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ICWPF 2015 blog: China -- where everything is possible, but nothing is easy

The biennial event moves to Denmark in 2015, inviting the industry's key stakeholders to get an update on the status of the coldwater shrimp market from every angle. Keep checking back here to follow all the news from the conference.

Nov. 12, 6.30 p.m. CET

ICWP keeps it close to the fishing grounds

The next ICWP will be held Nov. 10, 2017 in Reykjavik, Iceland, Royal Greenland’s Simon Jarding announced at the end of this year’s event.

“We will keep it close to our fishing grounds again,” he said.

Additionally the ICWP will be launching a tag along event at the North Atlantic Seafood Forum (NASF) in March 2016 as well, he said.

The whole day long side event at NASF will focus on snow crab, lobster and shrimp – basically all shellfish from North Atlantic.

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Nov. 12, 5.35 p.m. CET

The species is the brand

There is still plenty of work to be done to grow markets for coldwater shrimp, said Mikael Thinghuus, CEO of Royal Greenland, and there are many challenges ahead, but also there are opportunities.

Not least, prices could reach a level whereby only the wealthy can afford to pay for the product, and there will be some degree of substitution.

“This is a real danger,” he said. “There is a limit to how much anyone will pay for a certain product, so we cannot sell the same thing for twice the price, at some point people will feel tricked and go out of the product entirely,” he said.

To combat this going forward the industry must keep up the same high quality of product in its traditional markets, and in the newer markets it must emphasize the unique character of coldwater shrimp.

“In traditional markets we are all hurt if someone places substandard coldwater shrimp in the market,” said Thinghuus. “It reduces perception of quality to the consumer.”

“In newer markets we must cooperate to find a niche for species, whether through joint ventures, partnerships, cooperation or collaboration.”

Especially for new markets, the industry must adapt its production, packaging, sales and promotion to local requirements.

“To do this we need to have a local presence – which means you need a big organization. That requires size, to some extent in harvesting, to a smaller in processing, but to a large extent in sales and marketing activities,” said Thinghuus.

All of these challenges and opportunities require the coldwater shrimp industry to share goals.

“To a large extent the species is the brand,” said Thinghuus. "Consumers do not care if it is Royal Greenland, or Polar Seafood, or whoever, in China they know it as sweet shrimp."

But growing in places such as China is only going to happen if someone representing a large chunk of the market starts to make the changes, he said.

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Nov. 12, 5.15 p.m. CET

Supply situation not happy, but manageable

Mikael Thinghuus, CEO of Royal Greenland, said that while earlier presentations during the ICWPF revealed “doomsday” predictions regarding the supply outlook for coldwater shrimp, he believes it will be more or less stable.

“I think the quota of 16,000 metric tons is actually too low, and while 19,000 metric tons might be too high I think there is still stabalization in supply,” he said.

Considering the industry has managed to survive a massive drop in supply of around 200,000 metric tons over the last 10 years, it should be able to handle any predicted drop of 2-4 percent.

“Even a 2-4 percent drop for next few years is more manageable than the drop over the last ten years, which we still managed quite well. But yes, the supply situation is not happy but quite manageable right now.”

In addition, demand is still healthy for both shell on and cooked and peeled products, Thinghuus said, and over the past few years there has been increased demand from Asia – in particular China and Japan.

“We expect to see a bigger share there, so there is flat supply but healthy demand,” he said.

As for what will happen to supply in the longterm “this is anyone’s guess”.  But in the short term there are signs of stabilization and demand markets have more or less adapted to lower levels of supply.

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Nov. 12, 5.00 p.m. CET

Size does matter

Size does matter and it’s good to be big, according to Mikael Thinghuus, CEO of Royal Greenland.

Big companies are needed to make a noticeable change in the industry, and grow new markets, he told delegates at the ICWP 2015.

Royal Greenland, which had a turnover of around DKK 5 billion in 2014, is seeking to maximize the value of the North Atlantic marine resources to which it has access in Greenland, to the benefit of Greenland.

“Size does matter, it is good to be big,” said Thinghuus.

Royal Greenland is the largest global supplier of Greenland Halibut and coldwater shrimp.

“We are the closest to the fish, the closest to the customers and the closest to the consumers.”

However, while a company such as Royal Greenland is big in its own industry it is still "dwarved" by the big retail chain customers across Europe and the US, he said.

But it is not a case of being big enough to increase prices because of access, this will gain you no friends, said Thinghuus, but it is about having to funds to increase marketing activities in those important markets.

“These are initiatives that requires money – they are good for the whole industry but require money.

By quite some distance Royal Greenland has the biggest catch of Greenland halibut, and it wants the same position in shrimp, he said.

