The Faroe Islands’ plan to maximize the value of its limited farmed Atlantic salmon production by marketing the product as an exclusive, premium brand is paying off, according to the project’s leader.
The self-governing Danish islands have been involved in commercial aquaculture since 1967, starting with rainbow trout. They commenced farming salmon in 1980 and at one stage had as many as 69 salmon-producing companies. There has, however, been some major industry consolidation and now just three producers remain: Bakkafrost, Hiddenfjord and Marine Harvest.
Combined, this trio cannot produce more than 50,000 metric tons of Faroes salmon per annum — a relatively small annual output when compared with the 980,000 metric tons expected from Norway this year, the 150,000 metric tons from Scotland, and Chile seemingly well on the road back to its former, pre-ISA (infectious salmon anaemia) glory when annual production stood at around 400,000 metric tons.
The three Faroese operations therefore came together at the start of last year to form the umbrella brand, Salmon from the Faroe Islands, to make a united assault on the market.
Speaking at the Value-Added Seafood 2011 conference, held in London this week, Arni Olsen of Salmon from the Faroe Islands made it clear the intention is to make the islands’ limited production work in its favor, by creating a brand that is synonymous with quality, sustainability and value. Along with the consolidation of the Faroese industry came some very stringent industry legislation in 2003, and the resulting product has improved considerably, said Olsen, who has a background in luxury brand management.
“What we had in the 1990s was not very good quality, but what we’re selling now is perhaps the best salmon in the world,” he said.
Olsen said the Faroes’ remote location, pristine cool waters and strong currents make it ideal for raising the fish and pointed out that wild Atlantic salmon from all over northern Europe instinctively make their way north of the Faroes to feed and breed.
As well as producing salmon that have a high DHA and EPA omega-3 fatty acid content, the Faroes also has the lowest biological feed conversion ratio (BFCR) of all salmon producing nations at 1.1, along with the lowest mortality rate and the highest smolt yield. It is elements such as these that Salmon from the Faroe Islands is attempting to incorporate into its brand.
“You must have a story and be able to explain why your product is so good. We think we have an exclusive product that differentiates us from the rest,” said Olsen. “Scarcity is a very powerful tool that can drive price. We can’t produce any more. We can’t expand — the volumes will always be about the same. What we are is a ‘boutique’ producer of salmon that’s highly focused on quality.”
The umbrella brand gets about 1 percent of the revenue achieved by the three companies’ salmon sales to spend on marketing. Most of this attention is currently focused on b-to-b, particularly the targeting of sushi restaurants — businesses that Olsen says are “only interested in the highest quality.”
He claimed that the Faroes is already the leading producer of high-quality salmon for the U.S. sushi market. In fact, the United States is now importing close to one-third of all Faroese salmon production, twice as much as the Faroes’ second biggest export market, Germany.
It is also securing a price that is slightly above the U.S. market average.
“The short-term goal is to increase demand for the product,” said Olsen. “But the long-term vision is to get buyers from all around the world to recognize Faroes’ salmon as the highest-quality salmon in the world.”
Olsen would also like to expand the marketing strategy to other species in the future, but said in order to create a marketable brand like Salmon from the Faroe Islands, it is vital that the product must be of absolute premium quality.