Rabobank: Salmon must underline health, sustainability credentials to achieve long-term growth

Published on
February 13, 2019

Underpinned by changing consumer trends, new product innovation and sophisticated farming systems, salmon has risen to become one of the world’s most popular seafood products. But in order to maintain and increase its growth going forward, the fish needs to be repositioned as a leading healthy and sustainable protein and rather than rely on the current “affordable luxury” perception, a new report from Rabobank claims.

RaboResearch Food and Agribusiness’s “Keeping Salmon on the Top of the Menu” analysis explains that aquaculture has become a key alternative to terrestrial animal proteins, and that with efficient feed conversion ratios, lower environmental impact, and no apparent animal welfare issues, and as a good source of lean protein, it has successfully met consumer needs. 

This is particularly the case for farmed salmon, states the report. Also contributing to this fish’s status as a “winning protein” are its modern appeal, known health benefits, mild taste, and attractive product offerings.

“Its demand has grown faster than any others. Both in the E.U. and the U.S., salmon is currently in the top three of the most-consumed seafood categories, and is growing in markets that are saturated with protein,” the report said. 

Currently, the European Union is the biggest market for Atlantic salmon. It is the third-most consumed seafood species after tuna and cod, but it has experienced the highest demand growth in the last decade. 

The United States, meanwhile, shows even more potential for salmon demand growth. Despite being relatively new to the U.S. market, with lower per capita consumption rates, farmed salmon has overtaken canned tuna in the last couple of years to become the second-most preferred category after shrimp.

The report’s authors, Gorjan Nikolik, Rabobank’s senior analyst – seafood, and Beyhan de Jong, associate analyst, expect U.S. salmon consumption to increase further through new consumers in central parts of the country, where it’s currently at its lowest.

However, most of the new salmon customers are in markets in the emerging economies, such as China and Brazil. According to the report, salmon fits Chinese consumers’ expectations for high-end, foreign, healthy and modern seafood, while the Brazilian salmon consumption growth will be supported by more convenient pre-packed fillet products, as well as its close proximity to the Chilean salmon industry.

The Dutch multinational banking company expects the strong salmon demand to continue for the foreseeable future, but it also believes that there will be slower rates of supply growth, which could keep prices high. The report also suggests that the new price level of NOK 60 (USD 7.11, EUR 6.20) per kilogram might not be sustainable for global demand and that this could trigger substitution with other products.

Rabobank’s report further highlights that while salmon has been successfully competing against other animal proteins for a share of the center of the plate, it now additionally faces growing competition from the emerging alternative proteins. Despite not being in full-scale production or even in the market yet, these alternative products are cutting through consumer concerns about health and sustainability.

“The first initiatives for plant-based seafood products or lab-grown meat and fish have already started. The salmon industry is already a leader in connecting with its customers but the industry’s response to biosecurity and sustainability issues around salmon farming could affect future demand growth,” the report said. “In the 1980s, at the peak of the success of animal protein industries, the key concern was which of the proteins would consume a larger market share. No one predicted the rise of aquaculture and salmon as the key competitor. The future competitor of salmon for the center of the plate may not be a fish or an animal, but a completely new category – one we now barely have a name for and only loosely define as alternative proteins.”

Therefore, while salmon demand is currently strong, it’s also fragile, states the report. Rabobank advises that in addition to welcoming the demand growth potentially coming from the likes of Brazil or China, the salmon sector needs to embrace the sustainable alternatives and keep innovating, and it should always be the leader in consumer perception as a healthy and sustainable protein. 

“This is necessary in order to retain its status as the affordable luxury,” the report said. “If this does not happen, it will open the door to alternatives and competing products. The meat industry is already seeing this, with many new alternatives emerging – it is costing the sector a large part of its demand growth.”

Contributing Editor reporting from London, UK

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