish production was in decline from 1979 to 1983 but new ownership, re-investment and a more vigorous management approach at BFC has recently seen an upturn in the fortune of that company. Shippams competitiveness has been seriously affected by closure of the SW mackerel box and development plans for expansion in the SW have been shelved. 2. Purpose and Scope The purpose of this study was to provide an overview of the UK canning industry, from supplies to retail, as a basis of information upon which the Sea Fish Industry Authority may develop policy with regard to support of UK production in either a technical or marketing sense. The report details the market, UK production and discusses the prospects for UK producers, with particular reference to their ability to compete on price in the market. It concerns only fish intended for human consumption and not pet-food manufacture and concentrates on pelagic species that are currently underutilised. A short statement on the current pet food market is provided in Appendix 1. 1

5 3. The UK Market for Canned Fish 3.1. Retail Sales by Species 1984 TABLE 1 Value (rsp) % based on value Red Salmon million 33.8 Pink Salmon million 13.3 Medium Red Salmon million 5.0 Tuna million 24.6 Pilchards million 7.3 Sardines million 6.6 Mackeral 7.04 million 3.2 Prawns/Shrimps 5.05 million 2.5 Crab 3.96 million 1.8 Skippers/Sils 2.86 million 1.3 Kippers/Herring 1.32 million million Source - rsp - DLA Management, Market Assessment Report/The Grocer Retail selling price 3.2. UK Producer Share of Market UK production of canned fish in 1984 was 6,910 tonnes (Business Monitor PQ4150) valued at 8.0 million at manufacturers selling price. The figures however include some bottled shellfish, spreads, pastes and pates. UK producers estimate that 40% of UK production is exported.based on a UK Market figure of 93,000 tonnes for 1984 (Market Assessment Report) the UK producer share of the domestic market is in the order of 4%, by volume Imports to the U.K. Total imports of canned fish for 1984 were worth 239 million, including some product later re-exported (HM Customs). 2

6 Imports by country of origin (1984) TABLE 2 Canned Fish Canned Crustacea % of value % of volume % of value % of volume USA Norway Denmark Denmark Japan Thailand Canada 13 7 Iceland 8 8 Ivory Coast 4 4 Canada 7 4 Fiji 4 4 Others Philippines Portugal 3 7 USSR 3 2 Holland 3 3 Peru 2 6 Others Imports- of Canned Mackerel, Pilchard, Herring and Sprat (1984) Source - Seafish (FERU) figures based on statitistcs supplied by H.M. Customs and Excise. Note that the values are those declared by the importing agent and are not rsp figures. Herring Imports (1984) TABLE 3 % by value Value Tonnes Denmark , Irish Republic , Netherlands , Fed. Rep. Germany 9 161, Canada 6 102, Iceland 2 32, others 4 76, ,736,

7 Mackeral Imports (1984) TABLE 4 % by value Value Tonnes Denmark 86 2,190,282 1,600.0 Irish Republic , Fed. Rep. Germany 1 23, ,533,217 1,916.0 Pilchard Imports (1984) TABLE 5 % by value Value Tonnes Japan ,681, Peru ,614, Chile ,506, Morocco , Others , ,397,150 12,681.7 Brisling ( Sprat) Imports (1984) TABLE 6 % by value Value Tonnes Norway , Denmark , Other 0.3 1, ,

8 3.4. Mackerel, Pilchard, Herring & Sprat Products Dominant in the UK Market Mackerel Skinless boneless fillet in oil, brine or tomato sauce 120 or 125gm ¼ club flat can, ring pull or can opener type. Packed in cardboard carton. The majority are imported from Denmark. Skin-on, bone in, steak in brine or tomato sauce 425gm and 198gm, 3 piece round cans. The majority produced in the UK. Pilchard Headed and gutted whole fish in tomato sauce or brine. A variety of can sizes from 155gm to 425gm round cans. The bulk is imported from Peru, Chile and Japan. A very small quantity of 190gm flat ring pull cans of pilchard fillet in tomato sauce are imported from West Germany. Herring Skin-on, fillets in 190gm or 200gm flat cans in various sauces form the bulk of the UK market. Denmark, Ireland, Netherlands and West Germany dominate supplies to this small market. A very small quantity of herring in round cans is sold in Scotland, local to the cannery producing it in Fraserburgh, and to various institutions. Sprat Sild and smoked brisling in oil and tomato sauce in 106gm and 110gm key opened flat cans are the only sprat products on the market. International Fish Canners in Fraserburgh supply virtually all the sild and brisling consumed in the UK. Sild products are wrapped in cellophane and smoked brisling (skippers) in an outer carton. British Fish Canners new sprat canning line produces almost exclusively for the export market Trends in Mackerel, Pilchard, Sprat & Herring Products in the UK Market Overall the UK canned fish market is growing at an appreciable rate but it is the salmon and tuna imports that make up the bulk of the growth. UK sales of canned mackerel, sprat, pilchard and herring have been fairly static although some growth is reported by the major agents/brokers over the last year. 5