“This will be good for anyone involved in the shrimp industry as it is the only way to find new markets, create new markets.”

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Nov. 12, 3.42 p.m. CET

Stella Polaris to launch lucrative neutraceutical product in 2016

Stella Polaris subsidiary Marealis will launch its neutraceutical peptides product in 2016, which is has successfully developed from coldwater shrimp byproducts.

Marealis' first product to market will be an all-natural marine ingredient to address the increasing problem of elevated blood pressure, known as prehypertension.

​The company was set up by Stella Polaris in 2008 to look at ways the company could make use of its waste products. In 2007 the company processed 13,000 metric tons of raw prawns, and 5,000 metric tons finished products.

Of the total raw material, 40 percent became cleaned prawns but 40 percent was prawn shell/head fragments and 20 percent proteins in process water.

“So we asked ourselves how we could make money on waste,” said Tom Harry Klausen, CEO, Stella Polaris.

The result was the discovery of using the peptides found in the prawn shells which are effective in reducing blood pressure.

The product – Systolite - is currently undergoing full clinical trials, but is expected to launch in early 2016, said Klausen.

From its waste products, Marealis expects it can produce 250 million daily doses of  Systolite, bringing reduced risk for 700,000 people each year.

While there are a lot of interesting things that can be done with by products of all fish and seafood species, Systolite is unfortunately patented, added Klausen.

“But a lot of interesting things can be done with byproducts, and that is where the value lies,” he said.

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Nov. 12, 3.00 p.m. CET

Orkla raises sustainability goals

Swedish branded consumer goods Orkla – which owns Abba Seafoods -- is aiming to have 80 percent of its seafood products to MSC certified by March 2016.

Sustainability is a “big issue” in Sweden said Krishan Kent, group purchasing director at Orkla Foods.

“Swedes are very sensitive about being a negative impact on our planet and 30 percent of consumers will buy sustainable seafood or not at all.”

Back in 2009 the company decided it wanted to make sure it was taking care of its seafood environment, by employing responsible business practices, and ensuring all comes from sustainable sources.

By 2020 the company is aiming for all its products to be MSC or ASC certified and by 2016 all of its Kalles Kaviar products will be 100 percent MSC certified.

Already in 2015, all its lumpfish roe, Abba herring, and fish quenelles are 100 percent MSC certified.

“We are targeting 80 percent of all seafood products to be MSC certified by March 2016,” said Kent.

Coldwater shrimp constitutes 20 percent of the seafood business of Orkla Foods.

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Nov. 12, 2.15 p.m. CET

EHP to result in 20% drop in Indian shrimp production

The prevalence of EHP disease is expected to result in a 10-20 percent decline of farmed shrimp production in India in 2015.

According to Lian Heinhuis, a seafood analyst at Rabobank, the disease is likely to see production fall from 353,000 metric tons in 2014 to around 300,000 metric tons in 2015.

Heinhuis said the global shrimp aquaculture picture is still categorized by a high supply volatility caused by disease outbreaks in Asia and she “expects volatility to remain looking into the future," on both the supply and price side.

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Nov. 12, 2.00 p.m. CET

China -- where everything is possible, but nothing is easy

China is expected to represent 38 percent of global seafood consumption by 2030 and is expected to be the single biggest import market for seafood in 2016.

Meanwhile, e-commerce is booming in China – it was worth CNY 2.8 trillion in 2014 and is only expected to keep growing fast.

But where does coldwater shrimp fit in? asked Gao Linming, director of Everfish Int.

Coldwater shrimp is a well known product in the Chinese market, but mainly as cooked whole shell on, packed in 5kg boxes, he said.

Most of the quantity goes through retailers, although more online promotion has shown up since 2012. The difficulty is most of the product is repacked into smaller bags, which means it loses its quality and is sold for a low price as e-commerce retailers engage in inventory dumping, want to “get rid of it”.

“I feel really sorry to see it but for e-commerce, they want to get rid of it as soon as possible, and as cheap as possible.

“I don’t think e-commerce is the right place for coldwater shrimp at the moment – but I believe the highest price for cooked whole shell on prawn should be in China,” he said.

So it still needs more work.

The coldwater industry should look to similar campaigns such as the successful campaign by ASMI to kick start e-commerce sales in China through online giant Tmall, in October 2013.

In this case 50 metric tons of seafood was sold to 26,000 people in just 11 days.

“This is the equivalent of five months worth of sales through Sam’s Club,” said Linming.

So online sales can be very good if done right. This involves understanding the consumer and the market properly and making use of deals and government backing.

“Welcome to China - where everything is possible, but nothing is easy,” said Linming.

