Costco to shift significant volumes of salmon away from Chile
Big box giant tells suppliers it's looking to Norway for a larger portion of its fresh program.
Costco Wholesale, believed to be the largest buyer of farmed salmon in the United States, is reportedly seeking bids from Norwegian suppliers as part of an effort to convert a significant portion of their fresh program away from Chile.
Several sources from the farmed salmon industry in Chile and buyers in the United States told IntaFish Costco informed suppliers of the shift at the Boston Seafood Show earlier this week.
The exact volume Costco intends to source from Norway is unclear, but executives on the supply side said the retailer wanted to bring the percentage of Norwegian salmon up sharply. Costco is expected to continue to source from multiple countries, however.
Sources estimated Costco brings in 600,000-750,000 pounds of salmon per week from several countries, with Chile making up the overwhelming majority.
The move is a blow for the handful of Chilean companies that supply the contract, which include AquaChile, Blumar and Multiexport, among others.
The reasons behind the shift are not fully clear, but several of the sources said Costco may be looking to move toward salmon raised using fewer antibiotics in the wake of its shift away from chicken and meat raised with antibiotics used to fight human infections, which it announced earlier in the month.
Though Chilean salmon producers are looking to decrease antibiotic usage in their production, levels still remain high when compared with other salmon farming countries. Norway’s farmed salmon industry has moved away from antibiotic use dramatically, using less than 1 metric ton industry-wide in 2013.
The increasingly strong dollar may be another factor. With the exchange rate now at around NOK 8 to one dollar, the US giant can both hedge its supply and offer consumers the additional name recognition – and potential marketing support – of Norway.
It's unclear which Norwegian salmon companies would be tapped to increase their supply. Costco’s fresh fillet specs are extremely stringent – the company requires a specialized F trim for its fillets and is more rigorous than other retailers in its quality inspections, sources said.