9 It would appear that UK producers have been looking at export markets and have been successful to an extent in expanding their export sales Trends In Market For All Canned Fish Figure 1 The UK Market for Canned Fish 5 Year Forecast (from 1984) Source: Business Monitor, HM Customs & Excise, Market Assessment Figure 1 shows how the market for canned fish is expanding rapidly. The dotted line is based on the growth of the canned fish market between 1980 and It shows what growth would be expected if expansion of the market continued at a rate similar to that up to The continuous line shows what rate of growth is expected by the major brokers/buyers after It should be noted that as UK production is small compared to the overall British market for canned fish any reduction or increase in UK production would have very little effect on the slope of the graph. 6

10 Figure 2 Canned Fish and all Food 5 Year Forecast (From 1984) (Price Index 1979 = 100) Source: Business Forecast, Business Monitor, HM Customs & Excise, Market Assessment Figure 2 shows that after 1979 when the index for canned fish and all foods has been taken as 100, the value of the canned fish market rose steadily, whilst the growth in all foods remained relatively stable. Both Figure 1 and Figure 2 show that the growth in the canned fish market has not yet reached a plateau and that if British canners can successfully achieve import substitution, potential is great. Mackerel The trend in canned mackerel is away from round cans containing steaks, skinon and bone-in, towards ¼ club flat ring pull cans containing skinless mackerel fillets. The ¼ club can is the most commonly used flat can, containing grammes of product. 7

11 The split is now 70/30 in favour of ¼ club cans and their popularity with the British public is gaining all the time (Princes Foods Ltd). Club is a loosely used term for flat shallow cans with rounded corners. As healthy eating becomes more of an issue with the British public there is a trend towards canning mackerel in its natural juices or in brine. All major canned fish brand names are now following this trend. Sprat The market for sild and brisling in the UK is not growing at any appreciable rate with the high prices of these products versus that of sardines being the greatest stumbling block eg Armour sardines in tomato sauce 120gms-21p, John West Smoked Brisling in tomato sauce 106gms-49p, Keynote Sild in tomato sauce 106gms-32p. Pilchard The market for pilchard is falling with imports dropping 20% from 1984 to There is a close correlation between pet food prices and pilchard sales so it is possible that lower prices of cat food in particular has driven down demand (K. Wilson, John West Ltd). Cornish and Scottish canned pilchards are usually more expensive than their South American and Japanese rivals and so canning them in the UK is increasingly becoming a low return practice. Herring Due to the recent increased fishing activity and advertising campaigns for herring, canners are becoming more interested in this species. At the moment very little canning of herring is done in the UK and the market is very small. 8

12 4. UK Production & Values (1985) TABLE 7 Gross Weight (tonnes) Estimated (rsp) Mackerel Round Cans Shippams ,000 BFC ,150, ,995,000 Mackerel Fillet IFC ,000 ¼ Club BFC , ,445,000 Smoked Mackerel Fillet IFC ,000 Pilchards Shippams ,000 BFC , ,100 Herring Round Cans BFC ,000 Pink Trout BFC ,000 Soft Herring Roes BFC ,000 Sprats IFC ,000 Crab Shetland Norse Van Smirren ,000 Total Production 5, , Source: Gross tonnages obtained from canners and values estimated from tonnage. 9

13 Notes: Production figures for canned fish products quoted by Mintel/DLA Management and Business Monitor would appear to be inflated by the inclusion of bottled mussels, cockles and fish pastes and pates which may explain why the estimate of UK production for 1985 by the producers is apparently less than that quoted for the proceeding year by Business Monitor, when this is not believed to be the case. 1,000 tonnes would be a conservative estimate of the production of bottled cockles and mussels by Parsons, Van Smirren, Severnside and Sefton Meadow. Production of paste and pates is unknown. A further complication of production figures is the use of both net and gross weights by producers. Not withstanding the above, some confidence can be placed in a UK production figure of 5,000 tonnes for canned mackerel, herring, sprat and pilchard for A cautionary note is that for any species the production and import figures do not balance the export and domestic sales figures. Rounding errors, variations between gross and net weight and wastage all contribute to these differences. 10

14 5. U K Export Levels & Values (based on HM Customs and Excise figures) Canned Herring Exports 1984 TABLE 8 % by value Value Tonnes Netherlands , New Zealand , France , Eire , Australia , Other , , Canned Mackerel Exports 1984 TABLE 9 % by value Value Tonnes Benelux , Greece , Fed. Rep. Germany , Netherlands , Other , ,468,033 1,147.0 Canned Pilchard Exports 1984 TABLE 10 % by value Value Tonnes Eire , Netherlands , Other , ,

