seafood · 2016. 1. 21. · peter pan seafoods tomi marsh, vice chair alaska harvester kevin adams...
TRANSCRIPT
2015AlAskAseAfoodANNUAL REPORT
2
a Message froM the executive directorThe past 12 months have been challenging for nearly every sector of the Alaska seafood industry. After several years of increasing value, the tides have changed with strong currency values, a time of near-record abundance, weak export markets, and environmental groups restricting market access, all driving down values for processors and harvesters, alike. The good news is, we have some problems that most industries around the world would envy. An abundant, healthy resource of wild seafood from the highest quality and best managed fisheries in the world is something to be proud of, and we at ASMI are fortunate to have such an outstanding array of products to market.
Our seafood tells an amazing story. The success of our fisheries management is looked to as the gold standard worldwide. Almost weekly, another study is released celebrating the health benefits of omega 3’s, selenium, or another way eating wild seafood can boost health and wellness. Just this year, scientists at the United States Department of Agriculture (USDA) issued new dietary guidelines touting the health benefits of seafood and calling for Americans to eat substantially more seafood than currently consumed. At ASMI, we work with the amazing men and women of the Alaska seafood industry, scientists, chefs, fish
mongers, media, policy makers, and seafood fans worldwide, to spread these messages and bring value to our industry.
High supply and depressed prices provide an opportunity to create new markets, as well as expand our current markets. Whether it is exploring new export markets, like Brazil or Southeast Asia, marketing to athletes and the highly health conscious, or working with the USDA to get millions of healthy canned salmon meals into the foodbanks of America, the Board, committees, and staff at ASMI are always looking beyond the horizon for new ways to share Alaska seafood with the world.
Best regards,
alexa tonkovich
Barry Collier, ChairPeter Pan seafoods
Tomi Marsh, Vice Chairalaska harvester
Kevin Adamsalaska harvester
Jack Schultheis Kwik’Pak fisheries
Mark Palmerocean Beauty seafoods
Allen Kimballtrident seafoods corp.
Vacant, Large Processor Seat
Board of directorsThe seven-member Alaska Seafood Marketing Institute (ASMI) Board of Directors is appointed by the Governor. Through ASMI’s system of operational and species committees, the board and staff receive input from dozens of industry experts, primarily people in the harvesting and processing sectors.
ex-officio MeMBersAna Hoffman, office of the governor
Chris Hladick, Commissioner, department of commerce, community, and economic development
Representative Cathy Muñoz alaska state house of representatives
Senator Bill Stoltze alaska state senate
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section i: Mission Statement and Core Principles . . . . . . . . . . . . . . . . . . . . . . . .5
section ii: Seafood Industry Snapshot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
section iii: Alaska Seafood in the Global Marketplace . . . . . . . . . . . . . . . . . . . . .9Alaska Seafood Infographic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Salmon Price Infographic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
section iv: Alaska Seafood Accomplishments in Brief . . . . . . . . . . . . . . . . . . . . 12Brand Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Performance Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
section v: ASMI Strategies and Tactics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28International Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28US Retail Marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29US Foodservice Marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Global Food Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Seafood Technical Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
section vi: Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31FY 2014 Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31FY 2015 Revenues and Expenditures . . . . . . . . . . . . . . . . . . . . . .31-32
section vii: Raising the Value of the Alaska Seafood Harvest . . . . . . . . . . . . . .33Alaska Seafood Brand Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
taBle of contents
AlAskA seAfood MArketing institute 2015 AnnuAl report 3
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Alaska ConstitutionARTICLE 8 – NATURAL RESOURCES, SECTION 4. SUSTAINED YIELD
Fish, forests, wildlife, grasslands, and all other replenishable resources belonging to the State shall be utilized, developed, and maintained on the sustained yield principle, subject to preferences among beneficial uses. Adopted by the Constitutional Convention February 5, 1956. Ratified by the people of Alaska April 24, 1956. Became operative with the formal proclamation of Alaska statehood January 3, 1959
AlAskA seAfood MArketing institute 2015 AnnuAl report 5
Mission core PrinciPlesThe Alaska Seafood Marketing Institute is a marketing organization with the mission to increase the economic value of the Alaska seafood resource through: 1 Increasing positive awareness of the Alaska Seafood brand.2 Collaborative marketing programs that align ASMI and industry
marketing efforts for maximum impact within the food industry.3 Championing the sustainability of Alaska seafood harvests resulting
from existing Alaska fisheries management imperatives. (State of Alaska Constitution and Magnuson-Stevens Fishery Management and Conservation Act).
4 Proactive marketing planning to address short and long-term goals, while remaining flexible and responsive to a changing environment and economy.
5 Quality assurance, technical industry analysis, education, advocacy and research.
6 Prudent, efficient fiscal management.
ASMI exists to serve the entire Alaska Seafood Industry, harvester and processor alike. It is supported by industry self-assessments and uses available public funds including a federal grant to achieve marketing successes for the common good. ASMI adheres to the following Core Principles:1 ASMI follows the highest ethical standards in its day-to-day
operations and in its business relationships. 2 ASMI values its employees and members and insists that all be
treated with dignity and respect. 3 ASMI conducts business in the open so its actions and decisions are
visible to all industry members. 4 ASMI tells the truth when it conducts promotions or make claims in
the marketplace. 5 ASMI conducts marketing activities that provide the largest economic
benefit for its industry members.
section i
6
The seafood industry brought in over $130 million in revenue for state and local governments in 2014. A portion of this is self assessment revenue that is appropriated by the legislature to fund industry-related activities. Examples include the voluntary seafood marketing assessment through which the seafood industry supports ASMI.
