Disease issues not slowing bustling demand for European oysters in China
Virus-related quarantine issues have caused a 45 percent fall-off for sales of French oysters in China thus far in 2018. But that hasn’t slowed Chinese demand for oysters from Europe, according to two executives from Majestic Oysters, a County Donegal, Ireland-based company.
Established to satisfy growing demand for oysters in Greater China, the Majestic Oysters brand is now benefitting from the resulting fall-off in supply from France. SeafoodSource met with Majestic Oysters Head of Production Des Moore and Head of Marketing Jacques Cocollos at the 2018 Seafood Expo Asia to discuss their company’s efforts to expand into the rapidly-growing Chinese market.
SeafoodSource: This is your sixth consecutive year exhibiting at Seafood Expo Asia. What brought you back in 2018?
Moore: We came this year to meet the distributors who we had built up through previous shows and also to get a sense of what is going on in trends. Also, we have consolidated previous customers. We are reasonably optimistic that we can consolidate and expand.
SeafoodSource: What exactly is the problem facing French oysters exports to China this year?
Cocollos: We are encountering a 45 percent drop on last year’s sales volumes for Marennes d’Oleron, which represents about 80 percent of French oyster sales in China. On 13 June, French authorities issues a rapid alert on RASFF Portal to inform worldwide veterinary authorities of an excessively high count of Escherichia coli in live oysters from France. French authorities protected themselves by extending the description to all oysters of France. In fact, it was oysters from Normandy which were in question. But this rapid alert is costing today millions of euros to the French producers and their customers. These are sent to six main markets: Hong Kong, Dubai, Sweden, Denmark, China, and Germany. As China got the alert, they decided that oysters from every importer buying from France would be tested and then released post-clearance. The mechanism in place on the [RASFF] portal is outdated…It should specifying the catching area of the product incriminated rather than an entire country on the labeling of the alert.
This meant that the costs for importers or exporters increased because of quarantine and bonded cool rooms were needed. This meant – in practice – 48 to 72 hours to get test results. And then, in some cases, because of inconclusive results that couldn’t be read, another 48 hours was required before the oysters were finally released. Mortality levels increased.
Ultimately, oysters were effectively six days out of the water before release and the end consumer has a lot of mortality. On top of this with indirect flights, you could expect some unexpected delays in Dubai, where oysters could have been sitting in 40 degrees on the tarmac. With the use of temp[erature] trackers, we have been able to monitor [the] four days in quarantine with temperatures ranging from 35 to 2 degrees, [but] such thermal amplitude would kill any shellfish.
SeafoodSource: Why has this year been so difficult for producers in France?
Cocollos: Hot weather means less rainfall and mortality rates of 40 to 60 percent. This is higher than was expected. It has varied by region. The Mediterranean was very bad [in terms of heat-related losses]. Charente and Arcachon have been impacted but Brittany and Normandy are okay. And Ireland is not so bad.
Higher temperatures increase the risk of certain viruses. Most of the growers in France have now been cooling their waters. Also, the big killer for oyster production in France is the fresh water from rivers and retaining lakes are opening up more after heavy rain and this is resulting in a sharp reduction in salinity. This increases mortality.
Hot weather is increasing thunderstorms with very high precipitations in a very short period of time. And of course all that surplus of fresh water goes into the sea and brings down the level of salinity dramatically. And oyster farmers are demanding the French authorities to open up in full the doors of the locks rather than opening gradually in order to avoid big drops of salinity.
The hotter weather also means oysters feed more. Once the Vibrio aesturianus disease gets into the soil, it contaminates it and it is very hard to get rid of it.
SeafoodSource: If volume from France is down so drastically, how does that impact supply from Ireland into Hong Kong?
Cocollos: There is a large pressure on Ireland to cover the French gap. There is a good deal of supply coming from Canada and Korea . Australia, however, has huge problems with disease. We are seeing Sydney Rocks but not large oysters and China wants big-sized oysters.
SeafoodSource: New air routes have recently opened connecting Ireland and China. Has Majestic been using them at all?
Moore: [Hong Kong-based airline] Cathay Pacific is flying directly from Dublin to Hong Kong now and Hainan Airlines this year started a route from Dublin to Beijing. So that gives us an advantage in shipping directly from Ireland as regard[ing] packing, you get lower mortality rates and cheaper cargo prices. For that reason a lot of Chinese buyers are making huge efforts to get supply directly from Ireland due to the issues in France [regarding quarantine inspection of French oysters at Chinese ports].
We are trying to have the option now to ship from both countries so that we can accommodate any changes that may happen. [After seeing] what happened in France, the regulators in Ireland are more rigorous than previously. So the Marine Institute is monitoring for norovirus and the SFPA [Sea Fisheries Protection Authority] is checking for e coli. The Marine Institute checks waters for biotoxins and this time of year we are on a weekly alert from them. There has been a big effort in Ireland to safeguard every aspect of food safety.
