SUPA Report – Chapter VII: Market analysis of trends and key stakeholder sourcing policies in Spain

Seafood Consumption:

In October 2012, Diversified Business Communications, the organizer of Seafood Expo North America and the Seafood Expo Global launched the inaugural Seafood Barcelona trade event where Diversified explained the importance of the Spanish market as follows:

“With a total of 992,489 tonnes of fish and seafood, aquaculture and processed products, Spain is also the number-one exporting country in the EU, representing 17% of the community total.”

The Spanish have the 2nd highest per capita consumption of seafood in Europe based on FAO figures (live weight) from 2010, with 39 kg per capita and are only surpassed by Portugal with 59 kg seafood per capita consumption. It is interesting to note however that for economic reasons the same FAO report projects Portuguese per capita consumption to decline ever so slightly to 57 kg by 2030 and Spanish per capita consumption to remain unchanged during the same timeframe, while the rest of Europe is expected to increase in per capita consumption of seafood.

Seafood dishes in Spain have long been associated with their love of salt fish or bacalo in Spanish. In 2012, whitefish imports by volume were dominated by merluza (hake) in H&G as well as fillet form, followed by Pangasius. Pangasius imports into the Spanish market dropped from 44.835 tonnes in 2011 to 33.617 tonnes in 2012. In 2012, according to Conxemar, a Spanish seafood association, whitefish imports experienced a decline including Alaska Pollock and tilapia, yet surimi imports showed a substantial increase.

Sustainability trends:

One indicator of the uptake of sustainable sourcing in a given country is the Greenpeace supermarket ranking. Spain is no exception.

Greenpeace supermarket ranking for Spain

While there is no report available for 2012, it is clear despite the fact that 4 retailers were still classified as “red” (insufficient), there has been overall progress toward more responsible and transparent sourcing in the retail sector between 2008 and 2011.

Key issues and criteria for assessing retailers included:

- A written sustainable fish and seafood purchasing policy

- Discontinue selling the “worst” or unsustainable products from aquaculture or wild capture

fisheries.

- Promote the “best” or most sustainable products from aquaculture or wild capture fisheries.

- Establish traceability of supply chain and commit to not buying IUU fish and seafood products

- Commit to comprehensive labeling

- Do not sell any Greenpeace red-listed species

- Transparent communication with customers

Key retail players in Spain:

The retail arena in Spain can be divided into four distinct sectors: the hypermarket, the supermarket, the discount store and the ‘specialist’ or fishmonger store. As of 2011, the Spanish retail market was dominated by 7 retailers.

A breakdown of retail sales by type of store

Market share by retailer in Spain

The following quote from the French based Auchan Group 2012 Annual Report sets the current tone of the Southern European retail marketplace.

“Southern European countries saw zero to negative economic growth in 2012. Unemployment continued to increase and austerity measures implemented by governments were heightened. Fresh tax increases combined with a freeze on wages and pensions once again had a negative impact on household purchasing power.”

Mercadona:

Mercadona is a family-owned operation with 1443 supermarkets in Spain as of 24 July 2013. In their 2012 annual report, Mercadona discussed the ‘golden rule’ of the company and other product attribute priorities (highlights added).

“At Mercadona, food safety is a non-negotiable value shared by every product in its selection, and in 2012 it has been more important than ever, meaning that all the company’s processes have been realigned towards this basic principle. Each item on its shelves must conform to the company’s Golden Rule, which is that every product must first guarantee food safety; then quality; followed by attractiveness; fourth, it must provide a service; fifth, it must be competitively priced; and lastly, it must make a profit.”

The Mercadona Environmental Policy 2011/2012 outlines the corporate seafood sourcing policy. Mercadona financial performance in 2012 showed growth in a number of key areas such as sales units, turnover and operating profit.

Carrefour Group:

At the end of 2012, Carrefour in Spain was comprised of 173 hypermarkets, 115 supermarkets and 105 convenience stores.

“In 2012, Carrefour set out to maximise its customers’ purchasing power. In each of its 1,366 hypermarkets, Carrefour launched an offensive designed to offer the most competitive prices on the market and maintain an unbeatable price image. The offensive included the “Lowest Price Guarantee” campaign in France, and lower prices on 4,000 daily food products in Spain.” 2012 sales in Spain declined to € 7.795 billion from € 8.373 billion in 2011.