alasKa seafood industry snaPshot
section ii
a diverse PortfolioAlaska’s seafood portfolio is valuable and full of variety, including
Five species of wild Pacific salmon Shellfish, including shrimp, king crab,
Dungeness crab, snow crab, scallops, geoducks Pacific halibut and black cod (sablefish) Alaska pollock and Pacific cod Other whitefish varieties managed as
“groundfish” (rockfish, sole, flounder)
total value of alasKa coMMercial salMon
PerMits, 2000–2014 (millions)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Power trollersAverage permit values
from $14,600 in 2000 to $ 37,000 in 2014
gillnet vesselsAverage permit values
from $66,400 in 2000 to $139,300 in 2014
seine vesselsAverage permit values
from $41,700 in 2000 to $163,700 in 2014
$30,000
$60,000
$90,000
$120,000
$150,000
AlAskA seAfood MArketing institute 2015 AnnuAl report 7
salMon$741,200,000
PollocK$455,800,000
Pacific cod$167,000,000
flatfish$104,700,000
haliBut$111,500,000
craB$254,800,000
BlacK cod$82,100,000
other$86,500,000
2013 ex-vessel value
2013 harvest voluMe
(IN MILLIONS OF POUNDS)
salMon1,044.6
PollocK3,019.7
Pacific cod702.9
flatfish729.7
haliBut28.7
craB87.1
BlacK cod30.2
other296.9
60,000 WORKERSalasKa seafood industry eMPloyMent
(harvesting/Processing only)
200448,600
200549,900
200650,900
200752,200
200852,100
200953,300
201054,200
201157,500
201257,200
201357,400
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AlAskA seAfood MArketing institute 2015 AnnuAl report 9
section iii
econoMic and MarKet conditionsThere are several day-to-day challenges the fishing industry and ASMI share that result from variable harvest cycles and dynamic market forces.
The increasing global production of farmed salmon has damaged global salmon prices, though Alaska salmon is still prized and is doing better than most others in the market.
Following periods of increased value for particular species, Alaska producers are encountering price resistance for halibut in the current economic situation.
Increasing fuel and transportation costs raise already high production costs in Alaska and require expensive and aggressive marketing to help offset the price differential at the fish counter or restaurant.
Confusion about what is “sustainable seafood” and a proliferation of eco-labels.
Messages in the media about actual and possible contaminants in seafood.
Softening of markets for particular species and products (e.g. Pacific cod, pollock roe).
Increased influence of environmental non-governmental organizations (ENGO) in the marketplace creates market access issues. Maintaining market access for all Alaska producers becomes more challenging each year as ENGO sponsored proprietary “pay to play” eco-logos become mandatory for market entry.
Seafood consumption in major markets such as the U.S. and Japan is declining.
A glut of Atlantic cod in the market this year has reduced prices to the point that some in the North Atlantic are opting not to fish. In addition, the Norwegian Seafood Council (ASMI’s counterpart) is using their $75 million budget to aggressively target Alaskan cod markets.
The weakening international currencies, such as the yen and euro, impact international purchasing power, especially for higher-end products such as premium Alaska Seafood.
Russian fisheries are producing more wild salmon and making the market more competitive, thereby increasing the need for Alaska Seafood to establish itself as a premium brand in the minds of consumers.
Whitefish species are also experiencing market fluctuations. Pollock harvests have increased in Alaska and Russia during the past
year, and prices have fallen during the past several years. The Marine Stewardship Council (MSC) certification of Russian
pollock also affects the Alaska pollock markets in a negative way. Pollock roe markets in Japan are particularly saturated, causing large
price declines. Cod and sole markets are steady, despite the increase in Alaska and
North Atlantic cod stocks. Competing proteins such as farmed fish, beef, pork, chicken, and dairy
products, are often lower priced and have well-financed promotional campaigns.
Alaska seafood products have sold for favorable prices in several domestic and overseas markets. ASMI will need to invest marketing funds to protect and maintain the gains made in these markets.
alasKa seafood in the gloBal MarKetPlace
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ALASKA SEAFOOD
EXPORTS TO THE WORLDThese data reflect direct exports only, product is not necessarily consumed in the country shown
2007 2008 2009 2010 2011 2012 2013 2014
TOTAL SEAFOOD EXPORTS
$2,5
89,2
27,0
00
$2,4
82,8
05,0
00
$2,2
46,7
99,0
00
$2,5
46,8
45,0
00
$3,2
27,6
40,0
00
$3,2
13,1
34,0
00
$3,2
72,4
17,0
00
$3,2
76,8
06,0
00
ALASKA EXPORTS BY COUNTRY
$3,276,806,000
ESTIMATED U.S. MARKET
$1,116,649,000
11Alaska Seafood Marketing Institute 2013 Annual Report
ALASKA SEAFOOD
EXPORTS TO THE WORLDThese data reflect direct exports only, product is not necessarily consumed in the country shown
2007 2008 2009 2010 2011 2012 2013 2014
TOTAL SEAFOOD EXPORTS
$2,5
89,2
27,0
00
$2,4
82,8
05,0
00
$2,2
46,7
99,0
00
$2,5
46,8
45,0
00
$3,2
27,6
40,0
00
$3,2
13,1
34,0
00
$3,2
72,4
17,0
00
$3,2
76,8
06,0
00
ALASKA EXPORTS BY COUNTRY
$3,276,806,000
ESTIMATED U.S. MARKET
$1,116,649,000
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alasKa seafood accoMPlishMents in BriefMajor accoMPlishMents
ASMI’s long-term efforts to differentiate wild salmon from farmed varieties in the minds of consumers continue to bear fruit. The average retail feature price premium for sockeye fillets over farmed Atlantic salmon fillets was $0.64/lb at the beginning of 2011 but has remained above $2.50/lb since 2012 in the US. Differentiating Alaska salmon helps insulate the Alaska seafood industry from some of the fluctuations in the farmed salmon market and improves demand for Alaska salmon species. However, average
retail feature prices are down for both salmon products. Farmed salmon retail price on featured product was down 16 percent in Q3 2015 (YoY), while sockeye fillet prices were down 11 percent.