SeafoodSource: What kind of trends have you been seeing in the market in China and Hong Kong?
Moore: The demand has always been strong for zeroes [grade of large-size oyster] and [grade] ones and previously this is all they would take. But now we see an increased acceptance of smaller oysters, for example grade twos. Also, there is a large demand for buffet-sized oysters.
We’re seeing volume increase by 10 percent annually. Right now, Greater China accounts for 70 to 80 percent of what we sell. And this has happened since 2012, when we started in this market.
On the basis of slow autumn growth, it appears there will be a major scarcity of grade 1 and 0. This may even become apparent before Christmas. Coupled with this is the increased number of French buyers for speciales [a grade of larger oyster] in Ireland to supplement their own supply.
So what you have in the restaurants of Hong Hong is a huge variety of French brands which actually originate from four or five bays in Ireland. Little wonder they all taste similar. Majestic, however, is derived from our own two finishing sites in Donegal and Clew Bay [on Ireland’s west coast].
SeafoodSource: Even with China’s preference for larger oysters, are you finding markets for smaller oysters in Hong Kong’s hotel buffet trade?
Cocollos: Buffet oysters are 40- to 70-gram sized. Hotels want volume and they want them cheap. But it suits on production side to offload smaller oysters to have this market. Some are growing fast and some are slower, [but] there is a good market for each.
SeafoodSource: The oyster market in China is very brand driven, with Gillardeau promoted as a luxury brand like Gucci in China. How do you compete with that?
Cocollos: Our brand, Majestic, was originally targeted at Hong Kong. We have kept our quality consistent and kept our good name. We see that if your distributor in Hong Kong is happy with the quality, he will want to keep you, as opposed to if the quality is up and down, he will shop around. We are finding we can hold our own. A brand takes time.
Gillardeau was the first. We have kept our quality and six years on we continue to steadily increase our volumes. To us, it’s looking good.
Des and I are a first-generation business. Other brand names are five generations old. To make yourself well-known involves a continuation of selling, but also pick[ing] your ambassadors [carefully]. We have targeted Michelin-star chefs. Who is using your product determines how you become famous. Therefore, in Asia, we have been doing a lot of Michelin-star events. The past year, I was in Bangkok at the ceremony list of nominees for the launch of Michelin guide of Thailand. We were serving them our Irish Majestic oysters.
SeafoodSource: Where are your sites in Ireland and what size are they in terms of volume which you’ll be able to produce?
Moore: We have six sites in Ireland covering 50 hectares. We have two sites in County Mayo in the west of the country. According to the licensing rules, each hectare has a carrying capacity of 4,000 bags of oysters.
In 2012, there was a freak algal bloom in Donegal, which damaged our production there. That meant we wanted to minimize risk and spread out our sites.
SeafoodSource: In a previous interview with SeafoodSource, you expressed concerns about the process of licensing of aquaculture sites in Ireland. Has the situation changed at all?
Moore: Yes, there’s been a lot going on in licensing. Much has changed. We have been lucky to get several licenses. The Department of Agriculture and the Marine in Ireland is now very active in the last three years in issuing licenses. This has given businesses a lot more security that they can expand. Also, [Irish food promotion agency] Bord Bia and [seafood development board] Bord Iascaigh Mhara have worked hard to promote the Irish Oyster brand image in recent years.
There was pressure from the E.U. on Ireland, which was the bottom of the league in terms of licensing. They expected government to act quicker and get appropriate assessment sorted. This opened up several bays.
SeafoodSource: You mentioned you’ve been able to acquire licenses for new farming sites in Ireland. Can you describe these sites and why you decided to pursue them?
Moore: Some of these bays are virgin bays. For example, the site in Achill is the cleanest waters you can get anywhere. Over the next 20 to 30 years, I see that as a critical issue. I think people will be drawn to verifiably clean waters. And we in Ireland have that in abundance. Because we are cool, temperate climate Irish oysters growing and mature slowly and the meat is of a very good quality.
Ireland is very well-placed for the future as regards seafood. And that is borne out by a number of Irish firms exhibiting at the Hong Kong fair.
SeafoodSource: What happens to the licenses after their 10-year leases expire?
Moore: That is a big issue right now. The department has been very effective in licensing the big bays but also the smaller bays have been licensed now. This gives security to oyster farmers. You get the license for 10 years and the reissuing of the licenses is based on your utilization of the site [for the ten years prior to relicensing. There is a lot of talk right now on transfer of licenses and how that would work.
It’s been a positive few years in which all the stakeholders are working well together for the first time. For example we have started a small packers group. We went to the Food Safety and Marine Institute and said we wanted the sites monitored better. There has been a good two-way exchange on that. Ireland is clean, but abnormal weather events mean there can be a change in levels of toxins and you have to keep a handle on all of that.
SeafoodSource: How do you handle all the new volume to feed the Chinese market?
Moore: Segregated bays protects our business in the long-run. The majority of our new production is in areas that need employment.