uc westfjords and crm kielreykjavik,20.3.2018 p. krost: small is beautiful 14 the motivation to run...

Small is beautiful!Market segmentation in aquaculture

Copyright: Green wave ocean farming https://www.greenwave.org/greenwaveorg

Peter KrostUC Westfjords and CRM Kiel

Strandbúnaður 2018, Grand Hótel Reykjavík, 19.-20. mars.

Reykjavik,20.3.2018 P. Krost: Small is beautiful 3

„Being determines the consciousness“________________________________________________________________________________

● CRM 1995(www.crm-online.de)

● OceanBasis: 2001(www.oceanbasis.de)

● Kieler Meeresfarm 2014(www.kieler-meeresfarm.de)

● Environmental Impact Assessments

● Marine Ecology Studien

● ICZM

● Aquaculture (Algae, Blue Mussels)

● Products from sustainable marine resources

● Cosmetics („OceanWell“)


________________________________________________________________________________


European aquaculture industry over time________________________________________________________________________________

https://www.eea.europa.eu/data-and-maps/indicators/aquaculture-production-1/aquaculture-production-assessment-published-feb


https://www.eea.europa.eu/data-and-maps/indicators/aquaculture-production-1/aquaculture-production-assessment-published-feb

Without Norway________________________________________________________________________________


In Europe, there is some interest to change that________________________________________________________________________________

● Numerous strategies on EU, national and regional level to boost aquaculture


But why? And who?________________________________________________________________________________

● Numerous strategies on EU, national and regional level to boost aquaculture


…. a huge potential is anticipated________________________________________________________________________________


The top down view________________________________________________________________________________

Large markets

Large potential

Big industry

Employment

Taxes

Development

…etc.........


● Ignores the acting subjects! - the motivation of the aquaculture entrepreneurs!

● Fuels a number of research and development activities and pilot facilities, of which only few turn into sustainable and persistent operations

● Large potential for dissappointment – lack of public support ...

Wishful thinking!!________________________________________________________________________________


● The motivation to run a commercial aquaculture operation is is the expectation of a commercial success (vulgo: profit)!!

● And this will not be accomplished by producing commodities for low budget markets in high salary countries!

– => Global protein demand and aquaculture in the western world are largely unconnected!

● .. but for local markets with high purchasing power.

But:________________________________________________________________________________


High production costs (wages)

Limited Space

Strict and time consuming (environmental) regulations

Aquaculture

Constraints …..

Not an easy task in Europe!________________________________________________________________________________

Saturated classical markets


High production costs (wages)

Limited Space

Consumer quality awareness(willingness to pay)

High purchasing powerAquaculture

….. and chancesConstraints …..

… the coin has another side________________________________________________________________________________

Demand for novel and unique products

Saturated classical markets

Strict and time consuming (environmental) regulations High prices through

technology / product refinery


Classical approach: Economy of scale

Costs/item decrease with production volume

=> Increased profit and lower prices for consumers

=> Everybody is happy

In theory

Increase profit by scale(?)________________________________________________________________________________


Source: https://www.ssb.no/en/jord-skog-jakt-og-fiskeri/statistikker/fiskeoppdrett/aar-forelopige/2016-06-02Retrieved: 25.1.2018

0

20

40

60

80

100

Average prices for Norwegian salmon 1995 - 2018

Source: https://salmonprice.nasdaqomxtrader.com/public/report;jsessionid=64C9A752F6D71C730791CF9C9BF8E702?0. retrieved 20.2.2018

NO

KExample Norway

________________________________________________________________________________


________________________________________________________________________________

Most markets are not like that!


Many small enterprises...________________________________________________________________________________

https://de.statista.com/statistik/daten/studie/1929/umfrage/unternehmen-nach-beschaeftigtengroessenklassen/

97,8 %


… employ a lot of people________________________________________________________________________________

41,4 %

https://de.statista.com/statistik/daten/studie/1929/umfrage/unternehmen-nach-beschaeftigtengroessenklassen/

https://www.ssb.no/en/jord-skog-jakt-og-fiskeri/statistikker/fiskeoppdrett/aar-forelopige/2016-06-02


Year 19801990 2000 2009 2010 2011

Employment in marine Aquaculture 4500 4300 5100 5500 5800

1975 1980 1985 1990 1995 2000 2005 2010 20150

200

400

600

800

1000

1200

0

5

10

15

20

25

30

35

Norwegian Salmon Aquaculture

MarineAquaculture Produc-tion (1000 t)

Employment (in 1000)

Employees per 10,000 t production

Employment per unit produced drops with higher production ________________________________________________________________________________

