22 % extra for line-caught
“Our study shows that British customers are willing to pay up to 22 % extra for a packet of frozen cod or haddock when the products are labelled “line-caught”. The attribute “Icelandic” also gives a price premium and there are major price differences between the supermarket chains,” says Senior Scientist Geir Sogn-Grundvåg.
He has implemented the research in collaboration with Scientist Thomas A. Larsen and Professor James A. Young.
Sogn-Grundvåg believes that in a time of price pressure as a result of record high cod catches and weakened purchasing power in the main white fish markets, the fishery industry has a good opportunity to improve its financial position by offering more differentiated products.
Following 91 products
In 2010, as part of a four-year project financed by the Norwegian Seafood Research Fund (FHF), Nofima started weekly price observations of almost 100 different frozen fish projects of cod, haddock and Alaska pollock in seven British supermarkets.
This market surveillance is now being continued through funding from the Ministry of Fisheries and Coastal Affairs. A so-called hedonic price analysis is being undertaken, which makes it possible to uncover the effect of each individual product attribute on price.
In particular these attributes displayed on packs are observable by shoppers prior to the purchase decision and as such reflect their individual choice and willingness, and ability, to pay for them.
The most striking result from the analysis is that the attribute “line-caught” commands a price premium of up to 22 %. This price premium, which applies for both cod and haddock, can probably be explained by the fact that line-caught fish is often of better quality than fish captured by other modes, has a higher unit cost price but represents values that consumers want.
“The fact that the supermarket chains choose to label products as line-caught in all likelihood has a connection to this mode of capture being perceived as having less impact on the seabed and, as such, fits in well with the chains’ endeavours to act responsibly and be perceived as engaging in sustainable fisheries,” says Sogn-Grundvåg.
“From a Norwegian perspective, it is interesting that our study shows that Icelandic origin commands a price premium of 5 %. The Norwegian Seafood Council is now stepping up marketing efforts in the British market, so in this context this information should be relevant,” says Sogn-Grundvåg.
Choice of super market
The largest fluctuations in price are linked to the supermarket chains’ own brands.
Marks & Spencer are top with a price premium of 49 %, followed by Coop with 32 % and Waitrose with 30 %, while Tesco and Lidl have price premiums of -23 % and -25 % respectively.
Within frozen white fish, there are only two producer labels, Birds Eye and Youngs. Birds Eye command a significant price premium of up to 46%, while Youngs command a 21 % premium. Alaska Pollock fillets, as expected, are much cheaper than fillets of cod and haddock.
“The large price differences between the seven supermarkets can be useful information for Norwegian exporters that are considering which supermarket chains to offer their products to. The price level we find across the chains corresponds well with the general retail price level,” says Sogn-Grundvåg.
“The knowledge about the scope of the price premiums for the various attributes can also be useful in price negotiations with the supermarket chains and in addition for Norwegian producers that are assessing how to differentiate their products in the market. This may also suggest that other attributes, possibly frozen at sea, might yet hold scope to realise price levels more in keeping with their differentiated offerings to the market.”