Competition, cluster and market analyses for the salted cod and salted and dried cod industry

The project has given many new and interesting results. In WP1, new results show that value added per man-year in this industry is higher than the average for Norway excluding oil and gas. In WP 2, Cluster analysis, new analyses indicate the presence of two cluster effects. One is industry size, measured by total employment, which is found to have a positive although statistically weak effect on value added. The other is location. Firms located in Ålesund are found to have higher value added than firms located in other municipalities. In WP3, Process and product development, research has focused on Spain, Portugal, and Brazil. All these market are currently undergoing a shift from traditionally salted & dried cod to more convenient products that are easier to prepare. In Spain, consumers have gone from salted & dried fish to salted fish and are now increasingly purchasing desalted and light salted fish. In Portugal, salted & dried cod consumption is still high, but there is increasing consumption of desalted frozen products. Consumption of salted & dried fish is still high in Brazil, however sales of convenience and desalted products are increasing. WP4, Price analysis, has concentrated on the same three markets as WP3. For Spain, price competition at the import level has been confirmed across the main producing countries including Norway and Iceland. For Portugal, there is evidence that consumers are substituting away from both imported salted & dried and salted product to frozen product. In Brazil as well, Norwegian market share has been reduced quite. For Brazil, over the period of study, the demand facing Norway showed a 24% reduction. On the other hand, empirical results show that a 1% increase in income increases cod consumption by 1.3%. The high income elasticity is important for future consumption when economic growth resumes in Brazil. Competition and market analyses is the focus of WP5. Norwegian salted & dried cod will continue to be attractive to Portuguese and Brasilian importers and consumers, however, Norwegian producers need to respond to the challenge that desalted and convenience products presents. Moreover, the production of Portuguese salted & dried cod is increasing so that the Norwegian market share is declining. In Brazil as well, Norwegian market share has been reduced quite considerably. On the other hand, for Brazil the high income elasticity is important for future consumption when economic growth resumes. Project results clearly show the existence of a salted & dried cod industry cluster in the Ålesund area. In an increasingly more competitive global environment, it will be important to preserve and even strengthen this cluster. As a consequence, public policy towards the industry should be directed at strengthening this cluster.

In 2012 Norwegian exports of salted cod and salted and dried cod reached a value of NOK 2.7 bill. or almost 50% of total cod exports, with salted and dried cod representing NOK 2.0 bill. About 90 per cent was shipped from the North-West region of Norway, the possible presence of an industry cluster. Nevertheless, the industry is confronted with great challenges that result in poor economic performance. The aim of this research is to generate knowledge that may improve the competitiveness of the industry i n international markets. In recent years, Norwegian exporters of salted and dried cod has faced much stronger competition from countries like Iceland, Canada, and Russia, from new species like Pacific cod (processed in Portugal), and from processors in Ch ina. Historically Spain has been the main market for Norwegian salted cod. Over time Norway has lost market at the expense of Iceland, Faroe Islands and Sweden. The Spanish preference for whiter and thicker salted cod might be one reason for the increase in market shares from countries such as Iceland. Major challenges for the dried and salted cod industry are how to increase market shares and margins as well as finding new markets for their products. Another challenge is connected to market concentratio n at the retail level. Market and competition analyses of this industry also include a third challenge; the imbalance regarding the number of Norwegian exporters and producers, with the former outnumbering the latter. The competition among exporters may t hus be detrimental to the margins obtained. Three different value-chains and three different markets are studied: Portugal and Brazil for salted and dried product and Spain for salted cod. The project consists of five work packages: 1) industry analysis, 2) cluster analysis, 3) process and product analysis, 4) price analysis and 5) competition and market analyses.