15 Canned Brisling, sild, sprat, sardine exports 1984 The sprat is canned under the above four names. In Customs and Excise documents, exports of sprat would be included in both sardine and brisling figures. As the re-export of sardines is common-place, it is difficult to extract a true figure for canned sprat exports. An estimation arrived at through discussions with British canners would be around 635 tonnes per year with a value of approximately 2.0 million at rrp (recommended retail price). It should be noted that both import and export data relates to 'prepared or preserved fish', of which canned fish is a large proportion. 6. Raw Material Supply 6.1. Sources and Prices Freezing & Cold Storage After delivery to cold stores in which the fish is to be held, there are further freezing and storage costs. Approximate Costs Freezing 45 per tonne Storage 1.50 per tonne per week Mackerel Since the closure of the south west mackerel box, nearly all mackerel supplied to the UK canners originates from the north west of Scotland fishery, landed mostly to Ullapool. It may be processed fresh or bulk frozen and held in cold storage at various locations for processing through the year. Quayside prices of mackerel suitable for canning (4-7 per kilo), over the period October to December 1985 were between per tonne. Delivery costs from Ullapool to Penzance are in the order of 70/tonne and from Ullapool to Fraserburgh 22/tonne. Line caught fish in the south west is too expensive at 235/tonne for canning Herring Supplies of herring are obtained from west coast ports and from Fraserburgh for which the quayside price for the 1985/86 season was between 155 and 165 per tonne. Transport costs from Ullapool to an Inverness cold store are of the order of 30 per tonne and 8 per tonne from cold store to Fraserburgh Pilchard Supplies of pilchards for canning (7-9 per kilo) are mostly from Devon and Cornwall. Cost of fresh fish delivered to Shippams from Newlyn, or nearby ports, is in the order of 135 per tonne. Cost of the fish delivered to Fraserburgh is in the order of 190/tonne. 12

16 Trout BFC obtain pink trout locally from fish farms at a cost delivered to the factory of 0.70 per lb ( 1,543/tonne for whole fish or 0.90 per lb ( 1,984/tonne) for gutted fish. Trout are not normally frozen as they are usually available yearround Soft herring roe Blocks of frozen roe are imported from Canada, Ireland and Norway at a cost of 35p per lb 772/tonne). BFC store roe on the factory premises Sprats IFC obtain sprats from various sources. Various quantities are obtained from the Clyde fishery, Southern Ireland and Plymouth. Over a year the average cost per tonne of sprats (inclusive of handling, ice, freezing etc) will be around 225 delivered to Fraserburgh, although the quayside price may only be around 110/tonne Seasonal variation of supply Mackerel Mackerel suitable for canning are landed in the north west in greatest quantities between the months of September and February though the start and length of the season changes from year to year. Due to the closure of the south west mackerel box only a very small quantity of mackerel for canning is available from ports in Devon and Cornwall Sprat Quality is very important as oil content must be fairly high and guts virtually empty. They are generally in best condition for canning during the period October to January Pilchard The only supplies of pilchard used for canning are from the south west with catches landed at Looe, Newlyn, Plymouth and Brixham mostly between December and February Herring The small quantities of herring used by canners in the UK are obtained from the North Sea, central North Sea, south North Sea, Celtic Sea, North Irish Sea and Minches at various times of year. 13

17 7. UK Producers 7.1. British Fish Canners (BFC) Fraserburgh In 1981, after thirteen years of ownership by the Salvesen Group the interests of the group were bought out by a management consortium. It is now the only British owned fish canning company in the U.K. Since the takeover, investment in new plant and a more vigorous management approach has recently seen an upturn in the fortunes of the company. BFC pack mackerel, herring, pilchard, sprat, herring roe and trout in four sizes of can. They can handle both round and flat cans. Due to the short fishing seasons and irregularity of supplies, raw materials are frozen and held in various cold stores around Scotland. The company has very limited cold storage facility of its own. The quantities of species and the products produced from them are market led, and can vary greatly each year, but during 1985 about 2,000 tonnes of mackerel (quayside weight), 200 tonnes herring, 180 tonnes of pilchard, 200 tonnes of whole trout and 100 tonnes of soft herring roe was processed. 80% of the mackerel is used for steaks in round cans, with the remainder used in the production of fillets in tomato sauce or vegetable oil that are packed in the 125gm flat ¼ club. The production of 15oz steak in round cans is worth approximately 1.15M at rrp. The production of fillets in flat cans is worth approximately 0.57M at rrp. Herring is mostly canned in round cans, almost exclusively for export and is worth approximately 0.19M at rrp. Pilchard is canned in the 200gm and 425gm round cans and is worth around 40,000 and 70,000 respectively at rrp though these values vary depending on demand for the two products which is erratic. Production of pink trout in the 200gm round cans to the level of 200 tonnes of whole trout was undertaken in 1985 but sales were not maintained after marketing support was withdrawn by Berrisfords and BFC are not currently packing trout. Imported soft herring roe is canned in 125gm flat ring-pull cans and worth about 0.53M at rrp. With limited Seafish support the company has been active in the development of new products for both the home and export markets with some success and would like to do more when circumstances allow. In 1986 they launched a new kipper product and secured export orders for it. 14

