Differentiation in the Atlantic salmon industry: A synopsis

Abstract

The value chain for farmed salmon has experienced substantial changes over the past decades as a result of innovation in production technology, logistics, distribution and marketing that have helped facilitate the rapid production growth. The high level of control over the production environment in principle makes it possible for Atlantic salmon to be tailored on a number of product attributes or dimensions in response to requirements from different customer groups. However, when compared to meat production, differentiation in farmed salmon remains limited, pointing to a still immature industry. Based primarily on interviews with Norwegian producers, we offer an overview of the prominent differentiation strategies today and discuss barriers to further differentiation.

Keywords:

• Aquaculture
• differentiation
• salmon

Notes

1 For instance, salmon is the most popular fresh species in retail sales in Germany (Bronnmann & Asche, 2017), France (Landazuri-Tveteras et al., 2018), and the US (Love et al., 2020). In the US, salmon is still only the second most consumed seafood species, with shrimp more popular at restaurants (Shamshak et al., 2019).

2 In addition, attributes with respect to convenience of the product in terms of preparation may matter (Torrissen & Onozaka, 2017).

3 We refer to “farmed Atlantic salmon” as “salmon” or “Atlantic salmon” from here on, unless a clear distinction is to be made between farmed Atlantic salmon and other salmonids.

4 It is of interest to note that there are more studies focusing on economic aspects of product quality for salmon than for other fish species, as the production process for most other seafood products have even less control over the product and therefore over the opportunities for differentiation. However, specific attributes have been known for a long time to have value (Carroll et al., 2001).

5 EPA and DHA are omega-3 polyunsaturated fatty acids that are naturally abundant in fish, shellfish, and some algae. Some plants, such as Camelina Sativa, have been genetically engineered to also produce these omega-3’s.

6 Astaxanthin is the pigment naturally occurring in salmon and trout, as well as in other sea creatures, and is what gives these fish their pinkish-orange flesh color.

7 This level is still much higher than in most other regions. In Canada, for instance, it is down at below 10% marine feed content. For organic salmon, marine content is higher, at around 75% in Norway, and around 30% in Canada.

8 Similarly, there is the Best Aquaculture Practices (BAP) certification.

9 Ireland is the largest producer of organic salmon, Norway second and Scotland accounts for the remaining production. In 2017, the organic salmon production for each country was about 19,300, 17,000, and 3,000 tons, respectively.

10 Weihe et al. (2019) discuss feed performance with different levels of marine ingredients.

11 Some adjustments to the questions were made based on the company interviewed and their practices.

12 Some producers said they prefer to deal directly with the providers of alternative ingredients, to not to fall prey to the bargaining power of feed companies (which is now admittedly weak but has at times been very strong).

13 G.A.P. stands for Good Agricultural Practices. GLOBALG.A.P. is a non-governmental organization of supermarket chains and their suppliers in Europe. They consider food safety, workplace safety, animal welfare, and environmental regulation in setting independent standards for production practices and accompanying labels.

14 It has been reported that at the top of the pyramid are the well-off consumers who buy organic because they are following a trend. Next come the so-called “true organics” who tend to mostly purchase organic because they believe it is healthier and comes with a lesser environmental footprint. Then comes the “organic-by-chance” or “opportunistic organic” consumers segment, who purchase organic only as substitutes. Finally, the majority of organic consumers are families with children.

15 Each producer in the fish-processing industry is given a unique producer number, consisting of the first letter of the county and a three-digit number. For salmon, therefore, it is does not refer to one producer, but rather to the slaughterhouse (which might also slaughter for more producers and do some processing).

16 Since November 2015, GM salmon has been approved for consumption in the US, with the advantage that this fish is more predictable, can grow larger, and at a faster rate than salmon raised through traditional farming practices. However, consumer acceptance, market impact, performance, and effects on conventional producers remain to be evaluated (Smith et al., 2010).