There appear to be differences in the implementation within the global Carrefour Group of branding and labeling. For example, a similar label found on seafood products in France for quality refers to product origin in Spai. “Engagement Qualite Carrefour” – The “Carrefour Quality Commitment” is the guarantee that practices of farm-raised (fish) respect the environment.

Another example is the use of a label in France for farmed fish such as bass, bream, salmon and trout raised on feed with a minimum of 99.1% GMO free ingredients which does not exist in Spain. Farmed fish differentiated as 99.1% GMO free at Carrefour France.

In 2010, Carrefour published a report entitled “Hitos Desarrallo Sostenible” or “Milestones in Sustainability”. Aquaculture issues addressed included the following areas: stocking density, feed and veterinary treatments.

Eroski Group:

In May 2013, Eroski posted losses for a second year in a row. “In the 12 months ended 31 January, the retailer recorded a net loss of EUR121m (US$156m). This compared to losses of EUR43.01m in the prior year.” A presentation in February 2012 stated Eroski was comprised of 105 hypermarkets and 989 supermarkets. Eroski is also a member of an international cooperative Alidis along with Edeka of Germany and Intermarché of France.

In September of 2010, Eroski and WWF Spain entered into a partnership to improve the sustainability of its wild caught and farm-raised fish and seafood. At that time, Eroski agreed to give priority to suppliers involved in the Aquaculture Dialogues.In  February of 2012, Eroski shared the following feedback on their seafood customer profile.

“Eroski Consumer carried out a survey of more than 31,000 of its readers on seafood consumption habits in Spain. Almost all respondents stated that they preferred fish caught using environmentally friendly methods, but only 43 percent could mention a specific practice or initiative. Nearly 50 percent of respondents said they support sustainable sourcing of products.

“The conclusion we can take from this study is that there is a clear need to support and publicise sustainable fishing initiatives, because consumers value them even when they don’t know all the details”, Alejandro Martínez Berriochoa, Director of Eroski Consumer.”

Eroski developed a line of “natural” aquaculture species which in 2012 included: Atlantic cod, Atlantic salmon, sea bass and sea bream, trout and turbot. Eroski natural fish products ad from 2012 promoting the health benefits of omega 3 rich Norwegian salmon

Dia:

“The discount chain, spun off by France's Carrefour last year, said it would buy back the shares at market prices. Dia's share price has risen 50 percent over the last year to close at 5.6 euros ($7.24) on Thursday.

The company, which generates most of its business in Spain, France and Portugal, has escaped the retail downturn in its recession-hit domestic market, as customers turn to the chain for cheap products, boosting profit.” Source: Reuters 22 March 2013

The Dia discount model had its birth in Madrid, Spain in 1979. In addition to Spain Dia has stores in Argentina, Brazil, China, France, Portugal and Turkey and a group revenue of €11.679 billion. In Spain, the discount model has played an important role as evidenced by the 2925 discount stores and 4.9 billion in revenue for 2012. There are 5 areas of environmental focus listed as ‘cornerstones’ in the Dia 2012 Sustainable Development Report: “Proper waste management; Efficient energy management; Lower consumption of plastic bags; Innovative product packaging and Minimisation of the environmental footprint of all logistics activities.”

All Dia private-label products are required to meet specific requirements: “When choosing suppliers for its private label products, candidates must pass a rigorous preliminary certification audit to guarantee safety at each plant where DIA products will be manufactured. As a prerequisite to inclusion among the private label producers, they must also participate in and pass a consumer test designed to assess consumers’ opinion of the products being developed based on their organoleptic properties (aspects as experienced by the senses; e.g. taste, smell, sight, touch). All DIA product tests are compliant with UNE 87004:1979 and UNE 87023:1995 sensory analysis standards.”

Dia private-label frozen seafood products include Pangasius products

Auchan Group: Alcampo

In 2012, Spain, Italy, Portugal and Luxembourg combined contributed to 24% of the total €46.9 billion revenue at Auchan Group. This represented a decline of €288 million over 2011. Spain’s contribution to revenue in 2012 was generated by 55 Alcampo hypermarkets and 123 Simply stores.

On March 31, 2009, Greenpeace activists protested by hanging a banner stating Alcampo “destroys the oceans” at a hypermarket in Madrid. Greenpeace protesters hang banners along with a 16 meter long and 150 kilo fish at an Alcampo hypermarket in Madrid.