18 Summary of Annual Production (1985) TABLE 11 Number of cans Gross tonage (rrp) Mackerel steak 2,400,000 1,123 1,150,000 Mackerel fillet 2,200, ,000 Herring 312, ,000 Pilchard 283, ,000 Trout 700, ,000 Herring roe 900, , Summary of products (1985) Mackerel steak in brine and tomato sauce, 200gm and 425gm round cans. Mackerel fillet in oil, tomato sauce, and brine, 125gm ring pull flat can. Herring in brine and tomato sauce, 200gm and 425gm round can. Pilchard in tomato sauce, 200gm and 425gm round can. Pink trout in 200gm round cans. Soft herring roe in brine, in 125gm ring pull flat cans. Note: BFC now also can sprat and kipper products International Fish Canners, (IFC) Fraserburgh IFC is a Norwegian owned company whose parent company is Norway Foods of Stavanger. Its production facility is located at Fraserburgh, and head office at Aberdeen. Norway Foods previously set up a cannery in Denmark but labour and supply costs were found to be too expensive and relocated to Fraserburgh in 1979 under a joint venture with Macraes. In April 1983 the joint venture was dissolved and IFC established under its own name. IFC now rents part of the Macrae factory and operates independently although Macraes still undertake smoking of sprat and mackerel for IFC. Mackerel and sprat are purchased during their respective seasons, frozen and held in store for processing during the year. The factory has no freezing or cold storage facilities. IFC's main interests are in the canning of sprats for both the domestic market and for export. Approximately 55% of sprat production (57% sild and 43% brisling) is destined for the home market and 45% for export. U.K. sales are valued at about 2.75M (at rrp) and exports at 2.25M (at rrp). 15

19 Mackerel is canned in fillet form in 120gm flat cans in various sauces for export to Belgium and Luxemburg under the Feuille D'or label and is valued at around 875,000. The exported products are of excellent quality and are supported by extensive advertising. The products command a premium and are market leaders. A small amount of canned smoked mackerel fillet is produced in 110gm key opened flat cans. Approximately 50 tonnes per year are produced at a rrp of 125,000. IFC also has a roe canning line and would produce canned cod roe but cannot obtain supplies at a price that would make it viable. IFC are reviewing the potential for new products but declined to discuss their plans in this area Summary of annual production (1985) TABLE 12 Gross tonnage (rrp) Mackerel fillet in ¼ club ,000 Smoked mackerel in 110gm flat ,000 Sprats in gm flat can 1,588 5,000,000 2,208 6,000, Summary of products Sild in oil and tomato sauce in 106 and 110gm key opened flat cans. Smoked brisling in oil and tomato sauce, 106gm key opened flat can. Scottish sardine (sild in UK) in oil and various sauces in 106 and 110gm key opened and ring-pull flat cans. Kiln smoked sprats in oil in 106gm key opened flat cans. Mackerel fillet, skinless and boneless in chilli, tomato, tarragon, curry, Worcester, mustard, tomato and onion sauces, and oil C. Shippams Ltd., Newlyn C. Shippam Limited is owned by Pet Incorporated, a subsidiary of IC Industries of the USA, and produces mackerel and pilchard products for the UK market. The amount of product exported is negligible. 16

20 It produces mackerel steaks in 425gm and 198gm round cans in both tomato and brine, and pilchards in 425gm round only in both tomato and brine. The factory is not equiped to handle flat cans. It also processes and stores raw material for further processing at Shippams, Chichester plant for conversion into fish paste. Shippams processes approximately 2,000 tonnes (quayside weight) of mackerel and approximately 800 tonnes of pilchard each year. Two-thirds of the mackerel and one half of the pilchard goes for canning, with the remainder going to paste manufacture. Shippams have their own local cold store capable of holding 2,000 tonnes of frozen fish. The cost of freezing and cold storage for the 1985/86 season taken over a 52 week period is equivalent to 2.54 per tonne per week. Shippams have shelved plans for a 0.5M development of a new mackerel fillet line at Longrock next to the cold store, following the closure of the South West mackerel box production was maintained in the 1985/6 season by transporting mackerel by road from Ullapool adding considerably to the cost. Although since then satisfactory supplies of mackerel have been obtained from catches made outside the box, the company is understandably critical of the management of the local fishing resource. No investment is likely in new lines until the supply situation stabilises Summary of annual production (1985) TABLE 13 No. of cans Gross tonnage (r.r.p.) Mackerel steak 425gm, round 615, ,800 Mackerel steak 198gm, round 1,834, ,200 Pilchard 425gm, round 629, ,000 3,078,000 1,071 1,140,000 17

