Analysing the Distribution Strategies of Norwegian Salmon in Germany

Analysing the Distribution Strategies of Norwegian Salmon in Germany
Student’s Name
Course
Professor’s Name
University
City (State)
Date
Table of Contents 1.    Introduction. 4 2.    German Salmon Market Distribution Routes. 4 2.1     German Seafood Market Overview.. 4 2.2     Main German Distribution Channels - Catering and Retail 5 2.3     Germany’s Retail Industry Trends and Changes. 5 2.4     Norwegian Salmon Distribution in Germany. 6 3.    Market Players and BCG Framework Analysis. 7 3.1     Overview of the Market's Major Players. 7 3.2     BCG Key Market Player Matrix Analysis. 8 3.3     Norwegian Salmon Positioning. 9 3.4     Salmon Farming and Environmental Criticism.. 10 4.    Competitor Analysis. 10 4.1     SWOT Analysis of German Seafood Processing. 10 4.2     Key Metrics. 11 4.3     Norwegian Salmon Competitors and Their Strategies. 11 4.4     Market gaps and possible areas for improvement 12 5.    Porter's 5 Forces Industrial Analysis. 12 5.1     Threat of New Entrants. 12 5.2     Bargaining Power of Suppliers. 13 5.3     Bargaining Power of Buyers. 13 5.4     Threat of Substitute Products. 13 5.5     Rivalry Among Existing Competitors. 14 5.6     Strategic Penetration and Norwegian Salmon's German Market Impact 14 6.    Salmon Buyer-Supplier Relationships. 15 6.1     Overview and Dynamics of Buyer-Supplier Relations. 15 6.2     Shipments of Import and Export 15 6.3     Profiles and Trends of Salmon Importers. 16 6.4     Norwegian Salmon Opportunities and Challenges. 16 7.    Current Status PESTLE Analysis. 17 7.1     Political factors. 17 7.1.1    Impact of Trade Agreements and Brexit 17 7.1.2    International Relations. 17 7.2     Economic Factors. 17 7.2.1    Market Size and GDP Contribution. 17 7.2.2    Profit Margins. 18 7.3     Social factors. 18 7.3.1    Consumer and Health Trends. 18 7.3.2    An ethical perspective. 19 7.4     Technological Factors. 19 7.4.1    E-commerce and processing. 19 7.4.2    Sustainable fishing. 19 7.5     Legal Considerations. 19 7.5.1    importing and exporting laws. 19 7.5.2    GMO regulations and animal welfare. 19 7.6     Environmental Factors. 20 7.6.1    Ecological Impact of Sustainable Practices. 20 7.6.2    Consumer Sustainability Preferences. 20 8.    Recommendations Employing the Ansoff Matrix. 20 8.1     Market penetration. 20 8.2     Market development 20 8.3     Product Development 21 8.4     Diversification. 21 8.5     Strategic Growth and Expansion Recommendations. 22 9.    Conclusion. 23 Reference. 24  1 Introduction
Examining Germany's thriving seafood sector reveals a market shaped by shifting consumer habits and a refined palate, one in which salmon plays a complex and far-reaching role. With the third-largest GDP in the world and the most stable economy in Europe, Germany has one of the continent's most expansive markets for food products, including seafood, providing a compelling backdrop for delving into the nuances of the salmon market. According to a Financial Times survey, Germany's economic outlook has evolved to produce one of the most affluent consumer bases in the world (Strauß, 2023). This is demonstrated by the country's economic resilience and the elevated average disposable income. Considerably, Germans' purchasing power rose to an impressive 1.94 billion DM, illuminating a landscape where food and drink costs gracefully cascaded to an estimated 5,900 DM, roughly 19% of total average expenditures (Soares Andrade et al., 2023). Despite their significant purchasing power, German consumers have demonstrated a careful and discerning spending behaviour, particularly favouring discount stores for their food purchases. This indicates an inherent inclination towards caution and a desire for value. The research aims to explore the complicated and multifaceted German food market, focusing on fish and, most notably, farmed salmon, recognizing its consumption patterns and industrial significance amid shifting culinary trends and economic trajectories. It further evaluates Norwegian salmon and seeks to understand the interconnected factors that mark success in the German market.
