Fish Radio

Retail rules sockeye prices

March 10, 2016                  sockeye promotion

This is Fish Radio. I’m Laine Welch – How retail runs up salmon prices. More after this –

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If a sockeye base price to fishermen is 50 cents a pound, how can it fetch $10, $15 or more at retail counters? Because a lot of costs, margins and profits are included in that price.

For the most part, it’s all the other stuff that happens  after the fisherman sells the fish is a lot more fixed than exvessel prices. And wholesale prices come up and down with exv not as much and then retail tends to move even less.    

Andy Wink is a Fisheries Economist with the McDowell Group in Juneau.  The first thing, he says,  is that a lot of weight is lost going from a whole fish, which fishermen are paid on, to a fillet at retail counters.

If you look at that and say, what is the cost of fish in a fillet. If you sold the fish for a buck in round weight, each fillet has about $2.50 of exvessel cost in that one pound fillet. If it is selling for $9/lb or even $15/lb, it’s not a huge percentage of that total retail price.  

Most retailers, he says,  control pricing not so much through the so called ‘full retail price.’ They adjust it through sales, discounts and promotions.

So if a retailer wants to move more sockeye, they probably are not going to lower that full retail price. They will probably leave that alone but instead run a lot more promotions of say, $9.99 a pound. That way they can say they have discounted the product $8 so it looks like a big saving for the consumer./  And they just run more discounts and promotions.  As opposed to doing it for four weeks, maybe they will run it for 15 weeks out of the year. It just depends on how much success the have with it.   

The more discounted product sold, the lower the average price is to the retailer.

So even though it is hard to see those retail prices moving when you are looking at those full retail prices, when we look at point of sale data – the actual data of people buying this and what the retailers are getting per pound, the price has come down because of that discounting.  

Increased supply  of sockeye from back to back bumper years at Bristol Bay also has a big impact on what buyers are willing to pay to processors who buy from fishermen.

  The reality is that if they can only sell that H&G fish for $2.75 or $3.00 or $3.50 if it’s a larger sized fish. That is going to have a big impact on ex vessel pricing.  It’s not about the processors trying to screw the fishermen – they’re operating a business just like anyone else.     

Fish Radio is also brought to you by Ocean Beauty Seafoods.  Ocean Beauty has contributed over 10 million meals to the U.S. Food Bank network, and is committed to ending hunger in America.      In Kodiak, I’m Laine Welch.