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Potential European Union Export Markets for Frozen Fish and Fish Fillets
1.0    The European Union Market for Frozen Fish and Fish Fillets
Recent studies have shown that the best opportunities for exporters from Kenya and other developing countries (DC) in the Fish sector are found in the frozen and fillet segment. The most interesting markets in the EU are the established Southern and Western European countries due to their size and large trading capacity. These include Spain, France, Germany, The Netherlands, The United Kingdom, and Poland.

There are a lot of different fish species and varieties on the EU market making it one of the most diverse markets in the world. The EU catches, and to a lesser extent cultivates a large variety of species, and therefore competition is strong within those markets. In addition, the market for many fish species is saturated. However, there are some varieties that hold a lot of potential and are relevant for exporters from Developing Countries like Kenya. However, the following markets are highlighted that are relatively new to the EU market: several varieties of cultivated white fish (i.e. tilapia and pangasius), sustainable tuna and exotic coral fish species (i.e. parrot fish, barramundi, red snapper and grouper).

Potential European Union Export Markets for Frozen Fish and Fish Fillets (FFF) and Product Strategy for Fishery Products

1.0    The European Union Market for Frozen Fish and Fish Fillets
Recent studies have shown that the best opportunities for exporters from Kenya and other developing countries (DC) in the Fish sector are found in the frozen and fillet segment. The most interesting markets in the EU are the established Southern and Western European countries due to their size and large trading capacity. These include Spain, France, Germany, The Netherlands, The United Kingdom, and Poland.

There are a lot of different fish species and varieties on the EU market making it one of the most diverse markets in the world. The EU catches, and to a lesser extent cultivates a large variety of species, and therefore competition is strong within those markets. In addition, the market for many fish species is saturated. However, there are some varieties that hold a lot of potential and are relevant for exporters from Developing Countries like Kenya. However, the following markets are highlighted that are relatively new to the EU market: several varieties of cultivated white fish (i.e. tilapia and pangasius), sustainable tuna and exotic coral fish species (i.e. parrot fish, barramundi, red snapper and grouper).

There is a focus on only frozen fish and fish fillets, since most developing countries are not able to provide the EU market with fresh products due to the large distance to the EU. Fish fillets are one way to add value to your products. Other added-value products in addition to prepared and preserved fish will be discussed. Such products include those produced from boiling, cooking, cutting and gutting to secondary processing (fish salads, fish snacks, starters or party snacks.)

2.0    Opportunities for Kenyan Exporters in the European Union Market

i.    The European Union market is one the largest markets in the world and provides opportunities for suppliers of a wide variety of species and quality ranges. Freshwater species have the highest growth rates in the EU. Kenya exporters of Nile Perch should take advantage of the positive growth rates to launch into the market.
ii.    EU production has been declining in recent years opening up the EU market for product from Developing Countries including Kenya.
iii.    Frozen FFF are becoming more in demand from a perspective of convenience and their Possibilities for value addition.
iv.    There is a growing demand for FFF that is environmentally, socially and ethically sustainable. Several large EU countries are willing to pay price premiums for certified products. These include Marine Stewardship Council Marine Stewardship Council (MSC), Earth Island ‘Dolphin-safe’ International, Dolphin Conservation Programme, Friends of the Sea, Krav (Sweden), and Naturland. Ethical farming: non-GMO, feed sustainability farming labor.
v.    Economic conditions have a considerable effect on the demand for FFF, especially for higher priced products. The increased focus on price by EU buyers has allowed cultivated products (e.g. white fish) to gain market share. The consumption of FFF is expected to recover when the expected economic recovery materializes. EU buyers that are moving down the supply chain provide a threat for suppliers of FFF. However, they also provide opportunities for working together and forming partnerships.
vi.    There is an increased demand for secondary processed fish and fish fillets (e.g. slicing, cutting, ready-to-eat). This offers opportunities for developing countries.


2.1    Demand and developments in the European Union

The European market is the largest FFF market in the world. In recent years the demand has been dropping slightly as the large EU market becomes saturated. Nevertheless, demand is expected to pick up in the long term.

In 2008, the largest EU consumers were Spain (16%), the United Kingdom (UK) (15%), France (10%), Germany (10%) and The Netherlands (7.1%). These countries account for 60% of total EU consumption. Between 2004 and 2008 EU consumption of frozen FFF declined by 1.1% per year.

2.2    Facts of the European Union markets

Some important facts about the EU market:

i.    It is a highly diversified market. In Northern Europe, most of the consumed species are cold-water species such as cod, herring and Pollack. In these countries, ready meals are more popular than in Southern European countries and, in general, processed fishery products have a higher market share. In the Mediterranean region, species such as hake, anchovies and sardines are more popular. In those countries, a larger part of consumption consists of fresh, unprocessed fish, which is prepared further at home.
ii.    Consumption of FFF is quite stable throughout the year but highest during the summer months, when tourism is thriving and people are more likely to go out for dinner. Imports however are highest between September and January. In these months EU catch is lower.
iii.    There is an increased demand for aquaculture products. It offers more reliability in terms of supply and quality. Cultivated white fish is taking over the market due to its low price and neutral price. Kenya is in the process of putting up the necessary documentation and regulatory policy in order to access the EU market with aquaculture white fish.
iv.    Sustainability issues regarding overfishing and the management of fish farms are becoming a large issue. It restricts EU producers but also demands imported products to comply with stricter requirements. The market for sustainable FFF is still relatively small but is expected to grow in the coming years. Kenyan exporters should pursue the segment as positive growth rates are indicated.
v.    Opportunities for suppliers are generally limited to the supply of frozen FFF. Fresh and chilled products from most Developing Countries have to be flown in (instead of shipped) and are mainly destined for high-end buyers.
vi.    Although there are a lot of similarities between the FFF of different fish species there are also several important differences.
vii.     The economic crisis had a severe impact on the demand for FFF. At the end and throughout 2009 demand suffered because consumers were spending less on groceries and on higher prices articles, such as FFF. Lower priced fishery products relatively new to the EU market profited from this development and increased market share. However, this was also due to its neutral taste that is in demand by a younger generation of fish eaters. In 2010 the first signs of economic recovery have become evident. The improving economic conditions forecasted for 2011 are expected to have a positive effect on the demand for FFF. It is expected that this recovery sustains. There will however be some differences in development between countries.