2 German Salmon Market Distribution Routes
1 German Seafood Market Overview
The German seafood market has historically exhibited a diverse and extensive consumption pattern characterized by a significant preference for traditional and internationally influenced seafood cuisine. Germans have a taste for many different types of seafood, but salmon stands out due to its adaptability as a fresh or smoked product (Cojocaru, Iversen and Tveterås, 2021). The market dynamics for salmon distribution within the country are complex and multifaceted due to external influences such as health trends, issues with sustainability, and shifts in dining habits. Therefore, a delicate balance between traditional practices and contemporary demands for distributors guides the market's direction.
2 Main German Distribution Channels - Catering and Retail
In Germany, the distribution of salmon is primarily stratified into the catering and retail industries. The retail industry, which primarily serves the dine-in market, is the backbone of the food industry in Western Europe, accounting for about 80% of all food sales volumes. The retail industry is segmented into modern channels like hypermarkets and supermarkets and conventional ones like corner stores and farmer's markets. According to Figgener et al. (2020), the former category primarily consists of large-scale retail chains with a significant market share of 63%. Contrarily, the catering industry—which includes commercial catering divisions like cafés, bars, and restaurants—remains essential to salmon distribution despite a recent decline. Commercial catering is a significant part of the distribution chain for seafood, especially salmon, although it is in decline, primarily due to consumer behaviour changes related to value for money. This complex web of conventional and modern retail and different catering segments develops a strong distribution network that addresses various consumer demands across various social and economic classes.
3 Germany’s Retail Industry Trends and Changes
The retail food industry in Germany underwent significant alliances from the twentieth century. The prevalence of chain stores, including hypermarkets, supermarkets, and discount stores, has increased, indicating a shift in consumer purchasing patterns and preferences away from local shops. Discount stores such as Aldi indicated a preference among German consumers for cost-effective purchasing options (Jaeger and Höhler, 2021). Additionally, the consumer market has seen significant home delivery and e-commerce growth. The retail industry is undergoing continuous transformation due to the projected growth of 10-15% in the demand for home delivery of packaged groceries. Convenience store growth, which is continuing to accelerate and reflects a trend toward fast, effective, and localized shopping experiences, is one constant factor that has surged.
4 Norwegian Salmon Distribution in Germany
Norway's prized salmon has long been promoted in Germany as a premium item with a wide range of potential uses in the kitchen, as shown in the figure below.
Figure 1: consumption of salmon in Germany from 2015 to 2022 (Shahbandeh, 2023).
Nevertheless, it faces criticisms regarding its use of a generic marketing narrative. The distribution of Norwegian salmon follows similar patterns to those observed in Germany. However, there is a notable contrast in its utilization. Despite experiencing significant growth annually over the past decade, Norwegian salmon is primarily associated with smoked preparations, perpetuating a stereotypical perception (Dyrset, Margaryan and Stensland, 2022). The challenge of differentiation grows as the value chain from producers to retailers evaluates origin stories, certification schemes, and production practices inconsistently. To successfully navigate the intricate German distribution networks and secure long-term growth and consumer acceptance of Norwegian salmon, a nuanced approach that accounts for unique market needs, regulatory compliances, and an appealing narrative around quality and sustainability is required.