21 Summary of products Mackerel steak in brine and tomato sauce, 198 and 425gm round cans. Pilchards in brine and tomato sauce, 425gm round can Shetland Norse Fish Preserving Co. Ltd. The company's only canned product is dressed crab. There are no plans to develop further products. Shetland Norse supply 66% of John West's canned dressed crab (Norway supply the remaining 34%) and sales are described as steady with perhaps a slight increase in the last quarter of J. Van Smirren Ltd. The company's bottled dressed crab and canned 50/50 crab are experiencing steady demand with an annual 40 tonne output. There are no plans to develop new canned products using British fish products. Falkland Island red crab is being imported in frozen form for product development, including canning Hot Dish Ltd. An associate company of Parkin International of South Kirkby, West Yorkshire. The company produces a range of heat processed ready meals which features a mackerel fillet in spicy sauce. Production of the mackerel product is approximately fifty tonnes per annum. The company uses flat aluminium two-piece containers the lids of which are heat sealed to the bases. Nearly all product is exported. The company will shortly have the capability to pack in two-piece plastic ring-pull containers that will be micro-waveable. 18

22 8. Distribution Most of the canned fish sold in the UK is handled by importers and distributor/brokers for sale to the consumer via multiple grocers. John West Foods Ltd., of Liverpool, a subsidiary of Unilever PLC, are acknowledged leaders in the canned fish market with some 70% of their business derived from it. They are strongest in the salmon market. The company had sales of 102M in Princes-Buitoni Ltd., of Huyton, Liverpool, a subsidiary of Industrie Buitoni Perugina Spa of Perugia, Italy is the next largest distributor with total sales of 107M in The third largest distributor is S & W Berisford Ltd., of Middlewich:- part of the Berrisford Group of companies. In 1984 their sales of canned fish was 40M. Their market share of fish products is increasing under a variety of brand names including Osprey and Cucumber. Other companies active in the canned fish market are: Iceland Waters Seafoods, Deep Blue Canned Fish, Glyngore, Glenryck. Shippams, Armour, A summary of brand shares for canned fish products for 1984 is given in table 14. The use of own labels is growing in importance with Sainsburys and Marks & Spencer taking particular interest and buying from various canners. 19

23 TABLE 14 Brand Shares in Canned Fish 1984 % based on value John West 32 Princes Buitoni 25 Beresfords 15 Other brands 6 Own label Source:- Trade Estimates Brand shares of specific fish products are given in tables 15 to 19. TABLE 15 Brand Shares in Mackerel Steak, 1984/5 % based on tonnage John West Princes Shippams Other TABLE 16 Brand Shares in Mackerel Fillet, 1984/5 % based on tonnage John West Princes Other

24 TABLE 17 Brand Shares of Pilchard 1984/85 % based on tonnage John West Princes Glenryk Other TABLE 18 Brand Shares of Kippers/Herring 1984/5 % based on tonnage John West Princes Other TABLE 19 Brand Shares of Brisling, 1985 % based on tonnage % based on value John West The outlet share of the canned fish market is given in table 20. The major supermarkets have almost 60% of the market and are growing in importance with an increasing involvement in own label. 21

25 TABLE 20 Outlet Shares in Canned Fish, 1984 % based on value Major Multiple Grocers 57.9 Minor Multiple Grocers 13.4 Co-op 10.9 Symbol Groups 6.7 Independent Grocers 7.0 Other Outlets 4.1 Source:- The Grocer, Trade Estimates, Market Assessment 9. Prospects for UK Producers 9.1. General Prospects Demand for fish products in general over the past twelve months has been strong; encouraged by heightened public concern regarding healthy eating and increased marketing support. Canned fish products have shared in this upturn with growth reported by the major brokers in almost all canned fish products. Even mackerel steak in round cans which had been constantly loosing ground in recent years has experienced an upward trend. (J. West/Prince). More so than for wet fish sales, canned products are well suited to multiple retail operations and the one-stop customer shopping patterns of the modern housewife. Unlike frozen products they store and keep well without refrigeration. Unfortunately over 75% of the UK canned fish market is in salmon and tuna, species that present supply problems to UK producers. Atlantic salmon, even farmed, is too expensive compared to Pacific species, and has little prospect of any sale in volume. It might have limited sales if it were promoted strongly as a "Scottish" product of high quality. BFC in the past has attempted to import frozen tuna sides for processing but experienced problems with the attitude of UK Customs and Excise officials regarding the classification of the raw material. There is no duty on imported whole frozen tuna, but cooked, skinned fillets were levied with a duty that made the products uncompetitive. Pre-skinning is essential as the machinery needed to skin fish at the factory is very expensive and investment is not likely for the processing of an imported raw material at this time. 22