Seafood sector employment grew by over 11,000 workers in the last 10 years.
The total value of Alaska’s commercial salmon fishing permits increased 312% between 2003 and 2014, primarily as a result of better salmon prices. This has
added $640 million to the balance sheets of commercial salmon fishermen, the majority of whom are Alaska residents.
Created and formalized the governance structure for the Alaska Responsible Fisheries Management Certification Program, preparing the program for benchmarking by the Global Seafood Sustainability Initiative.
AlAskA seAfood MArketing institute 2015 AnnuAl report 13
section iv
Maintained relations with influential food media through top-tier press events in New York City. Executed press tours showing off Alaska’s fisheries to some of the highest profile food media and food influencers in the United States, including the Wall Street Journal, the New York Times, Epicurious, Weight Watchers, 60 Minutes, America’s Test Kitchen and the Today Show.
Tapped into Alaska’s local food trend by partnering with Alaska Grown to launch the statewide “Eat Alaska” promotion, with recipes featuring Alaska seafood and Alaska Grown produce from chefs across Alaska.
The ASMI Global Food Aid Program worked with the Alaska congressional delegation and the USDA to secure the purchase of over $30 million in Alaska canned sockeye salmon.
Launched the Fisherman Ambassador program of “spokesfishermen” and produced the first installment of “Wheel Watch,” the fleet newsletter, to connect with Alaska commercial fishermen who are essential for telling the Alaska seafood story.
Revamped and launched two websites: www.alaskaseafood.org for a seafood industry and trade member audience and www.wildalaskaseafood.com for a consumer audience.
The domestic advertising campaign resulted in 111,999,056 total impressions with a total magazine circulation of 55,961,976.
Secured over 5,000 sockeye salmon cooking demonstrations in retail stores nationwide, resulting in 12% to over 200% sales lifts per store.
Funded consumer research showing 91% of consumers would be willing to pay a little more for an Alaska seafood sandwich and one if five would be willing to pay “much more.”
A promotion with United Kingdom canned salmon brand, John West, resulted in a 351% increase in sales during the duration of the promotion.
Participated in over 20 international food and beverage shows including the Seafood Expo Global in Brussels, Beligum, with projected 12 month sales of over $544 million.
Successful application for USDA Emerging Markets Program grant funds to conduct an upcoming trade mission to Southeast Asia, targeting Thailand, Vietnam, Malaysia, the Philippines, Singapore and Indonesia, to expand Alaska’s brand name and distribution in the region through business workshops, trainings and orientation visits.
At the request of the International Marketing Committee, ASMI issued an RFP for a feasibility study to determine the current scope and potential for Alaska seafood in the South Korea market and potential for marketing activities in the region.
In response to the import ban in Russia, ASMI has explored new markets in Eastern Europe, including overseas representative attendance at WorldFood Azerbaijan, the leading food industry event in the Caspian region, and World Food Kazakhstan, the leading annual event for the Kazakhstan food and drink market.
14
Maintaining market access for all Alaska producers is more challenging each year as environmental non-governmental organization (NGO) sponsored “pay to play” eco-logos become mandatory for market entry.
The proliferation of eco-labels in the marketplace (labels denoting sustainably produced seafood), confusion over sustainable terminology, and the issues of traceability and country of origin labeling, require education at consumer and trade levels about the Alaska Seafood brand and Alaska as the model of sustainable fisheries management.
Seafood consumption in major markets such as the U.S. and Japan has been declining.
Record, or near record, runs of pink and sockeye salmon, currency values, and small fish sizes challenge promotional efforts and prices for all wild Alaska salmon species.
Record farmed salmon imports to the U.S. have created more competition in the domestic marketplace.
With approximately 2/3 of Alaska seafood exported, a strong US dollar greatly reduces the purchasing power of our trading partners while improving export economics of our competitors.
Funding uncertainty, with continued pressure to reduce or eliminate State of Alaska and USDA Market Access Program funding.
Illegal, unreported and unregulated fish sold fraudulently in the market negatively effects prices.
Supply volatility of wild capture fisheries make multiyear market planning difficult.
Global aquaculture continues to increase its percentage of world seafood supply: Alaska produces about 1.3 percent of world supply and this percentage decreases every year.
Seasonality, consistency of supply, inelasticity of supply – product availability fluctuates within the season and from year to year, and there are upper limits to wild seafood production in sustainably managed fisheries.
The Russian government’s ban on imports, including seafood, from the U.S. and the European Union has all but eliminated a major salmon roe market for Alaska seafood and caused global uncertainty in the salmon market.
Key challenges
AlAskA seAfood MArketing institute 2015 AnnuAl report 15
section iv
16
beneath the s�face
-50
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
ALASKA SOCKEYE SALMON PRICES
Alaska sockeye harvests in 2014 and 2015 increased sharply, adding more supply to the global market chain, while also increasing the canned inventory into the next season.
20080.2
20097.6
20109.1
201112.8
20121.7
201323.3
201438.7
Di�erence Between Alaska Sockeye Wholesale Production Volume and Following 12 Month Sales Volume (in millions of pounds)
ON THEBright Side• ASMI branding and promotions help
differentiate and build preference for wild Alaska sockeye
• Salmon permit values up over time
• USDA buys 30 million dollars of surplus canned sockeye
Many markets that buy Alaska salmon have depressed currency against the U.S. dollar. CompetitorsThis means they are unable to buy as
much Alaska salmon for the same amount of money as they could a year or two ago. This is leading them to buy at lower prices, buy less or look to less-expensive salmon from other markets, or farmed product.