Source: http://www.fao.org/fishery/facp/NOR/enRetrieved: 25.1.2018


1999 2000 2001 2002 2003 2004 2005 2006 2007 20080

2000

4000

6000

8000

10000

12000

14000

Employees

Source: http://www.fao.org/fishery/facp/NOR/enRetrieved: 25.1.2018

Also in secundary industry________________________________________________________________________________


Segments Segmentation strategy Comments

Zero Undifferentiated strategy Mass marketing: no segmentation

One Focus strategy Niche marketing: focus efforts on a small, tightly defined target market

Two or more Differentiated strategy Multiple niches: focus efforts on 2 or more, tightly defined targets

Thousands Hypersegmentation One-to-one marketing: customise the offer for each individual customer

From Wikipedia: Market Segmentation, retrieved 30.1.2018

Market segmentation________________________________________________________________________________


Segments Segmentation strategy Comments

Zero Undifferentiated strategy Mass marketing: no segmentation

One Focus strategy Niche marketing: focus efforts on a small, tightly defined target market

Two or more Differentiated strategy Multiple niches: focus efforts on 2 or more, tightly defined targets

Thousands Hypersegmentation One-to-one marketing: customise the offer for each individual customer


Market segmentation in regional aquaculture________________________________________________________________________________

http://www.fao.org/fishery/facp/NOR/en




Product differentiation________________________________________________________________________________




Specialized, segmented production

Mass production

Product diversity hi loNumber of companies hi loEmployment many/unit few/unit producedSkilled workers yes no / fewInfrastructure (costs) not so required requiredDevelopment hi loEnvironmental impactimpact lo lo – hiRisks (diseases etc.) lo, balanced hiWater quality deterioration lo hiProfitability lo – hi hi

Small vs.big________________________________________________________________________________


And the profitability?________________________________________________________________________________

Profit through added value and higher prices, not through high production volume

● Defined target markets

● Promotion and communication

● Innovations

● Divided costs by shared ressource use (logistics, advertizing, fairs, exhibitions etc.,

● Networking in professional associations for lobbying, political represbtation, networks

● Close cooperation with reserach places


● Product Quality (Freshness etc.)

● From here! Local Production, Regional SpeciesLocal is the new Bio! Transparent production

● Direct MarketingExample: Blue Mussel: Wholesaler: 0.8 -2.0 € / 6.0 – 11.50 €

● High Refinery / Technology LevelCosmetics and Neutraceuticals from Algae

High prices need extensive communication (marketing)________________________________________________________________________________


Fine de Claire VerteMarenne-Oleron

Belon (France)Belon River, Brittany

GauloiseBelon River, Brittany

GillardeauMarenne-Oleron

Source: www.oysterater.com

All of them: Pacific Oyster!!

From here. Local production. Regional species

(The classic: Wine! 100s of grape – species, 1000s of different wines________________________________________________________________________________

Et pour chaque lieu de production, une saveur différente: à vous de les découvrir !


Wholesaler Direct

Blue Mussels 0.80 – 2.00 € 6.50 – 11.50 €

Fisch vom Kutter 1.00 – 2.00 € 8.00 – 15.00 €

Direct marketing________________________________________________________________________________


High refiners / technology level________________________________________________________________________________


The BamS initiative________________________________________________________________________________

● BamS = Bio-Economy at marine Sites

● Idea: cascade utilization of biomassfrom aquatic sources

● Enhencement of regional economy

● Synergy (logistics, distribution,marketing, brand etc.)


CAU

EMB

FH KI

Trout Farm

Shrimp Farm

Cosmetics

GEOMAR

Fish Restaurant

Mussel Farm

GEOMAR

Marine science

Aquatic production

Processing,sales

GMA

FH HL

Fish Restaurant

Fish Restaurant

Kiel Fjord

Fish Restaurant

FH FL

Kelp Farm

Fish Restaurant

● Development● Consulting● Demonstration● Courses● Information● Exhibition● Sales● Storage● Presentation● Processing


● Small production will not solve global food (protein) scarcity

● But: neither will large production (Norwegian salmon for Africa?)

● Small production has an impact on employment, rather than on turnover

● Small production can be, but is not necessarily, ecologically better than large production (eg. CO2 footprint)

● Potential hazards in small production less dramatic (mortality, water stagnation, dead bottoms etc.)

● Products from small and local segmented production (can) have e better quality (freshness, choice ((you can always go to the supermarket..!))

● Increased self-determination of producer and independence from global prices

● Region benefits from added value, income and employment effects

● Costs per unit higher in production, logistic and communication

● Segmented production units require synergy and networking

Summary________________________________________________________________________________


________________________________________________________________________________

Thank you for your attention!

Takk fyrir!

uc westfjords and crm kielreykjavik,20.3.2018 p. krost: small is beautiful 14 the motivation to run...

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