In 2 subsequent press releases Alcampo defended its purchasing practices. The second press release in October of 2009, specifically cites embracing “sustainable aquaculture as a complement to ensure the supply of fish” (Google translator). Today, corporate Auchan describes how it has embraces sustainability in the seafood sector throughout the Auchan Group.

Alcampo has developed a special label associated called “Auchan Producción Controlada” (APC) or “Auchan Controlled Production”. This label endorses products that: are able to ensure the highest quality, freshness and food safety; to restore the true flavors; to observe the highest animal welfare and to reduce the environmental impact.

Alcampo outlines their seafood sustainability policy in an online brochure entitled, “cuidar nuestros mares es cuidar del futuro” or “caring for our seas is caring for our future”. Commitment 5 endorses sustainable aquaculture and the incorporation of herbivorous species.

El Corte Ingles Group

In 2011 Hipercor hypermarkets and Supercor supermarkets contributed to €2,114.14 million and €402.21 million respectively to the total El Corte Inglés group revenue of €15,777.75 million.

Overall performance was hampered however by a 33.5% decline in operating profits at Hipercor hypermarkets and a 9.8% decline at Supercor supermarkets.

In 2011, El Corte Inglés released a sustainable and responsible seafood buying policy. In an interview in 2012 El Corte Inglés  described the policy: “Working closely with our suppliers, we reach a mutual compromise on the quality, security and safety of the seas and its species. With this ambitious project, which involves various stages of implementation and evaluation, we aim to contribute to the survival of marine species while ensuring we meet future consumer demand and support the continuity of all fishing-related industries.” The coporate social responsibility section of the El Corte Inglés 2011 annual report states, “In addition, certified aquaculture was fostered by our inclusion in Global G.A.P., the largest primary production certification programme in the world. At the time of writing, the Group markets 100% of its fresh salmon offering and 50% of its fresh trout offering with this certification, which guarantees good fish-farming practices.” El Corte Inglés has private-label Pangasius product

Lidl:

The Lidl Spain website has section entitled, “Guía del pescado” or “Fish Guide”’ and therein a page dedicated to “La pesca sostenible” or “sustainable fisheries”. While the majority of the sustainable fisheries webpage is dedicated to the MSC, Lidl does make a statement about aquaculture and “strict controls”. Additionally there are webpages: fish and fisheries, zones of capture, a fish encyclopedia, and a Q&A section. Pangasius is included on the fish encyclopedia webpage.

Other Pangasius supply chain participants in Spain:

Caladero – Owned by Mercadona http://www.caladero.com  

Freiremar – “Nakar” brand; http://www.freiremar.es

Grupo Delfin “delfin” brand; http://grupodelfin.com/EN/index.php

Mascato – http://www.mascato.com  

Pescanova – Recently declared bankruptcy. http://www.pescanova.es

Pescatrade – http://www.pescatrade.com

Conclusions:

Imports of Pangasius into Spain declined in 2012 over the year prior as did the overwhelming majority of whitefish products according to Conxemar.

In the retail sector, the majority of fish and seafood is purchased in supermarkets.

The economic situation is Spain is difficult and has a direct impact on consumer spending as evidenced by this excerpt from the El Corte Inglés Chairman’s Report of 2011.

“These circumstances have had a direct impact on the retail industry. The crisis has influenced purchasing habits, with families readjusting their budgets, and the biggest effect was felt in consumption. The two defining characteristics for the year have been a decline in consumption and a decrease in sales volume, which has been especially noticeable in household goods, the acquisition of other goods and personal items.

As a result, retail sales experienced a prolonged decline with an additional impact on purchasing habits: reduction in spending at commercial premises,a slide towards cheaper products and increased sales of goods on special offer. To sum up, this has been a difficult year for the industry that has tested the companies’ ability to adapt to the reality of the market and respond effectively to consumer needs.”

The Spanish retail market is making progress in the establishment of transparent comprehensive certification guidelines for purchasing policies of fish & seafood as evidenced by the Greenpeace supermarket ranking and corporate reporting.

Overall, progress in seafood certification has also been hampered by poor economic conditions in Spain, where fundamental merchandising strategies are aimed at low pricing to maintain market share.

Study on market potential of sustainably produced Pangasius in Europe

Project: Establishing a Sustainable Pangasius Supply Chain in Vietnam

Author: Carson Roper, Independent Consultant

Contracted by: WWF Austria

September 2013