Countries with an average per capita consumption will see their consumption per head increase. The fastest growing countries in coming years in the EU are the countries Eastern European markets that still have a low per capita consumption. Most countries in the EU with high per capita FFF consumption (e.g. Spain and Portugal) are saturated and face declining demand.

The increased consolidation of importers and retailers will sustain the pressure on prices. In addition, the increasing consolidation will make it harder for smaller suppliers to sell in the EU. It is becoming increasingly important for large suppliers and groups of smaller suppliers to work together in terms of warehousing, logistics and supply.

3.0    Product Strategy for Fishery Products


3.1.1    Deciding your strategy


A useful tool to start developing a product strategy is Ansoff’s Product Matrix whose analysis is given below:-

a)    Diversification
This requires the most investment as you will be entering new markets with a new product. Diversification is a reasonable choice if the high risk is compensated by the chance of high rate of return. Other advantages of diversification include the potential to gain a foothold in an attractive market and the reduction of overall business portfolio risk.
b)    Market penetration
You can further penetrate the market with existing products in an existing market where there are opportunities. This strategy is often the easiest but will require you to intensify your marketing activities and building and maintaining of your network. The fishery product market is a well-established market and therefore your size and level of organization of operation can be a deciding factor. EU buyers and retailers are getting larger and will generally prefer to work with fewer large and reliable suppliers. Emerging markets include those for several varieties of cultivated white fish (i.e. tilapia and pangasius), sustainable tuna and exotic coral fish species (i.e. parrot fish, barramundi, red snapper and grouper).

c)    Market development
Market development refers to entering an existing market that is new to you. In the fishery products sector market development can be done in two ways:
a.    Market your products in new geographic areas
This can be either a neighboring geographic area or an entirely different one. The best thing to do is to look for the market that will be most sensitive for your product. Something to help you do this is deciding in which life cycle phase your product is in the market that you are interested in.
b.    Enter market through new distribution channels
If you are selling your product to an agent or importer it might be interesting to see whether you can sell directly to a retailer or fishery product processor.
d)    Product development
Innovation of a new product should be understood from within the context of fishery products. As they are natural products not much can be done to change the product without changing the characteristics of the products. The following options however do provide possibilities:

a.    New products
This comes down to introducing new products to a market that are not yet known. Examples are the introduction new species, processed fishery products (e.g. canned ready-to-eat meals). This strategy often requires extensive marketing and investment in establishing new business contacts.

b.    Quality
Many opportunities exist during growing, initial processing steps (such as boiling, cooking, salting, smoking, cutting, grinding or freezing) and packaging to improve the quality of your product and add value. This also influences your costs of production. Therefore, features can be used to formulate your features/benefit analysis. This figure concerns the decision making process of the final consumer. You will generally be dealing with intermediaries (e.g. importers, agents, processors). Although these companies will be influenced by the decision making process of the final consumer they will also have their own features that makes them decide to buy or not. The table below lists several important features for intermediaries regarding fishery products and states ways to gain competitive advantages. This list is not exhaustive and would have to be complemented with personalized ideas about the features/benefits of your products.

Table 1: Important features of fishery products for importers

Aspects Focus points to obtain competitive advantages
Price    •    Scale, reduction of costs of production, logistic, and marketing
•    High productive varieties and off-season production
Reliability of deliveries    •    Professionalism, planning and logistics
Source (farmed or wild)     •    The quality of cultivated products can be controlled
Wild fisheries are not
Distinguishing marketing concept    •    Cooperation, development and information with retail organizations or out-of home
Sustainability    •    Sustainable production and certification: concepts in Europe organic, sustainable catch, ISO 14001, OHSAS18000, SA 8000
Traceability and transparency •     •    Logistics , quality control and ICT
Logistics    •    Shorted lead times, quality control and ICT, better delivery conditions, payment conditions


It is also important to map out whether there are any intrinsic qualities of your product that are not appreciated by your consumers. For instance, EU consumers do not appreciate fish bones in their fishes, especially when going out for dinner. Good processing is therefore very important for continued success on the EU market. Another example is that in large catching countries (i.e. mainly Southern Europe) will prefer local fresh products while products from DC are mostly frozen. Locally products can also be preferred for environmental reasons. Imported products will have to make more ‘food miles’ and therefore are less environmental friendly, thus Kenyan exporter would have to cover up the disadvantage with other attractive product qualities e.g. sustainability.


3.1.2    Deciding the Right Time to Export


Good timing is essential. Ideally you should start exporting when demand for your product is high. Important facts to consider regarding timing are:

For fishery products that are caught and imported in the EU seasonality plays a role. The EU fisheries are restricted by commercial fishing seasons. To learn what these seasons are might enable you to improve your timing and therefore chances on the EU market.

 
 
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