3 Market Players and BCG Framework Analysis
5 Overview of the Market's Major Players
Critical companies like Rügen Fisch AG, Crusta Nova, Frosta, and Deutsche See each contribute to the growth and stabilization of the German seafood market (Pananond, 2021). The company's wide range of products, technology integration, and commitment to sustainability have shaped a path corresponding to the global demand for seafood and environmental considerations. Accordingly, high-quality fish products from Rügen Fisch AG have become a household name, with the company's goal being to have every bite remind the customer of the ocean's infinite bounty. According to Pananond (2021), with over 70 years of history, it has proven its tenacity and flexibility by enlarging its market and streamlining its operations, such as the strategic alliance with the Thai Union Group.
By implementing cutting-edge RAS technology for shrimp farming and creating a digital seafood platform that supports open, sustainable practices in the seafood industry, Crusta Nova, a company with roots in sustainability, emerges as a market disruptor and serves both B2B and B2C segments. Besides, with its commitment to MSC certification standards and transparent dedication to sustainable fishing practices, Frosta has positioned itself as a conscientious producer, resulting in significant sales increases despite market volatility.
Deutsche See represents broad reach and dependability in the seafood industry. By employing a sophisticated cooling logistics infrastructure and establishing numerous subsidiaries, this company guarantees the widespread availability of a diverse range of freshly sourced seafood delicacies throughout the country.
The structure and future course of the German seafood market, where sustainability, quality, and technological advancement have taken centre stage, are shaped by these players with their unique strengths and challenges.
6 BCG Key Market Player Matrix Analysis
The Boston Consulting Group (BCG) Matrix divides product portfolios into four quadrants: Stars, Cash Cows, Question Marks, and Dogs, each representing a different level of business growth and market share. The BCG Matrix will analyse and position German seafood companies like Rügen Fisch AG and Crusta Nova based on market growth and share, providing insights into their current and future market strategies.
Company
BCG Matrix Quadrant
Reasoning
Rügen Fisch AG
Cash Cow
A mature, stable market presence and a solid strategic partnership give it a steady revenue stream, even though it may not be the fastest-growing segment.
Crusta Nova
Star
Demonstrated innovative edge and substantial market growth through technology adoption in farming and digital sales, catering to the emerging demands of consumers and businesses.
Frosta
Question Mark
Amid uncertainties and market variables, it has potential with its sustainability practices and product popularity, but whether it will capture a larger market share remains a question.
Deutsche See
Cash Cow
With a nationwide operational base and stable distribution networks, it has a secure position but may not be experiencing high growth compared to other innovative players.
Table 1: BCG Matrix Analysis
7 Norwegian Salmon Positioning
Norwegian Salmon has successfully positioned itself in Europe's competitive protein market with its superior sashimi quality, firm texture, and unique flavour. Norway's salmon farming practises being characterised by extrinsic qualities rooted in a long-standing tradition of knowledge and optimal use of the country's naturally favourable farming conditions. Norwegian Salmon is strategically positioned to profit from the increasing demand for protein caused by rising global populations and per capita consumption. According to Saidi et al. (2022), salmon's inherent and cultivated characteristics, combined with Norway's refined farming techniques, contribute to its strong market position and ability to benefit from the growing global interest in healthy eating practices. For instance, Mowi ASA's strategic actions and positioning highlight the potential and toughness of Norwegian Salmon in the international market. Mowi, a prominent player in the industry, achieved a significant harvest of 464,000 tonnes of Atlantic salmon in 2022, resulting in a global market share of approximately 20%. Therefore, this success can be attributed to their skilful management of the industry's operational and strategic aspects (Mowi, 2023).
Additionally, it emphasises its dedication to protecting the competitive positioning of Norwegian salmon farming entities against rising operational costs and maintaining its central role in the global seafood industry; Mowi has consistently opposed the Norwegian government's proposed aquaculture tax despite subsequent amendments. This commitment to an ideal operating environment strongly focuses on sustainable growth in the global protein market. Thus, by syncing intrinsic quality with strategic industry navigation to maintain its standing amidst shifting market dynamics, Norwegian Salmon has maintained and strengthened its positioning in the global market, comparable to how Mowi has done so successfully.