• Just over 50 percent of Alaska’s sockeye harvest is exported.
• Weaker currency for competitors means they can import their goods to the US at lower prices.
The main reasons ex-vessel prices for
Alaska salmon have dropped are related
to depressed wholesale prices. These are
the three main contributing factors.
• At the same time, farmed salmon imports are at a record high, with the average value down 18%. This means more, cheaper fish available in the U.S. at a time when the domestic market is crucial for Alaska sockeye sales.
Increased Supply and Surplus
• Russian, Fraser River runs lower in 2015, decreasing global supply
• More opportunities for US consumers to try and love wild Alaska sockeye salmon
• Japan absorbing more small sockeye surplus.
#1 Smaller fish are less valuable because they are more costly to process, less desirable in the marketplace, and in times of high volume, must be frozen (which costs more) when canning production lines are at capacity.
Small Fish Size
This year’s sockeye are almost 20%
smaller than 2 years ago
#3#2
Changes in Foreign Currency
Values versus August 2015
EUEuro
JapaneseYen
BritishPound
CanadianDollar
RussianRuble
NorwegianKroner
Buyers
17Alaska Seafood Marketing Institute 2014 Annual Report
beneath the s�face
-50
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
ALASKA SOCKEYE SALMON PRICES
Alaska sockeye harvests in 2014 and 2015 increased sharply, adding more supply to the global market chain, while also increasing the canned inventory into the next season.
20080.2
20097.6
20109.1
201112.8
20121.7
201323.3
201438.7
Di�erence Between Alaska Sockeye Wholesale Production Volume and Following 12 Month Sales Volume (in millions of pounds)
ON THEBright Side• ASMI branding and promotions help
differentiate and build preference for wild Alaska sockeye
• Salmon permit values up over time
• USDA buys 30 million dollars of surplus canned sockeye
Many markets that buy Alaska salmon have depressed currency against the U.S. dollar. CompetitorsThis means they are unable to buy as
much Alaska salmon for the same amount of money as they could a year or two ago. This is leading them to buy at lower prices, buy less or look to less-expensive salmon from other markets, or farmed product.
• Just over 50 percent of Alaska’s sockeye harvest is exported.
• Weaker currency for competitors means they can import their goods to the US at lower prices.
The main reasons ex-vessel prices for
Alaska salmon have dropped are related
to depressed wholesale prices. These are
the three main contributing factors.
• At the same time, farmed salmon imports are at a record high, with the average value down 18%. This means more, cheaper fish available in the U.S. at a time when the domestic market is crucial for Alaska sockeye sales.
Increased Supply and Surplus
• Russian, Fraser River runs lower in 2015, decreasing global supply
• More opportunities for US consumers to try and love wild Alaska sockeye salmon
• Japan absorbing more small sockeye surplus.
#1 Smaller fish are less valuable because they are more costly to process, less desirable in the marketplace, and in times of high volume, must be frozen (which costs more) when canning production lines are at capacity.
Small Fish Size
This year’s sockeye are almost 20%
smaller than 2 years ago
#3#2
Changes in Foreign Currency
Values versus August 2015
EUEuro
JapaneseYen
BritishPound
CanadianDollar
RussianRuble
NorwegianKroner
Buyers
18
Brand PowerASMI’s access to the corporate offices of grocery retailers, restaurant operators and foodservice distributors around the world has successfully increased the value of Alaska seafood, and achieved increased use and awareness of the Alaska Seafood brand and companion brands. ASMI also cultivates media contacts to increase positive exposure for Alaska and Alaska Seafood. The relationships developed by ASMI have built brand equity for Alaska Seafood. For example, the Alaska Seafood brand remains one of the top three food brands on the menus of the top 500 US restaurant chains. ASMI educates chefs, restaurant operators, grocery retailers, foodservice distributors and seafood buyers about Alaska seafood. ASMI activities spread key messages about Alaska Seafood: wild, natural, unparalleled flavor, superior quality, sustainability, versatility, ease of preparation, and healthfulness. This brand equity can be leveraged by all Alaska seafood suppliers.
ASMI works closely with other state agencies, the Department of Commerce, Community and Economic Development and the Department of Natural Resources, on Alaska marketing issues, in the form of seafood, tourism, and agriculture. ASMI also works with the Alaska Department of Fish and Game on sustainable fisheries issues and telling the story of Alaska’s successful fisheries management.
More people than ever before are being exposed to the brand and Alaska Seafood’s unique attributes. “Alaska” signifies wild, natural, unparalleled flavor, superior quality, sustainability, versatility, ease of preparation and healthfulness. ASMI is committed to building the enthusiasm – and brand equity – for sustainable, wild caught Alaska seafood, and the use of the logo on value-added seafood products is increasing.
alasKa seafood Brand equityAlaska Seafood held second place among food brands on U.S. menus in 2014.
AlAskA seAfood MArketing institute 2015 AnnuAl report 19
analysis of results and challenges:
Alaska Seafood has increased its brand equity in the United States. Measuring its popularity on the menus and among consumers helps chart its progress. The Alaska Seafood brand has ranked third and second in popularity among food brands on the menus of the top 500 restaurant chains over the past eight years; however, the goal is to be “Number One.”
As a result of Alaska Seafood Marketing Institute foodservice promotions, a wide majority of US restaurant diners have a positive impression of the Alaska Seafood brand (70 percent). Alaska seafood is preferred 57 percent to 14 percent over farm raised seafood in restaurants. Sixty-eight percent reported that seeing an Alaska Seafood logo on a menu would increase their likelihood of ordering an Alaska fish/seafood item.
