Marine Harvest aims to be ‘Coca-Cola’ of salmon

Posted date: 02/18/2019
In changing its name and launching a new line of prod¬ucts under a consumer-facing brand, Marine Harvest is looking to become the "Coca-Cola" of salmon.

This was the turn of phrase em­ployed by Christian Nordby, an­alyst with Kepler Cheuvreux, speaking to Undercurrent News after Marine Harvest's announce­ment presentation on Nov. 13. "With this big new strategy they want to create a strong brand, that people will pay for, globally. They want to be the brand that that cat­egory is known for; you could say like Coca-Cola".

The world's largest salmon farmer plans to invest €35 million in de­veloping its MOWI brand over the next two years. It will also change its name to Mowi, subject to ap­proval at an extraordinary general meeting to be held Nov. 13, 2018. The name change, if approved, will be effective from Jan. 1,2019.

In a presentation on the rationale for the name change and brand­ed plans, Marine Harvest said the plan is to hit €1 billion in MO- WI-branded sales by 2025. It plans to launch the brand in Europe in 2019, and then North America and Asia in 2020.

In August Marine Harvest brought in Andreas Johler, now managing director for brands. He came from a similar role with the Coca-Cola Company in Germany, and was formerly in marketing with Unile­ver, working with seafood.

Marine Harvest's suggestion for a MOWI retail chiller

He spoke about Marine Harvest wishing to create an emotional response to its products at the point of consumption, which would then create brand loyalty. He mentioned his former bever­age-sector employer - as well as Apple and Amazon - as brands to aspire to. "At the moment, the salmon sector is almost entirely private label," he said. "It does not have that one global brand. When you become that voice of the cat­egory, it then becomes your job to pro-actively communicate with consumers, and to defend the cat­egory from outside myths"

Salmon lacks all of these things now, he said.

Retail balance

Currently almost all of Marine Harvest's retail business is private label, sold under supermarket brands. Ola Brattvoll, chief oper­ating officer for sales, was keen to stress that new MOWI lines would be in addition to that business, not instead of.

The company thinks it has iden­tified a gap in the retail offering. MOWI salmon will be marketed as even healthier, even more trace­able, even more sustainable. The 'omega' symbol which forms the 'O' in MOWI illustrates this is salm­on with a higher omega-3 content than the standard product - which itself contains enough to put it on a par with wild-caught salmon, CEO Alf-Helge Aarskog noted.

The products will be marketed as Aquaculture Stewardship Coun­cil-certified, and the company has been in talks with the World Wide Fund for Nature about how to communicate sustainability, he said.

Salmon Brands' Salma raw salmon sashimi. Seafood Expo Global, May 2015, Brussels, Belgium. Photo: Miriam Okarimia/ Undercurrent News

The marketing and adverts will be focused largely on millennials, Johler noted, and so will feature a heavy online, interactive presence. There were some analysts during Marine Harvest's presentation who asked if retailers were fully on board with this, and whether the salmon company was certain there would be no "cannibaliza­tion" of sales.

"We've held discussions with some retailers, and they have been clear that as long as this brand adds value to the whole salmon cate­gory, they are happy" said Brat- tvoll. "But it is not our intention to directly compete with private label business, we cannot jeopardize our main sales."

He also said the company was not concerned that customers would feel the marketing of a new high­end brand would reflect badly on what they were buying as being "second-class" salmon. "This is in a different role, enhancing the cat­egory. The quality of what they buy will not change."

Speaking to Undercurrent, Nord- by said he felt Marine Harvest had indeed identified a gap in the market.

"There'll always be a little bit of cannibalization," he said, "but I don't see them competing there re­ally" Instead, he suggested Salma - a highly popular brand of fresh, premium salmon sold in Norway, produced by Bremnes Seashore - could feel the impact. "Obviously we don't know yet what the MOWI products look like, but I imagine they might be like that. No private label can do that type of thing, and it's been so loved in Norway. That kind of thing, rolled out globally, could be huge."

Kolbjorn Giskeodegard, director with Nordea, said he expects a positive reaction from the market off the back of Marine Harvest's news. "Their target is an addition­al €100m annual [earnings] from 2025, with €1bn in branded turn­over. This is 6-8% on top of our cur­rent estimates, and some NOK 15­20 per share if fully realized. How realistic this is to achieve is hard to say, and hard to track and isolate this effect looking back after 2025 (how much of [the earnings] is actually related to the new brand­ing strategy). Nonetheless, we do expect a positive market reaction today"

Lars Konrad Johnsen of Norwe­gian analysts Fearnleys told that Marine Harvest's new strategy "shouldn't make much difference from a shareholder perspective". However, the change in focus highlights the value proposi­tion of having an integrated val­ue chain from breed to finished product, with an associated strong brand strategy."

"Gaining a premium for its product by branding is difficult and similar to what many of the other larges names already do in their core mar­kets" he noted.

For the category overall, and the other "listed names", this initia­tive is clearly positive though, he said, as "the world's largestproduc- er is now launching an extensive marketing program focusing on farmed salmon".

One further analyst, wishing not to be quoted, said Marine Har­vest's strategy was "perfectly sensible", but that he saw salmon today as a commodity, with the majority sold under private label.

With salmon prices already high by historical standards, it could be difficult for MOWI - which Marine Harvest will look to sell at a 20% premium to private label prod­ucts, at least - to build consumer traction in the near future. Thus, the plan will take time; something Marine Harvest itself has stressed as well.


Neil Ramsden

Assistant editor

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