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West Coast Groundfish Pilot: What’s Next for Developing Local Markets?

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A previous post outlined the results of the recent market demand research for West Coast groundfish. This post follows-up with more detail on the proposed West Coast groundfish pilot.

Purpose and Intent

And now what? That was our first question after learning the results from the market demand research. Those results indicated that next efforts to improve demand and pricing for West Coast groundfish should focus on selling minimally processed products to suppliers and buyers in the grocery retail and full service restaurant sectors. The answer is a pilot project; one designed to test the findings which will help U.S. West Coast fishermen expand into regional market.

This project would aim to raise commercial buyers’ and suppliers’ awareness of U.S. West Coast Groundfish as a domestic, sustainable source of whitefish and prove that these fisheries can provide a reliable supply of local fish. As a result, it will establish new markets and demonstrate the benefits and availability of West Coast groundfish to other buyers and suppliers.

Rationale

A pilot project, with defined sales periods and goals, will provide room to experiment to build relationships and to understand the market dynamics. Without a pilot, it will be difficult, if not impossible, to rally collaborative action or justify further investments in the fishery. Harvesters and buyers envision a pilot as being a first step in creating an ongoing sales effort that expands beyond the West Coast within two to three years, possibly sooner.

A successful pilot is key to having larger, sophisticated customers purchase significant quantities for a substantial part of their operations; the pilot also develops the tools they need to successfully use and continue purchasing the fish. Assuming the pilot results in positive values, harvesters, trusts, buyers, NGO’s, and potential investors will have information necessary to make decisions about infrastructure, marketing and other investments. In addition, they can start sizing-up plans in the local, regional and national markets, all of which are important to increasing quota attainment.

Framework

To create organizational capacity that endures beyond the period of the pilot, it needs to be structured carefully. The fishermen and the buyers need to feel comfortable with their roles and build knowledge useful for future efforts. Because of this, the pilot project will endeavor to work within the existing supply chain to build the ability of the harvest groups and processors to provide reliable supply. Memorandums of understanding and contracts for the pilot have to be written so all the parties involved understand their roles and feel comfortable with their responsibilities. Of utmost importance, the pilot design must incorporate a way for the value chain to continue the work after the pilot concludes.

Target Outcomes

Some specific questions the pilot should be designed to answer revolve around the conditions and requirements for supply and pricing. At the outset, stakeholders will need to address legal restrictions on collaboration. The pilot should also define the incentives or conditions needed to gain cooperation between the processors and the groundfish harvesters. Also, the pilot should delineate the amount of fish, prices, and timing (flow of supply and seasons). Finally, the pilot will try to determine the level of transparency needed to build trust so that value chain actors can work together as a team to create value.

Final Thoughts

Regardless of who carries out the work, a pilot is the best next step for the West Coast groundfish stakeholders. The ultimate goals are easy – improve profits for those paying for management – but the route has to be carefully plotted. Building trust and knowledge and demonstrating improved values are key. We can get there, but we have to keep the focus on the end goal of a sustainable fishery, which means ensuring profitability for the harvesters.

US West Coast Groundfish – Key Market Channels

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Continuing our market demand assessment work with US West Coast Groundfish, our partner, Changing Tastes completed an assessment of key distribution channels to prepare for the survey they’ve just initiated. In this post, we discuss what the key distribution channels are, their preferences for fresh and frozen, and why any of that matters.

As we and others have said, the story of US West Coast Groundfish is one of best fish stories you probably haven’t heard. The fishery was declared an economic disaster in 2000, but in 2014 thirteen species were MSC certified in 2014, eight groundfish in the California Groundfish Collective fishery are green-rated by Seafood Watch plus more from the fishery that are green- or yellow-rated. In an effort to increase overall value in the fishery, we’re working with Changing Tastes to help determine who could be purchasing this fish and the key characteristics of demand.

Changing Tastes recently initiated a survey to assess demand, but they had to identify key market channels in order to focus assessment efforts. The following information is based on their work, which they completed using a combination of methods, including:

  • Government data for whitefish consumption
  • Publicly and privately held company data
  • Professional opinion gained from working with some of the nation’s largest restaurant and food service companies and grocers

Total sales of whitefish (a broad category that would include the species landed in the fishery) are estimated at US $542.9 million in the three West Coast states based on US government data, with $442.7 million of that spent in California. Total dollar value of whitefish was second to shrimp, unsurprisingly.

 

Click to see table of approximate dollar values

Sales and format value comparisons of whitefish in California, Oregon and Washington. Green is the proportion of the value sold fresh; blue is the proportion sold frozen. Size of the graph is relative to the total values of whitefish bought. (“School and government institutions” and “Hotels” are shown larger than their proportion of the total for visibility purposes. Grocery is actually ten times larger than hotel, and 40 times larger than schools and governments.)

These channel categories are generalizations—different companies and brands within each category may use different mixes of fresh and frozen—but the generalizations are useful for determining which channels to concentrate on for survey completion.

Interestingly, an unpublished May 2016 study by Globescan noted that California consumers are 20% more likely than the average national consumer to buy fish from fresh counters in grocery stores.

Click to see table of approximate volumes

Click to see table of approximate volumes

Changing Tastes then screened the channels using their professional opinion on parameters based on the desired outcome of improved values, including their ability of a market channel to:

  • pay a premium for higher quality, local or sustainable
  • use whole or minimally processed fish, frozen or fresh
  • practice seasonality by varying menu options
  • be flexible with species offered

Based on values, volumes and their professional opinion, Changing Tastes is prioritizing receiving feedback from the following channels, and the specialty distributors who supply them:

  1. grocery
  2. full service restaurants
  3. institutional foodservice sub-segment of colleges, corporate dining, and cultural and leisure destinations
  4. hotels

The survey started landing in inboxes last week. By mid-October, we should have more to report about the initial findings. Until then, if you have questions, comments or suggestions, we’d love to hear from you.