26 French and Danish canneries import tuna for processing for their domestic market and for export (including to the UK) particularly tuna seafood and tuna mayonnaise added value products incorporating vegetables and sauces (in flat 2 piece ring pull cans) that do not compete directly with tuna steak. BFC has also canned farmed rainbow trout in the 200gm round can for Berrisfords and initially met with some success but when marketing support was withdrawn, sales were not maintained probably due to competition from pink salmon which is cheaper. Apart from a share in the general upturn of sales in canned fish over the last twelve months the sales of round cans (excluding salmon and tuna) have in recent years been losing ground to flat cans, particularly for mackerel and herring. This trend looks likely to continue with obvious implication to companies that are not equiped to handle flat cans. The introduction of canned recipe dishes also looks likely to continue to grow. Princes recently launched a line of four seafood dishes; plaice with mushrooms in wine sauce, paella with cod, mussels and prawns, cod with prawns in cream sauce, and tuna a la king. The dishes, canned in 320gm flat, ring pull cans are imported from Denmark and have proved popular with initial sales of over twenty times the target figure UK canners however are not equiped to handle this size of flat can. The attitude of the brokers/agents toward UK producers is generally favourable with all the major brokers/agents handling at least some UK product. Brokers/agents find UK Producers convenient to deal with and are not troubled by fluctuations in the pound ( ) against foreign currencies. They also find that UK products compare favourably with imports on quality. With respect to price UK producers face strong competition from imports from various sources with Denmark and Ireland strong in the sales of herring and mackerel, and Japan and South America strong in sales of pilchard. Some countries benefit from heavy subsidies, with Peruvian canners for example receiving subisides in a range 27 to 35% on pilchard. See appendix 3, a copy of correspondence between C. Shippam Ltd. and the DTI. UK producers are more competitive in mackerel steak in round cans than they are in fillet in flat but the price differential for fillet in the flat cans between British and Danish products in the UK is now very close (Princes). With Princes importing 40,000 cases per month of fillet (compared to 3,000 cases per month of steak supplied by BFC) the prospect of import substitution is attractive in a market that is large and growing. Danish canners are reported to be competitive due to large-scale production on highly automated plant, and lower raw material costs. (They are also more inovative in terms of product and packaging development). Set against the economies of.scale and lower raw material costs however are significantly higher costs of labour and services, which is the reason for IFC moving its 23

27 production from Denmark to Britain. It is probable that the margins for Danish products in Britain are low with the high profits being earned in Germany. If this is the case then it might make good sense for UK Producers to compete more in the European markets where margins are better. In order to set up a canning plant or even a new canning line, much capital is needed as processing and packing equipment for canning is very expensive. To justify investment a stable supply of raw material, ie pelagic species is essential. The variability of supply of pelagics is discussed in Seafish Technical Report No The natural variability in supply of pelagics is compounded by quota systems which do not account for the needs of processors, with the systems resulting in massive fishing effort over a comparatively short period.these short fishing seasons cause gluts and fish must be frozen and kept in cold storage so canning can continue during the rest of the year. The freezing and storage of fish is a major cost to canners, which changes in stock control measures could reduce. Total closure of areas to pelagic fishing vessels (eg South West Box) takes no account of processors needs, while a limited fishery continuing in that area would sustain the processor until the fishery was fully opened again. Processors are reluctant to invest in canning whilst no consideration appears to be given to their needs during the construction of fishery management regimes British Fish Canners Prospects for BFC would appear to be reasonably good. They are able to handle both flat and round cans, they offer a fair range of products at competitive prices, and are located conveniently with respect to raw material supplies. Recent capital investment in new lines and a vigorous management approach auger well for the company's future. The company is interested and active in pursuing new product development but has limited capacity at present to finance such on any scale. They would benefit from having their own freezing and cold storage facilities. BFC would appear to be close on price to substituting for Danish flat can imports and have prospects in export markets supplied by the Danes International Fish Canners IFC have good established European markets for products backed by high marketing support. They are known to be active in product development but would not disclose details. IFC are also located at Fraserburgh convenient to raw material supplies but like BFC they have no freezing or cold storage capacity of their own. 24

28 Prospects for IFC are largely unknown but product range, pricing and the marketing support they are given would lead us to be optimistic for the future of IFC Shippams Shippams face strong price competition for pilchards from South America and have had supply/cost problems with mackerel which had to be purchased from Ullapool in 1985/86 adding in excess of 50% to the raw material price. The lack of a line to handle flat cans does not allow the company to escape the direct competition with South American imports of pilchards in round cans and limits the company's ability to diversify in added-value flat can products. Prospects for the company are linked with access to mackerel stocks in the south west box Prospects for Products Salmon and Tuna Although the UK canned fish market is huge and growing it is dominated by sales of Pacific Salmon and Tuna, neither of which are landed in the UK. Import of the raw material for UK production is considered unlikely to be economically feasible for steak products where there are established prices and direct competition from imports. Use of imported raw material for value-added products incorporating vegetables etc., that do not compete with existing Salmon and Tuna products might have some potential. Atlantic Salmon and farmed trout are currently too expensive to hope for any volume sales. Torry Research Station, Aberdeen has been working on Salmon and Tuna analogues manufactured from white fish and mackerel and while appearance of the analogue is good problems of texture remain to be solved. Chances of solving the technical problems involved are not known but success would have immense implication, not just to UK canning and catching operations, but to operations worldwide Mackerel Significant expansion of UK sales of skin-on bone-in mackerel steak in round cans is considered unlikely as the market trend seems to be away from round cans to the flat ¼ club. As UK producers already dominate 25