Moving Beyond the “great recession”
More than ever, operators and consumers are wanting healthy options that include fish/seafood.
Corporate initiatives and positioning continue around sustainability, the environment and “feel good values.”
Operator and distributors are looking for the right co-branding partner - Alaska seafood has the “look of the leader” and is in a good position.
section iv
20
PerforMance Measures
Target #1: Increase the first wholesale value of selected Alaska salmon products by 0.5 percent annually
analysis of results and challenges: Ex-vessel value refers to the value of payments made to fishermen by processors (for delivering fish). First wholesale value is the revenue received by processors recorded when they sell processed seafood resources outside of their network. ASMI strives to increase the value of Alaska salmon products, thereby increasing the first wholesale value and ex-vessel value of the resource for both fishermen and processors.
Odd years tend to produce larger harvest volumes and values because pink salmon catches are usually higher in odd years. This general pink salmon abundance cycle and the normal variation in salmon harvests make year to year comparisons of value tenuous. However, over the long term the goal is to increase the value of Alaska’s salmon resource with the understanding that there will be fluctuations from year to year.
result: increased econoMic value of alasKa seafood resources.
Key findings froM 10 years of alasKa salMon value data:
The average first wholesale value in 2013 and 2014 was $1,368 million, compared to $717 million in 2004/2005 (10 years prior). This produces a CAGR of 7.4 percent over the past decade.
The average ex-vessel value in 2013 and 2014 was $671 million, compared to a $296 million average in 2004/2005 (10 years prior). This produces a CAGR (compound annual growth rate) of 9.5 percent.
The CAGR of ex-vessel value and first wholesale value over the past 10 years is well above the 0.5 percent annual goal.
In 2014, the first wholesale value was 11.0 percent below the 2013 season, but 1.6 percent above 2012 (the last even year). Ex-vessel values fell 18.8 percent in 2014 compared to 2013, but were 4.6 percent above 2012.
As first wholesale value has increased, the percentage paid to fishermen has increased (see grey line in chart below). This percentage varies from year to year, due to numerous factors (species composition, market changes, inventory positions, etc.), but in general, as processing revenue increases, there is more revenue available to buy fish. In a competitive market, we would expect prices for raw material to increase (which is exactly what has happened).
AlAskA seAfood MArketing institute 2015 AnnuAl report 21
The fact that ex-vessel payments to fishermen have increased as first wholesale value increased, suggests there is healthy competition between processors in Alaska’s salmon industry.
Rising values for Alaska salmon have resulted in numerous benefits for Alaska’s economy over the past decade. The cumulative value of Alaska salmon permits is up 182 percent since 2005 (from $300 million to $846 million in 2014), improving the balance sheets of thousands of Alaskan households. The number of commercial salmon permits fished is up, as is the number of processing jobs in salmon producing regions. Larger ex-vessel values also produce more tax revenue for state and local governments. Finally, more income in Alaska communities creates more indirect jobs for other Alaskans.
suMMary of MarKet challenges and oPPortunities:
Strong U.S. DollarExport markets are critical to Alaska’s salmon industry. Foreign buyers purchase approximately two-thirds of Alaska’s salmon products (by volume). Key export markets include China, Japan, Europe, Canada, Russia, and the Ukraine. The currencies of all these countries have weakened considerably versus the dollar over the past 18 months. When the currency of a foreign buyer or foreign competitor weakens versus the U.S. dollar, it can have a negative impact on prices (denominated in U.S. dollars) for Alaska producers because American products are now more expensive from a foreigner’s perspective. Typically foreign exchange rates do not fluctuate significantly from year to year, but recent months have been exceptional.
section iv
Value of Foreign Currency Lost versus the U.S. Dollar, Key Foreign Markets and/or Competitors (Past 18 months, March 2014 to August 2015)
Ukraine (hryvnia) -53.5% (pink salmon roe market)
Russia (ruble) -44.3% (pink salmon roe market,biggest wild salmon competitor)
Norway (kroner) -27.1% (farmed salmon competitor)
Europe (euro) -19.7% (frozen sockeye and pink/chum fillet market)
Chilean (peso) -17.9% (farmed salmon competitor)
Japan (yen) -17.3% (frozen sockeye and salmon roe market)
Canada (dollar) -15.3% (canned salmon market)
U.K. (pound) -6.1% (canned salmon market)
China (yuan) -2.8% (frozen pink/chum re-processing market)There is little Alaska producers or ASMI can do about exchange rate impacts. Obviously export sales are under pressure given the strong dollar, but it also creates stronger competition in the U.S. market as imported salmon products are cheaper for American buyers.
Larger Alaska Salmon HarvestsAlaska waters have produced large salmon harvests in recent years. The 2013 salmon harvest was the largest ever, due to a record pink salmon run. The 2015 harvest is the second-largest (in terms of fish caught), and the pink salmon harvest is also the second-largest in history. In addition, the 2014 and 2015 seasons produced the highest back-to-back sockeye harvest since the mid-1990s. This dramatic increase in supply has led to growing inventories, supply shocks, and ultimately lower prices for Alaska processors and fishermen. Although larger harvests make it difficult to maintain pricing, it presents opportunities to increase demand in the long term by expanding consumption and developing new markets for key Alaska salmon products.
Smaller SockeyeSockeye typically accounts for about half of Alaska salmon’s ex-vessel value. Although the last two seasons (2014 and 2015) produced large harvests, the average fish size caught during the last two years is easily the smallest in many years. Larger fish produce thicker fillets, better processing yields, and higher wholesale prices. The situation presents a significant marketing challenge for ASMI and industry.