8 Salmon Farming and Environmental Criticism
Salmon farming has drawn much criticism, especially on an industrial scale, with the majority of these criticisms focusing on the environmental effects and the contrast between wild and farmed salmon. It is important to note that industrial salmon farming has been linked to a role in localised pollution because it causes waste and uneaten feed to build up on the seabed, which in turn affects benthic ecosystems. The industry also faces issues with escapees, where farmed salmon are accidentally introduced into wild populations, posing genetic and disease risks. Putting wild and industrial salmon side by side reveals a debate over sustainability, flavour, and nutritional value. Wild salmon is frequently praised for its robust flavour and leaner texture, while industrial salmon is occasionally criticised for using antibiotics and artificial colours (Awuchi and Awuchi, 2019). Sustainability, transparent communication, and research-backed salmon farming innovations are needed to mitigate impact and meet global sustainability goals in this complex web of environmental, ethical, and consumer-choice dynamics.
4 Competitor Analysis
9 SWOT Analysis of German Seafood Processing
SWOT Analysis analyses a company's strengths, weaknesses, opportunities, and threats to determine its market position. This analysis will examine the German seafood processing industry's sustainable practices, vulnerabilities in international markets, and potential for innovative, environmentally friendly production methods despite threats like excessive fishing and unregulated competition.
Strengths. Because of its strong fleet and dedication to ecological sustainability, Germany's seafood processing industry has established a prominent presence in the North and Baltic seas. Vecchio et al. (2022) highlight that this approach effectively utilizes diverse production systems and capitalizes on significant funding from the European Maritime and Fisheries Fund (EMFF) and national contributions.
Weaknesses. The sector is vulnerable to risks to its sustainability and reputation due to historical and systematic issues like prioritizing fishing quotas over scientific advice. Furthermore, the ongoing decline in seafood exports highlights a possible lack of synchronization with international market requirements.
Opportunities. The industry might be revived by implementing cutting-edge, green practices and maximizing the natural environmental advantages of extensive production techniques.
Threats. Considering Germany's historical propensity for overfishing, IUU fishing and the underlying unregulated competition present significant threats to environmental sustainability and economic profitability.
10 Key Metrics
Focusing on Norway when analyzing competitors is instructive because of its strategic divergence in salmon market expansion strategies. In contrast, countries like Norway actively pursue strategies that add value and differentiate their salmon products (Blindheim et al., 2023). For instance, Norway plays a vital role in the production of salmon and uses diversification strategies that go beyond the simple export of gutted fish to branded, consumer-ready products, successfully positioning them closer to end consumers.
Norwegian Salmon Competitors and Their Strategies
Norwegian salmon policies sharply contrast with German ones, which tend to export salmon in forms that need further processing. Jäger et al. (2022) explore that even though Germany appears proficient in product output, with over 6,500 full-time employees and an annual revenue of about EUR 2 billion, it is critical to analyze why Norwegian strategies lean toward direct consumer engagement through product diversification and creative branding.
Norway has adopted a flexible strategy, prioritizing value over quantity, ensuring that its products satisfy and anticipate consumer preferences regarding flavor, color, and consistency. The shift toward consumer-ready products intertwined with compelling storytelling and quality assurance ensures a direct-to-market strategy that potentially results in higher profitability and improved brand perception. In contrast, the apparent absence of significant German branding and ready-to-use seafood products in domestic and foreign markets represents a stark departure from competitor strategies, particularly those used by Norway.
Market gaps and possible areas for improvement
The German seafood processing industry might benefit from direct-to-consumer marketing and product branding advancements by analysing Norwegian salmon distribution strategies in Germany. Germany's traditional export forms are more reserved than Norway's proactive positioning, influenced by consumer and processing industry preferences. This strategy might have origins in Norway's tendency to value distinctive salmon characteristics and pronounced efforts to tailor products to different preferences, a tactic that has arguab...