Could Foppen's flop cost it the Costco contract?

Dutch smoker's Costco contract is sizeable. Who it goes to next -- or if Foppen can hold onto it -- remains to be seen.

Foppen, a 94-year-old seafood exporter from the Netherlands, stands to lose a lot of money if it loses its smoked salmon contract with Costco in the wake of this weeks salmon recall.

 

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Last year’s exports of smoked salmon from the Netherlands into the United States were valued at $25 million (€19.2 million) and volume of 1.3 million kilos, according to National Marine Fisheries Service (NMFS) statistics. While it's not a certainty that all that volume comes from Foppen and ends up at Costco, smoked salmon industry sources told IntraFish the overwhelming majority is.

What's more, the contract was growing -- from its humble beginnings in 2004, when Foppen took the contract over from Marine Harvest -- to what looked to be a record level. Based on the first seven months of shipments, around $40 million (€30.7 million) worth of smoked salmon exports would have been shipped from the Netherlands to the United States this year.

Considering Foppen has halted production, it won’t reach its sales potential this year. But sources told IntraFish Foppen is likely to keep some or even all of the contract with Costco. No salmon smokers in the United States are large enough to fill the void, a source told IntraFish. They are too “small, inefficient and expensive,” the source said.

In addition to size, Foppen has quality and –- quite ironically -– sanitation on its side, Jonathan Brown, founder of the MacKnight Food Group in the United States and owner of UK.-based Grants Smoked Foods, told IntraFish.

“I’ve visited their factories, and they had the best hygiene I’d ever seen,” Brown said.

MacKnight supplies specialized smoked salmon products to Costco’s Mexican division and its US Northeast Division, but he does not see this as an opportunity to grow his own piece of the Costco pie.

"I think Foppen is an excellent company, I think the products are outstanding, and I would be very surprised if they don’t work this out with Costco,” Brown said.

Opinions are split on that point among industry members. Some US companies have been approached for additional volumes in some Costco regions to fill in during the period while Foppen investigates the salmonella problem, sources told IntraFish.

Long-term, one source said Morpol would be the only company that has the ability to fill the contract, though others have pointed toward Marine Harvest, and toward Chilean producers.