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Target #2: Increase the ex-vessel value of key species in Alaska’s commercial harvest by 0.5 percent annually.
analysis of results and challenges: The harvest (ex-vessel) value of Alaska’s commercial seafood resource represents payments from processors to commercial fishermen. The commercial fishing sector directly creates jobs for more workers than any other Alaska industry, and most of these workers are Alaska residents. Increasing the harvest value has a beneficial impact on Alaska communities and revenues for local/state governments.
The collective ex-vessel value of key commercial seafood species totaled $1.91 billion in 2014; however, this figure is preliminary as final ex-vessel value data on federal groundfish species is not yet available. Estimated value declined 4.3 percent in 2014. The total harvest volume of key species declined 3.7 percent in 2014 and the value per pound declined by 0.6 percent.
Despite the lower value of Alaska seafood in 2014, the industry and ASMI’s performance over the past 10 years is still above the targeted growth level. The CAGR (compound annual growth rate) of key Alaska commercial seafood species between 2005 and 2014 is 3.0 percent – well above the annual target of 0.5 percent. Harvest volumes and values fluctuate from year to year depending on environmental and market
PerforMance Measuresconditions, so it is instructive to view results over the long term rather than focusing solely on year to year changes.
Lower ex-vessel values during the past year are primarily due to lower total values for salmon, halibut, and black cod. The total value of these three species declined 18.1 percent ($154 million) in 2014 versus the prior year. However, this was primarily due to lower harvest volumes of these species, which posted a decline of 31.7 percent. Smaller salmon harvest volumes in even years is common, so this development is not unexpected. Although the ex-vessel value of federal groundfish species (pollock, Pacific cod, flatfish, Atka mackerel, and rockfish) is not yet available, the first wholesale value of these species increased 6.7 percent in 2014.
Challenges The strong U.S. dollar, explained in greater detail on page 2,
significantly impacts the value of almost all of Alaska’s commercial seafood species. Overall, 60 to 70 percent of Alaska seafood is sold to export markets. Europe and Japan are critical consumer markets for Alaska seafood. Exchange rates had a significant impact on pollock, Pacific cod, black cod, flatfish, rockfish, herring, and Atka mackerel in 2014 (as well as salmon).
AlAskA seAfood MArketing institute 2015 AnnuAl report 23
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In addition to currency pressures, the European whitefish market is more competitive since the late-2013 MSC certification of Russia’s largest pollock fishery. This more than doubled the supply of pollock fillets available to “MSC-only” buyers in Europe and led to lower prices for Alaskan pollock fillets. This has also had an impact on the value of flatfish fillets. Once-frozen pollock fillets accounted for 13 percent of Alaska seafood’s total first wholesale value in 2014.
Consumer and buyer education remains a key challenge, as well as an opportunity. Alaska seafood is a uniquely valuable protein, but the diversity and remote nature of the industry make it difficult to succinctly message the benefits of its products and tell the industry’s story. One of ASMI’s key functions is to create positive awareness of the state’s seafood products and address misinformation, which invariably surfaces from time to time.
Market access and market development are ongoing challenges which must be addressed in order to continue fulfilling ASMI’s mission. Consolidation and changing product management practices in the food industry weakens Alaska’s ability to market its products. Opening new markets and finding ways to partner with major buyers will continue to be key strategies if Alaska is to retain and grow the value of its seafood products. These issues are particularly relevant for high volume whitefish species (pollock, Pacific cod, and flatfish), which have seen larger harvests over the past five years.
Continuing to improve communications with industry and other Alaska stakeholders will improve ASMI’s ability to create positive awareness of the industry and add value to the Alaska Seafood brand.
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PerforMance detail
Target #1: Increase the aggregate value of Alaska seafood exports to Alaska Seafood Marketing Institute (ASMI) program destination countries by 0.5 percent annually.
analysis of results and challenges: Export markets are critical to Alaska’s seafood industry, as foreign markets account for 60 to 70 percent of first wholesale value each year.
a1: result—increased econoMic value of alasKa seafood resources.
Export results are as follows: Exports to program countries increased 3.6 percent by value and 7.3
percent by volume in 2014. Exports to program countries have been relatively consistent in recent
years but can change significantly from year to year – mostly due to changes in harvest volumes. As a result of this inherent variability, it is instructive to view growth over a longer period. The compound average growth rate (CAGR) in both export value and volume over the past 10 years is 3.6 percent – well above the 0.5% annual growth goal.
Total 2014 export unit value, that is export value per metric ton, was similar to 2005 and has been fairly steady over the past decade. Part of the reason unit values have held steady is that Alaska is producing and exporting more co-products. Products such as fish meal and fish oil are made from fish parts which would otherwise be discarded. Exports of inedible co-products have more than tripled – from $47.9 million to $161.3 million - since 2007.
The unit value (i.e. value per metric ton) of these inedible co-products is relatively low, thus lowering overall export unit value. A closer look at key species reveals encouraging growth.
The average unit value of Alaska salmon exports (to all countries) is up 20.8 percent since 2007. Total export value of salmon is up 21.1 percent since 2007, with similar export volume.
Unit values for (edible) Alaska pollock exports are down 12.8 percent since 2007, but total export value of these Alaska pollock products is up 29.9 percent.
The total value of Alaska crab exports is up 21.6 percent since 2007 despite declining harvests (and exports) of the more valuable king crab species.
AlAskA seAfood MArketing institute 2015 AnnuAl report 25
section iv
The Alaska seafood industry faced significant challenges in 2014 and export markets will continue to be pressured in 2015.
In 2014, the Russian government placed an embargo on seafood products from the U.S. and several other countries. This action, along with conflict and fiscal problems in the Ukraine, led to a decline of nearly $75 million in Alaska seafood exports to these two Eastern European countries during 2014. These are important salmon roe markets.