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Nov. 12, 1.32 p.m. CET

Educating the new generation of chefs

The UK’s Wild Atlantic Prawn program launched by former head of marketing for Seafish Karen Galloway, has been live for a year now and is rapidly gaining traction.

The chef education program is targeted at the future generation of chefs in the country and aims to explain the reason why they should be happy to pay a premium for a coldwater shrimp product, Galloway said.

“We want the next generation to not undervalue coldwater shrimp, and get them to treat it with the respect and responsibility it deserves,” she said.

The program is focused on chefs, and lecturers teaching the next generation of chefs.

“We get them to reappraise product, get to know how to use and prepare coldwater shrimp and understand how they can add value to their menus.”

Of the 250 chef colleges in the United Kingdom, the program is already working with 32 of them.

“We tell the story of the Atlantic prawn, and get them thinking differently,” she said.

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Nov. 12, 12.02 p.m. CET

Profits, people, planet

These are the three key things to keep in mind when attempting to grow the coldwater shrimp category, said Jonathan Banks, consultant for the retail sector.

As we are becoming more urbanized, retailing is also changing he said, and there is a clear correlation between modern retailing and economic development.

This has seen the evolution of supermarket formats which has seen a growth of bigger stores, discounters, local convenience and online shopping to the demise of smaller stores which are being “squeezed out as we change shopping habits,” said Banks.

But the mainstream retailers are having issues as a result of discounters in particular, and are seeing sales decline while costs increase and in turn profits squeezed.

To fend off the growing competition for other avenues, retailers are increasing space for private label, said Banks, which offers a higher percentage profit on return.

They are also looking to reduce complexity in stores, by ditching a number of brands and increasing transparency.

“Private label will gain an increasing share of the market,” said Banks. So will the sub-brands of supermartkets  and imitation products, he said.

Meanwhile, there are four “megatrends” which consumers will pay more for:  convenience and practicality, health and wellbeing, taste, and things that are done in an ethical manner.

“If you can tick all four boxes you are a winner,” said Banks. “It is about profits, people, and the planet. And it is about getting it right, and all doing whatever we can.”

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Nov. 12, 11.32 a.m. CET

High pink shrimp catches 'unlikely' in the next few years

We are unlikely to have high shrimp catches in the next few years along the West Coast of the United States, as a result of phenomenons such as El Nino and the Warm Blob, according to Laurie Wietkamp, research fisheries biologist at NOAA.

The upcoming El Nino event is expected to "depress recruitment of pink shrimp for the next one to two years," WietKamp said.

In addition, warm water temperatures and high sea level height in 2015 resulting from the warm blob are expected to depress recruitment, she said, but there are no indications that this is happening yet.

"But we should expect that recent high landings of pink shrimp along the west coast of North America are unlikely to continue,” she said.

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Nov. 12, 10.52 a.m. CET

The patient isn't cured

Despite some estimates suggesting otherwise, the outlook for shrimp catches is not good, according to Carsten Hvingel from Norway’s Institute of Marine Research.

In fact things are pretty bad, he said. “I don’t think the patient is cured – something is wrong either with this year’s assessment or last year’s assessment, but I expect declines pretty much across the board.

“It is too optimistic, shrimp stocks will continue to decline, through to 2030.”

Giving an overview of the different Atlantic shrimp fisheries, Hvingel asked why shrimp landings have decreased around 40 percent in the last 10 years. The reasons were varied, depending on the fishery, and ranged from environmental reasons, changes in ecosystems, economic reasons, and resource dynamics.

According to Hvingel, West Atlantic stocks have reduced 53 percent since 2007, while East Atlantic stocks have been fluctuating at a relatively high level.

Giving his gloomy outlook, Hvingel said he expects the North-West Atlantic stocks to continue to decrease on average 5 percent per year due to environmental changes and overfishing, but added that more abrupt changes may occur – such as a regime shift event whereby cod numbers increase and shrimp decline.

However, he said the North-East Atlantic catches in the Barents Sea could increase around 5 percent per year due to improved economics, which could partially offset this.

But overall the North Atlantic total will be down 2-4 percent per year, Hvingel concluded.

“But we might see an abrupt decline within the next 5 year period as a combined effect of less favorable conditions for shrimp and overfishing in the West Atlantic.”

“Where it will level out is hard to tell, but we expect a decline in coming years, and then hopefully things will flatten out – still have a reasonably good shrimp fishery but for sure it will not be like the happy days,” he said.

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Nov. 12, 10.21 a.m. CET

If we build it, will they come?

Free Trade Agreements (FTAs) are brilliant things, but they can also be useless if none makes use of them, said Adeline Grenier, senior trade commissioner for the Canadian Embassy in Denmark.

