Alaska Seafood in China

Joe Jacobson International Program Director November 2, 2012

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What is the Alaska Seafood Marketing Institute?

Partnership

of public and private sectors

Public corporation

that fosters effective alignment with industry marketing efforts

Governor-appointed Board of Directors

: five processors, two commercial harvesters.

Alaska’s official seafood promotion arm,

supports Alaska seafood industry through promotion of Alaska seafood products, education and research in the U.S. and key overseas markets including China.

Alaska waters produce more than 50% of U.S. seafood Total Alaska exports in 2010: $2.35 billion The seafood industry is the State of Alaska’s largest employer

ASMI Mission: Increase the economic value of the Alaska seafood resource

China Seafood Market Overview

• China is world’s largest aquatic product producer • 2011 total aquatic production forecast at 53.6 MMT • Future growth driven by aquaculture • Major species: carp, tilapia, pangasius (catfish), shrimp/prawns

China Seafood Market Overview

• 2010 seawater aquatic production (aquaculture) estimated at 14.5 MMT • 2010 freshwater aquatic production (aquaculture) estimated at 23.5 MMT • Total aquaculture production=38 MMT (72% of total aquatic production)

China Seafood Market Overview

• Wild capture fishery production stagnant or in decline, unlikely to increase • Salt water catch (2010) = 12.4 MMT • Freshwater catch (2010) = 2.1 MMT • Total: 14.5 MMT (28% of total production)

Major Production/Processing Regions (2009)

• Shandong—7.536 MMT • Guangdong—7.026 MMT • Fujian—5.675 MMT • Jiangsu—4.432 MMT • Zhejiang—4.403 MMT • Laioning—4.006 MMT • Hubei—3.339 MMT • Guangxi—2.623 MMT

China Seafood Market Overview

• Huge middle class with greater disposable income • Per-capita aquatic consumption increasing… 14.7 KG/year (2009) • RMB’s steady appreciation against the dollar makes AK products more competitive • Average wholesale price for aquatic products increased 10% YOY in 2010; salt-water products increased 14%

Market Trends and Opportunities

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Hypermarket and Restaurant Growth

– 75% of seafood consumed at home – As income grows, the amount of food purchased at supermarkets (especially processed food) increases significantly – Young people (18-34 years) dine out much more frequently and are more likely to purchase fast/convenience foods

Consumer Expenditures on Food (U.S. $Billion)

Between 2003 and 2007, consumer expenditures on food jumped to more than 36.7% of total expenditures (Projected to double by 2020!).

700 600 500 400 300 200 100 0 19 90 92 94 96 98 20 00 02 04 06 08

Source: Global Insight’s Global Consumer Markets Service

20 10 12 14 16 18 20 20

Per-Capita Annual Seafood Expenditure, Urban Residents, by Region (2009)

• Fujian—954 RMB/year • Shanghai—728 RMB/year • Zhejiang—623 RMB/year • Hainan—619 RMB/year • Guangdong—594 RMB/year • National Average—301 RMB/year • (Beijing = 246 RMB/year)

Alaska Seafood Exports to China, 2001-2010, ($1,000) $600 000 $500 000 $400 000 $300 000

243 905

$200 000

140 432 168 189 205 025 176 808 204 368

$100 000

47 296 40 578

$-

2001 2002 2003 95 910 2004 2005 Value (000) 2006 Volume (MT) 2007 2008 2009 2010

Flatfish 22% Alaska Seafood Exports to China, 2010 NSPF 3% Molluscs 1% Crab 6% Salmon 37% Groundfish 28% Herring 3%

Major Products Exported to China/H.K. (2010)

Snow Crab Chum Fr/Fz Pink Fr/Fz Sockeye Fr/Fz Cod Pollock Fillet Pollock Sole Other Flatfish

NSPF

MT

3,401 19,385 39,349 5,346 25,373 12,479 13,620 66,041 22,305 7,271

Value (000)

$ 28,786 $ 63,682 $ 113,175 $ 25,002 $ 68,186 $ 31,008 $ 26,562 $ 81,565 $ 35,673 $ 18,043

Processing Sector (Export)

Aquatic export processing = 33% of total aquatic product export market value Processing sector grew strongly in 2010 (10 15%) However, processors challenged by: • Rising production costs • Labor shortages • Raw material fluctuations • Slow global growth

Processing Sector (Domestic)

Domestic processing sector growing quickly As foreign market growth slows, companies turning inward to focus on China Even those with a background in aquaculture interested in importing wild-caught seafood from around the world (including Alaska)

Major Products Exported to China/H.K. for Domestic Consumption (2010)

Snow Crab

Species

King Crab Black Cod Salmon Roe Halibut/Turbot NSPF (Fishmeal) Cod Pollock Fillet Pollock Sole

Volume

3,401 330 897 258 2,150 7,271 25,887 12,479 13,620 66,041

Value

$ 28,786 $ 5,448 $ 7,234 $ 2,580 $ 5,811 $ 18,043 $ 69,777 $ 31,008 $ 26,562 $ 81,565

Market Trends and Opportunities

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Food Safety

– Food safety is the primary concern among consumers, especially regarding domestic food products sold in the market.

