Smoked salmon is as much a part of Europe’s holiday season as turkey and ugly knitwear. But while there was no depletion in supermarkets’ cured fish offerings in November and December, one noticeable difference was the lack of attractive price deals, which have become almost customary as the calendar year nears its conclusion.
A U.K. supermarket survey conducted in December found that 100-gram pack of smoked salmon was selling on average for GBP 4 (USD $5.56, EUR 4.76), 28 percent more than in December 2012. With the U.K. economy only just starting to show signs of recovery, it remains to be seen if such a large price spike will cool demand for the product.
European smokers say the main problem lies with the high price of salmon, which has increased dramatically over the past 12 months. In December, Norwegian producers were quoting prices in excess of NOK 40 (USD 6.49, EUR 4.71) per kilogram (kg) in line with the shorter supply, but some smokers say they had been asked to pay as much as NOK 50 (USD 8.06, EUR 5.88) per kg at the end of November and first week of December, which is when the largest orders are traditionally placed in the run-up to the holidays. These prices were around NOK 15 (USD 2.42, EUR 1.76) ahead of those given a year previously.
Prices have increased as a direct result of the significantly reduced supply in 2013. In the first 11 months of the year, Norwegian producers exported 870,000 metric tons (MT) of salmon products, which was 35,000 MT less than in the corresponding period of 2012. These exports were valued at NOK 35.4 billion (USD 5.74 billion, EUR 4.2 billion), an increase of NOK 8.7 billion (USD 1.4 billion, EUR 1 billion) year-on-year, which confirms that 2013 was a good year for most of the Scandinavian country’s big salmon companies.
A similar supply situation also occurred in Scotland, which is Europe’s main salmon-producing country. Scotland was forecast to produce 152,000 MT in 2013, which is 10,000 MT less than in 2012. This reduction is a direct result of disease outbreaks at a few important production sites. Nevertheless, with less product coming out of Scotland, the United Kingdom and other countries have been forced to source more Norwegian salmon.
One market that has already reacted to the high prices is France, which is Europe’s biggest salmon market. French smokers produce more than 30,000 MT of salmon products annually, but they have found domestic retailers are extremely reluctant to ramp up consumer prices in accordance with the increased raw material costs. They say raw materials have therefore accounted for as much as 75 percent of the value of smoked salmon this past year. With margins squeezed to such unsustainable levels, several French smokers closed their doors in 2013.
Looking ahead, with only modest salmon production increases forecast in 2014, those remaining smokers in France can expect a similarly tough year in 2014 unless their retailers follow the lead of U.K. stores and implement price increases.