29 the home market for mackerel steaks, import substitution would not be great. Expansion of UK sales of ¼ club flat ring pull cans of skinless mackerel fillets is feasible through a share in the growth of the UK Market and by substitution of Danish product. Profit margins on mackerel fillet products in the UK however are believed to be low and UK producers could well find better margins in export sales Herring The UK market for canned herring is small and largely supplied by European imports of skin-on fillets in various sauces in 190/200gm flat cans. Substitution might be possible but current volumes are small. Sales of mackerel steaks in round cans in recent years have shown an underlying downward trend so prospects for a similar herring product would not look good. Herring fillets in various sauces have been test marketed over the years by John West Ltd., but only fillets in tomtao sauce and savoury sauce have survived at fairly low volumes. A comparatively healthy market exists in various EEC countries for 190/200gm ring pull flat can herring fillet products and in the short term it might be more realistic to try to exploit these developed markets than to try to open new ones in the U K. Australaisia also offers some potential for UK exports where BFC recently secured orders for a new kipper fillet product Pilchard Excluding salmon and tuna, the largest UK market for canned fish (1984) is pilchard although the market is contracting with demand possibly driven by lower prices of cat food. Given the price competition from imports, and from South America in particular, not only is import substitution considered unlikely but loss of market share to imports is likely to continue Sprats The UK market for sprats is relatively static and dominated by UK Producers so no signficiant import substitution is possible. In the UK sprats compete directly with sardines which are a much cheaper product. UK exports however are significant with 45% of production going to EEC countries, the U.S.A. and Australasia. During 1986 BFC commissioned a new sprat canning line and secured export orders for products. Some growth is therefore considered likely in the export market of sprats. A potential product for the UK market might be the development of a skinned, salted and spiced sprat fillet that might substitute for high-priced anchovy imports which in 1985 were worth 1.2 million. 26

30 Roe The only roe canned in the UK are soft herring roes which are imported from Canada, Ireland and Norway in frozen block form. During 1985 British roe were costing 20 pence per lb more than frozen imported roe. With an increase in the British herring catch, prices of roe could come down but most of the herring processed in the UK is by machine which tends to damage the roe making it unsuitable for canning. Canned hard cod-roe has a good market in the UK though all of it imported from Denmark. Only relatively small quantities of cod roe are landed in the UK with most of it going to small processors for smoking or to fishmongers for sale as fresh. In 1985 Marr Seafoods handled 180 tonnes of roe which had been frozen at sea by their own vessels. All of it was sold to the Greek market for a price canners could not afford. It appears that good quality roes have a lucrative market in Japan, Korea, Greece and Germany and that only low quality broken roes are cheap enough to be affordable by canners. Although IFC have a hard cod roe canning line it is not in operation due to lack of affordable raw material supplies Shellfish and Molluscs Canned shellfish production in the UK is restricted to dressed crab and at only low volume, but with larger volumes of imports of mussels, white crab meat and prawns import substitution is a possibility. John West alone currently handle in the order of 20,000 cases of 24's per year of 105gm smoked mussels in oil valued at approximately 200,000 (retail) that are imported from Korea. With Korea reported to be experiencing supply problems this year, there could be opportunities for UK producers to substitute for this product. Korea are not exempt from EEC duties and tariffs (Appendix 2). John West have been approached by a UK canner (undisclosed) and provided with samples of a similar product but taste and smoke levels need improvement. All canned white crab meat sold in the UK is imported, mostly from Thailand, but whilst prices are high ( 1.65 for 170gm retail) it is doubtful that hand picked British white crab meat could compete on price. John West has looked at machine recovered white meat but quality was not good enough. With the high cost of canned shellfish products substitution by canned surimi-based shellfish analogues would appear to be attractive but the technical feasibility (retort stability, storage etc.) of such is not known Seafood recipe dishes With strong competition in traditional canned fish products, new products that have no direct competition and having no established price, offer opportunity for better margins. 27