– Quality natural imported products are increasingly entering the market, which has spillover benefits for the marketability of Alaska Seafood products.

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Health-conscious -

Organic foods are quickly rising in popularity.

* Organic food sales have increased by 50% at Carrefour in China between 2007/08 – Following the health trend, rising popularity of organic foods mean consumers are more receptive of healthy products such as Alaska seafood.

Market Trends and Opportunities

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HRI Growth

– Restaurants • Clean fast food of certified quality • Quick service restaurants expanding rapidly; KFC now has over 3200+ outlets in 650+ cities, 1 new outlet per day, target of 20,000 outlets – Hotel and Catering Industry • The hotel and catering industry recorded retail sales of US$18.3 billion, up 26.3% from 2007 • As disposable incomes increase, Chinese consumers spend more eating out

Market Challenges

• Entrenched live or fresh fish preference • Distribution network outside of first-tier cities • Vast country with diverse tastes and preferences • NE a reprocessing for re-export center • Prominence of farmed salmon/Russian product • Trade barriers • IPR Infringement

ASMI China Activity

In order to further expose Alaska seafood, encourage more traders and consumers to purchase or use the products and to increase the sales of Alaska seafood to China, ASMI China has devoted the utmost attention for these promotional effort in the Chinese Market.

Market Strategy

• Focus efforts in the four major cities of Shanghai, Beijing, Guangzhou and Hong Kong. However, ASMI will selectively expand into the most promising second and third-tier cities as opportunities present themselves, particularly in nearby satellite cities that have access to first tier cities’ distribution chains • Strengthen the brand image through the promotion of the distinct natural and pure features of Alaska Seafood and proper labeling • Work with processors that produce for the Chinese domestic market, including major fast-food chains and producers of frozen convenience food sold at the retail level. With changing lifestyles, prepared, pre-cooked or ready-to-eat fishery products are now in high demand

Some of the ASMI materials currently available in the Chinese language:

• Alaska Salmon Buyer’s Guide • Alaska Whitefish Buyer’s Guide • Alaska Seafood Fact Sheets for several species of Alaska Seafood • The Nutrition Story • Roe Guide (Pollock and Salmon) • Alaska’s Harvest – Natural, Sustainable, Pure • Alaska Seafood Suppliers’ Directory • Alaska Seafood’s Sustainability Brochure

Consumer Sector

 Working with new partners like RT-Mart, City Shop and Jenny Lou’s etc. to carry Alaska seafood through promotional activity efforts.

 Price-point products like sole and pollock are being featured on a more frequent basis during the consumer promotions.

Consumer Sector

Consumer PR and Recipe Development

   Posted billboards in HK and Guangzhou.

Placed advertising and advertorials in lifestyle magazines and newspapers.

Produced 4 segments of TV shows targeting audiences of 300 millions.

   Organized 3 consumer club activities (Shanghai, Beijing & Guangzhou).

Press coverage campaigns generated over 150 articles with a value of $155,000.

2 different recipe categories have been developed, with 24 recipes per category .

Press Coverage of Alaska Seafood

Trade Sector

Trade Shows

 HOFEX  China Fisheries and Seafood Expo Now the largest seafood show in Asia

Trade Sector

Trade Education

 Trade gatherings were held in Beijing, Guangzhou and Hong Kong.

 Organized retail education seminars with retain chains like Metro in East & North China, RT-Mart in East China and Vanguard in South China to teach stores buyers how to differentiate wild Alaska seafood from farmed seafood as well as emphasize sustainability of Alaska seafood.

HRI Sector

Food Service Promotions

 Worked with high-end hotels/restaurants across China. First time cooperation with around 70% of the promotional partners.

 Products being used were not only high-end Alaska seafood items like sockeye salmon, king crab, snow crab, black cod and halibut, but also pollock, cod and sole as well.

 Most of the promotional partners are still using Alaska seafood after the promotions such as White Swan Hotel, Radisson Plaza Hangzhou, Dong Fang Hotel Guangzhou, Greenery Café and La Seine Restaurant Guangzhou.

HRI Sector

Chef Seminars

 Organized hands-on chef seminars (Qingdao, Beijing and Macao) and 3 normal chef seminars (HK, Dalian & Shenyang).

 220 local chef participated in these events, and some hotels like Rose Hotel Shenyang, Trade Hotel Shenyang, Inter Continental Hotel Beijing and Venetian Resort Macao have started to use Alaska seafood after the seminars.

HRI Sector

Training School Program

 Conducted training programs with five culinary schools in Shanghai, Beijing, Nanjing and Chengdu.

 Over 2,200 students attended the training programs.

HRI Sector

Chef Forum

 Organized a two part chef forum (chef competition and nutrition seminar) in Guangzhou and a chef competition in Shanghai  Over 200 chefs attended both events

Upcoming Activities

Trader Focus

 Organize outbound trade mission to China focusing on new trade partners in south China..

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If you want to do business in China, you need to invest time and effort in developing relationships