Increased exports to Japan, Alaska’s largest (single) export market, offset the decline in Eastern Europe; however, the outlook for exports to Japan in 2015 is poor. The yen has continued to weaken versus the U.S. dollar while the Russian ruble has weakened significantly versus the U.S. dollar and yen (Russian seafood is one of Alaska’s largest competitors). This places Russia in a much better position to export sockeye, pollock roe, and crab to Japan.
Total export value to central Europe increased 9.4 percent ($28.2 million) in 2014, but this was mostly due to larger export volumes of pollock fillets. Unfortunately prices for Alaska pollock fillets have
declined in recent years due to the (MSC) certification of Russian pollock, which has significantly expanded the supply of pollock fillets available to the European market. Salmon roe is a bright spot in exports to central Europe, the value of exports to this market doubled in 2014 from $9.4 million to $18.9 million.
Exports to China, Alaska’s largest seafood trading partner, have been relatively steady after increasing substantially in 2011. It is estimated that 80 to 90 percent of Alaska seafood exported to China undergoes secondary processing and is re-exported to other countries (mostly Europe, U.S., and Japan). Exports of frozen headed/gutted pollock and Pacific cod increased 12.7 percent ($29.8 million). Operating costs in China continue to increase faster than the price of the products produced there. This could have significant ramifications for Alaska producers in coming years.
Overall, higher sales of Alaska pollock products, frozen sockeye, Atka mackerel, and co-products allowed total export value to grow in 2014, although headwinds such as greater competing supply (pollock/sockeye), an embargo on Alaska seafood products (Russia), and weaker currencies of key trading partners (euro/yen/Ukraine) led to lower export unit values. Unfortunately, most of these headwinds are still present and some are intensifying in 2015.
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AlAskA seAfood MArketing institute 2015 AnnuAl report 27
section v
asMi’s roleASMI is a public-private partnership between the State of Alaska and the Alaska seafood industry established to foster economic development of a renewable natural resource. ASMI plays a key role in the repositioning of Alaska’s seafood industry as a competitive market-driven food production industry. Its work to boost the value of Alaska’s seafood product portfolio is accomplished through partnerships with retail grocers, foodservice distributors, restaurant chains, foodservice operators, universities, culinary schools, and the media. It conducts consumer campaigns, public relations and advertising activities, and aligns with industry efforts for maximum effectiveness. ASMI also functions as a brand manager of the Alaska Seafood family of brands.
in the u.s. and international MarKets, asMi: conducts consumer campaigns to strengthen demand for wild and natural Alaska Seafood,
stimulate sales and increase economic value of Alaska seafood executes advertising and public relations campaigns to boost demand for all key commercial
species of Alaska Seafood performs outreach at expositions and trade shows works with broadline foodservice distributors to maximize Alaska Seafood penetration customizes promotion methods with retailers and foodservice operators to build on strong brand
equity to differentiate Alaska Seafood from the competition partners with restaurant chains to increase number of restaurants that feature Alaska Seafood as
a branded menu item conducts media tours and media outreach to secure positive publicity for Alaska’s seafood
products and the Alaska seafood industry
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coMMunicationsASMI’s communications program works to inform consumers that Alaska is the best source of premium seafood in the world through media interviews, curating
ASMI’s photo and video assets, planning and hosting media visits to Alaska, oversight of ASMI’s social media channels, and management of ASMI’s domestic public relations program.
Within Alaska, the communications program affirms the value of ASMI to the fleet, industry, and policy makers by producing and distributing economic reports, press releases, marketing updates, and representing ASMI at various events and trade shows throughout the state.
international MarKeting PrograMThe international program focuses on promoting Alaska Seafood in key markets, Japan, China, the European Union and, recently, Brazil. Eight regional programs conduct retail and foodservice promotions, technical seminars, chef and retailer training, Alaska in-bound missions for members of the overseas trade and press, trade shows, out-bound trade missions, advertising and public relations.
asMi PrograMs and how they worK
ASMI International monitors trends across the globe and has made strides in E-commerce in markets like China, Japan and the UK, resulting in millions of dollars of Alaska seafood products sold online.
Emerging markets offer an opportunity for ASMI to increase the overall value of the Alaska Seafood resource by growing worldwide demand. ASMI first won an Emerging Markets Program (EMP) grant to explore Brazil in 2011 and subsequently opened the Brazil office in 2012. Alaska Seafood exports to Brazil have increased from 31 MT worth $393,000 in 2011 to 2,493 MT worth $7,708,200 in 2014.
foreign agricultural service and international MarKetingAlaska Seafood overseas marketing activities receive substantial support from the federal government through the United States Department of Agriculture (USDA). ASMI applies annually for USDA funds from the Foreign Agricultural Service (FAS) through the Market Access Program (MAP). The amount of MAP funds awarded to ASMI, and the timing of their receipt, are subject to annual congressional budget appropriation. The in-depth research that ASMI International conducts each year in target overseas markets and the high level of involvement by the Alaska seafood industry through the ASMI committee process, both contribute to the international program’s continued successful application for MAP funding.
In 2015 ASMI International was also awarded an Emerging Markets Program (EMP) grant to host a trade mission to Southeast Asia, targeting Thailand, Vietnam, Indonesia, Malaysia, Singapore and the Philippines.In addition to MAP and EMP funding, ASMI International also participates
With hands-on guidance from its seafood industry board of directors and input from dozens of industry experts serving on operational and advisory committees, ASMI applies a range of strategies and tactics tailored to fit specific market segments in the U.S. and overseas. These strategies and tactics enable Alaska’s seafood promotion arm to conduct effective consumer, retail, and foodservice promotions, public relations activities, media campaigns, and technical education, all designed to increase the value of Alaska’s seafood resources and build brand equity.
