Adding value to pangasius

The rapid depreciation of the euro is eating away at the profit margins of European importers of pangasius fillets from Vietnam — so much so that they’re increasingly looking to bring in value-added pangasius products to sell at higher prices.

In just six months, the value of the euro has declined from VND 28,000 (USD 1.48, EUR 1.23) to just VND 21,000 (USD 1.11, EUR 0.92) today. It might not seem like much, but when margins are already extremely tight it could make all the difference between earning a profit to making a loss.

In addition, availability of fish in Vietnam isn’t so high anymore. Many farmers have stopped production because fish feed costs are 20 percent higher this year, and freight costs are up 20 to 30 percent.

Costa and HMF, which supplies Aldi in Germany, Marine Harvest and others, are among the companies looking at adding value to get a higher price for their fish. Danish seafood company Rahbek has cut two 150-gram loins out of the fillet and wrapped them on a tray. Pangasius fillets are being shaped by folding the tail under the rest of the fillet for it to be used in ready meals with the addition of sauces and vegetables.

What’s more, fish fingers and nuggets are being breaded, chunks are being skewered in combination with shrimp and vegetables, fillets are being marinated with lemon and even Japanese teriyaki-style sauced fillets are being produced at the request of buyers. Most of these products are now on test runs, and samples have been given to retail and foodservice customers for evaluation.

It is very likely that pangasius will now move from primary to secondary processing in Vietnam. Companies such as the newly formed Green Farms have already invested in upscale enrobing lines to meet the expected demand for breaded products.

Of course, this approach will only work if there is demand for value-added fish products in Europe. But the demand is definitely there, and it is growing. What started off in the United Kingdom more than 30 years ago when Marks & Spencer introduced what it called “recipe dishes” has grown to the extent that every UK retailer now has a range of ready-to-eat seafood products on its shelves.

And the rest of Western Europe is following suit. According to Leatherhead Food Research, while the UK still dominates the market for prepared ready meals with sales of EUR 6.07 billion (USD 7.28 billion) in 2009, Germany is second at EUR 3.07 billion, France third at EUR 2.17 billion and Spain fourth at EUR 1.16 billion.

Ready meals themselves are expected to remain Western Europe’s largest sector, with sales rising 9.5 percent between 2009 and 2013 to reach EUR 7.21 billion (USD 8.65 billion), said Leatherhead Food Research.

The driving factor behind the amazing growth in ready meals sales is convenience. Despite the ongoing economic downturn, many European consumers do not want to purchase all of the components of a meal and prepare it from scratch. And once the recession is over, sales of ready meals are expected to soar, with consumers trading up and buying more expensive and elaborate ready-to-eat products.

Despite being forced into the production of value-added lines, Vietnamese pangasius processors are in an ideal position to capitalize on the ready meals trend.

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