31 There would appear to be considerable interest from brokers in canned value-added recipe fish products and judging by the success of Princes imported range of products this development looks set for continued growth Catering and secondary processing An area considered worthy of further investigation is the development of larger sized cans or trays for use by catering services and secondary processors. Schools, Hospitals and Contract Catering Services etc., might well be interested in heat processed fish dishes that are easy to handle and store and that require a minimum of kitchen preparation. A larger can size might enable the contribution of the can cost per serving to be reduced compared to standard retail can sizes. Such a development would obviously have implications of investment cost associated with plant to handle larger cans but a 2kg aluminium tray designed for use in a retort is now available from one processor that might be suitable for trials. Another possible opportunity for a larger sized can might be in its use by secondary processors, not necessarily fish processors. There is considerable interest at present by non-fish food processors that would like to include fish in their product range, for example in pies, pasties, pizzas, savoury pancakes, prepared sandwiches, etc., but are concerned with problems of handling, smell, taint and (in the case of pelagics) with bones. The complete removal of bones from mackerel and herring is not technically feasible at present so the equivalent of the bone-free cod block made from pelagics is not possible (other than minced). The can retorting process however reduces the bones to a soft crunchy state that might be acceptable to the palate Microwave 'cans' Recent developments with plastic 2-piece ring-pull flat 'cans' that are suited for micro-wave ovens would seem well suited to added-value retail recipe dishes. The 'can' or container is not cheap compared with conventional cans but the convenience of being suitable for micro-wave ovens could be attractive to many consumers. It might also find markets in catering services where kitchen facilities were limited or in industrial catering where the scale of service required did not warrant a full kitchen service, and could even be dispensed by vending machine. 28

32 10. Acknowledgements British Fish Canners, Fraserburgh - Mr. David Mack International Fish Canners, Fraserburgh - Mr. Knud Riis C. Shippams Ltd., Newlyn - Mr. D. Cooke Shetland Norse Preserving Co. Ltd. - Mr. Alredson J. Van Smirren Ltd. - Mrs Hilary van Smirren Hot Dish Ltd. 29

33 APPENDIX 1 Canned Pet Food Market Canned pet food manufacturers are largely separate from the human consumption market. However approximate estimates from the trade give the UK retail market value in 1986 for all canned pet foods as 840 million (894,000 tonnes) and that of fish based canned pet foods as 35 million (45,000 tonnes). Both oily fish and white fish are used in canned pet foods, with the heads and frames of white fish obtained from processors making up 80% of raw material and whole oily fish 20%. A small amount of tuna is imported for speciality pet foods. All fish except tuna is obtained from British sources. Approximate cost to canners of raw materials are, white fish offal 60 per tonne, oily fish (mainly mackerel) 110 per tonne (frozen, ex. store). Brand Shares of Canned Pet Foods % based on tonnage Pedigree Pet Foods 60 Spillers 20 Quaker 5 Carnation 1 Other 14 I

34 APPENDIX 2 Duty & Tariffs for Imports of Prepared or Preserved Fish (EEC Countries pay no duty within the Community) Source: HM Customs A. Caviar and Caviar Subsititutes: I. Caviar (Sturgeon Roe) Iceland = Free with EURI Morocco & Thailand = 12% with GSP Morocco = Free with EURI The rest = 30% II. Other B. Salmonids: Iceland = Free with EURI Morocco & Thailand = 14% with GSP Morocco = Free with EURI The rest = 30% I. Salmon Morocco & Thailand = 4% with GSP Morocco = Free with EURI The rest = 5.5% II. Other C. Herring Morocco & Thailand = 4% with GSP Morocco = Free with EURI The rest = 7½ I. Fillets, raw, coated with batter or breadcrumbs, deep frozen Iceland = Free with EURI Norway = 3% with EURI The rest = 15% II

35 II. Other Iceland = 10% with EURI The rest = 20% D. Sardines = 25% E. Tunny = 24% F. Bonito, mackerel and anchovies: G. Other: Bonito - Morocco & Thailand = 18% with GSP Mackerel - Morocco & Thailand = 19% with GSP All items from Morocco = Free with EURI The rest = 25% I. Fillets, raw, coated with batter or Breadcrumbs, deep frozen Iceland = Free with EURI Norway = 3% with EURI Morocco & Thailand = 10% with GSP The rest = 15% II. Other a) Saithe (Pollachius Virens) b) Other: Pilchards Brisling Roes Iceland = 10% with EURI Norway = 12% with EURI Morocco & Thailand = 9% with GSP Morocco = Free with EURI The rest = 20% III

36 Crustaceans & Molluscs A. Crabs: B. Other: Morocco = Free with EURI Iceland = Free with EURI In airtight can from Norway = 7.5% with EURI The rest = 16% Other crustaceans:- Shrimp and Prawns, canned Other Molluscs Iceland = Free with EURI Shrimp & Prawns (shelled and frozen) from Norway = 7.5% with EURI Morocco & Thailand (except shrimps & snails) = 6% with GSP Morocco = Free with EURI The rest = 20% Members of the European Free Trade Association after filling in a form termed EURI before exporting, receive a reduced rate of duty. General System of Preference (GSP) applies to a group of countries seen as needing help in developing. IV