Canada’s Comprehensive Economic and Trade Agreement (CETA), is due to be brought into force as quickly as possible – aiming for early 2017 – but the question is “if we build it, will they come?”

“To have a FTA is great, but it’s effectively useless if no one uses it,” said Grenier.

Therefore the commission is making a concerted effort to talk to buyers, traders, and suppliers, to ensure they take full advantage of the agreement.

“We want them to be aware of how CETA impacts them to ensure a smooth transition,” she said.

Denmark is the second largest market for Canada in terms of coldwater shrimp after the United Kingdom, and CETA will result in duty free tariffs on 90 percent of fish and seafood products coming out of the country.

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Nov. 12, 9.56 a.m. CET

Focus on what we're good at

Things have changed and these days consumers are not only interested in just quality – now they are interested in sustainability, said Jorgen Isak Olsen, deputy minister for fishery, catch and agriculture for the Government of Greenland.

Coldwater shrimp consumers are located all around the world and it is important to bear in mind what they demand, he said. Likewise in recent years what supermarkets require has also changed.

“Just having high quality is no longer sufficient,” said Olsen.

“Consumers today also require that resources are managed appropriately – setting conditions and regulations for fishing is no longer local but global.”

But planning of fisheries can be challenging, when there are constant fluctuations in scientific advice, said Olsen.

While the coldwater shrimp stocks declined significantly between 2004 and 2014, the Greenlandic institute of natural resources, claims this decline has not continued in 2015, and expects that biomass will increase over coming years.

“But the government of Greenland wishes to take precautionary approach – wait and see how stock develops,” said Olsen.

“We want to understand, what do the significant, rapid fluctuations mean in advice mean? What does it indicate? It is hard to manage like this, we must improve scientific advice.”

Olsen said it is not a question of not trusting the scientific advice, but he wonders if there is a better way to reach more steady advice.

“This can be done through more cooperation between all parties, and a better understanding.

“Sustainability in the fishery is in the best interest of all parties, we must develop cooperation and use our experience and knowledge and focus on what we are good at.”

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Nov. 12, 9.27 a.m. CET

Shift to Copenhagen pays off

The ICPWF has been held in London for more than 20 years, but two years ago the organizers decided to make a change and move it to Denmark.

The forum was originally held in London as the United Kingdom is the main market for cooked and peeled shrimp, but as the membership of the ICWPF has grown, its reach is now beyond this.

“Two years ago, we decided to make a change,” said Royal Greenland’s Simon Jarding, who is also chairman of ICWPF.

“For more than 20 years we have been in London, which was the main market for cooked and peeled prawns – but things have changed and we are no longer limited to cooked and peeled shrimp.

“The forum has grown, and now encompasses all coldwater shrimp sectors.”

And the move has been a success – the number of attendees has broken a record with 210 people attending this year’s forum in Copenhagen, from 17 different nations, said Jarding.

“So it looks like a good decision.”

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Nov. 12, 8.55 a.m. CET

Coldwater shrimp industry gathers in Copenhagen

The biennial International Coldwater Prawn Forum (ICWPF) is kicking off this year in Copenhagen, Denmark at the city's Tivoli Hotel and Congress Center.

The event, which last took place in London in 2013, offers a unique opportunity for all stakeholders in the sector to get an up-to-date status of the coldwater shrimp market, one which has seen its struggles over the past few years.

Offering a wide international perspective, the forum brings together professionals, specialists and traders in the industry to share information and ideas regarding resources, production, opportunities, challenges and market developments.

Two years ago Mikael Thinghuus, CEO of Royal Greenland, warned the forum that when considering the future outlook of the coldwater shrimp market, the industry must look beyond future supply and future demand and consider its own role.

“We are not simply bystanders, what we do can impact what happens,” he said at the time. “Each of us must change our ways or perish, and Royal Greenland certainly will try to change.”

It will be interesting to see what has happened in these past two years and whether the words of advice were heeded.

Speaker highlights at this year's event include: Jorgen Isak Olsen, deputy minister for fishery, catch and agriculture for the Government of Greenland; Adeline Grenier, senior trade commissioner for the Canadian Embassy in Denmark; Henrik Espersen, from Ocean Prawn in Denmark; Krishan Kent, group purchasing director at Orkla Foods; Gao Linming, director of Everfish Int. Ltd; Tom Harry Klausen, CEO of Stella Polaris; and Royal Greenland's Thinghuus, among many others.

ICWPF is a non-profit organization that was officially established in April 2013.

Its membership is composed of processors, fisherman, fishermen’s associations, traders, scientists, organizations and individuals with a particular interest in coldwater shrimp.

IntraFish will be blogging live from the event this year, so keep checking back to get the latest information on the coldwater shrimp market.

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