AlAskA seAfood MArketing institute 2015 AnnuAl report 29
section v
in several Global Based Initiatives funded by FAS. These programs build international goodwill and provide potential emerging markets with opportunities to develop a taste and possibly a preference for Alaska canned salmon, herring and other products, as available.
u.s. retail MarKetingThe domestic retail marketing program works to align with Alaska seafood suppliers and retailers to support their sales and marketing programs. Over the years, the retail program has worked with every major supermarket chain in the country. Working with chefs, home economists, quality experts and key food industry influencers, ASMI capitalizes on the latest seafood consumption and preparation trends. Resources for retailers include a wealth of literature and sales aids and interactive web-based training for retail seafood counter personnel. Consumers have direct access to recipe collections and preparation videos through the internet.
u.s. foodservice MarKetingThe domestic foodservice marketing program is designed to help foodservice operators, both commercial and non-commercial, handle, menu and promote wild Alaska seafood products. Through an extensive chef network and programs with professional schools, such as the Culinary
Institute of America at Greystone, ASMI offers expertise – as well as a wide range of promotional and educational materials – to help operators capitalize on the latest seafood and dining trends.
gloBal food aidAlaska Global Food Aid Program (AGFAP) was created in 2005 by Alaska Salmon fishermen to help feed the world’s food-insecure the same nutritious canned salmon available in United States from food
banks to school lunches. Since 2008, ASMI has spearheaded this unique humanitarian initiative. The Alaska global food aid program links Alaskan fishing communities with populations around the globe to fill nutrition gaps while they develop self-reliance, food security and their economic well-being. Canned salmon and herring are increasingly being adopted by private voluntary organizations (PVO), the World Food Program and other non-governmental organizations (NGO) in food aid programs.
seafood technical suPPortThe Alaska seafood industry and businesses promoting Alaska seafood have access to seafood technical support through ASMI’s in-house seafood technical program. It is involved in matters of food safety, quality, nutrition and food labeling, as well as environmental issues, fisheries sustainability and seafood purity. The technical staff works in collaboration with the marketing staff to research and develop educational materials and programs. It also works with the Alaska seafood industry in the area of quality assurance, and educates producers and customers about proper seafood handling at every point from harvest to plate.
alasKa resPonsiBle fisheries ManageMentAlaska RFM is a robust, common sense, practical and cost-effective approach and allows Alaska fisheries to meet the FAO criteria for credible certification. This program also utilizes certifiers who are accredited to the International Organization for Standardization (ISO) by an International Accreditation Board member. The result is a model that is practical, verifiable, transparent and incorporates the criteria and procedures outlined in the FAO Code and Guidelines.
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financial inforMation
unrestricted general funds
$2,883,600
general fund Match
$4,500,000
statutory designated Program receipts
$9,634,900
federal receipts
$4,046,600
fy2015total estiMated
revenues $21,065,100
fy2014total estiMated
revenues$19,415,200
unrestricted general funds
$7,772,200
general fund Program receipts
$7,868,700
federal receipts$3,774,300
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section vi
full tiMe eMPloyeesjuneau KodiaK seattle
international$8,101,063
food aid$370,332
domestic Public relations$759,688
technical$1,072,585
communications$1,347,959
domestic advertising$1,597,266
foodservice$2,249,982
retail$2,471,544
executive and consolidated
administration $3,094,681
fy 2015 exPenditures$21,065,100
32 SECTION VII: FINANCIAL
section vii
raising the value of the alasKa seafood harvestASMI is accomplishing its mission of increasing the economic value of Alaska seafood resources, providing economic benefit to state and local governments and to private sector businesses. The following measures are used by ASMI to report on its performance to the State of Alaska.
AlAskA seAfood MArketing institute 2015 AnnuAl report 33http://cookitfrozen.com
contact asMi
digital resourcesJoin our 83,984 fans on Facebook!
https://www.facebook.com/alaskaseafood
https://twitter.com/alaska_seafood
http://pinterest.com/alaskaseafood
http://www.youtube.com/alaskaseafood
http://wildalaskaseafood.com
http://www.alaskaseafood.com
juneau office
Alexa TonkovichExecutive [email protected]
Deb TempelExecutive [email protected]
Tyson FickCommunications [email protected]
Nicole StangelandMarketing & Communications [email protected]
Megan RiderInternational Program [email protected]
Tasha McKoyInternational Program [email protected]
Becky MonagleFinance [email protected]
Matthew ArnoldtAdministrative Specialist [email protected]
Shannen O’BrienAdministrative Specialist [email protected]
Nanette SolanoyAdministrative [email protected]
Jhi-Jhi [email protected]
Michael KohanSeafood Technical [email protected]
Bruce Schactler Global Food Aid Director [email protected]
seattle office
Claudia HogueFoodservice Marketing [email protected]
Karl UriFoodservice Marketing Specialist [email protected]
Larry AndrewsRetail Marketing [email protected]
Linda DriscollAssistant Retail Marketing [email protected]
Heather SobolMarketing Specialist [email protected]
Lisa MartinsonAdministrative Support [email protected]
Susan MarksSustainability [email protected]
contractors
Ksenia GorovayaEastern [email protected]
Rebecca WilsonNorthern [email protected]
Pierre-Hubert MeilhacWestern [email protected]
Maria KrausCentral [email protected]
David McClellanSouthern [email protected]
Tomo [email protected]
Robin [email protected]
Jose [email protected]
asMi plays a unique role: through ASMI, people representing
the many facets of the Alaska seafood industry—processors
and harvesters, and many different harvest sectors—work
together for the good of all.
311 n. franklin street, suite 200juneau, aK 99801-1147
http://alaskaseafood.org
Cover photo by Chris Miller