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How to survive in Germany's highly competitive frozen fish market

This processor has been at it for more than 25 years.

German frozen fish and seafood processor Femeg's strategy to pit itself against the industry's big players in the highly competitive German and European markets can be described as both rational and pragmatic.

The company knows its strengths -- and its weaknesses. And this knowledge has paid off since it started operating as a family-owned business 25 years ago.

Today, the Rehna-based firm boasts a stable turnover of about €30 million ($32.8 million) annually, processes about 7,000 metric tons of fish and seafood a year, and counts Europe's "five most successful retailers" as its biggest customers, Stefan Drewes, head of marketing at Femeg, told IntraFish

Femeg's strong areas are "innovative products" -- for instance the recently launched gluten-free breaded frozen whitefish fillets -- its high standard of quality and its commitment to transparency and traceability, he said.

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"Our supply chain is very clean and we're communicating that to our customers. This differentiates us to a great extent from commodity-driven processors."

The time and effort the company puts into its transparency drive is great, Drewes said, and transparency has been on top of Femeg's agenda for years.

And customers have to accept the higher cost for it. "We would say no to customers if they don't comply with our supply chain terms," he told IntraFish.

"It's difficult at times because it could be a big contract for us. But you have to know where to draw your line; that's part of our strategy."

Drewes believes Femeg is right with its stance on sustainability and traceability.

Consumers in Germany, and Europe, are getting more conscious, he said. "The level of knowledge discerned consumers have today is a totally different one than 10 years ago, and that includes shoppers at discounters," he said.

"As a small business we can be one step ahead in terms of innovation and information. A big commodity-driven company can't offer that."

European expansion

Germany is by far Femeg's biggest market. However, it sells its products to Austria, Switzerland, Italy, Hungary, the Netherlands and Belgium as well.

Femeg's branded frozen products are mainly sold at major retailers and discounters, and to a smaller extent, foodservice customers, but it also has some private-label business with discounters.

Growth is always in the cards, but within the confinements of the European Union, Drewes said.

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"There's no point of us trying to go to Asia; we'd fail," he said. "But we very much like the EU. The mentality and preconditions are similar."

Femeg is now looking at Eastern and Northern European markets, and is hoping to expand further down south in Italy.

In Germany itself, it aims to grow further within foodservice with a mix of transparency and convenience.

Challenges? There always are

Wild salmon is Femeg's best-selling item, however, its products range from pollock to pangasius, Nile and pike perch, saithe, herring, sea bass and sea bream as well as king prawns.

Drewes believes one of the biggest challenges is the "global raw material situation" and global competition for products, especially in the premium category.

"Buyers in Japan and North America are more willing to pay premium prices for premium products, which isn't always the case in Europe," he said.

Retail buyers in Europe, on the other hand, are at times "too price-driven," Drewes said. 

This comes on top of the difficult currency situation and volatile pricing for farmed salmon, for instance.

"That's a struggle for us too," Drewes said. "But we're able to handle all this pretty well."


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