From the Nordic Marine Innovation Conference in Oslo 25th of January 2012 by Jens Henrik Møller, Partner, GEMBA Seafood. Title: Market innovation - sustainabilitu as an issue?

1. Nordic Marine Innovation Conference - Competition and cooperation
Innovation as a driver for competitiveness in the Nordic marine sector
Market innovation – sustainability as an issue?
Jens Henrik Møller
GEMBA Seafood Consulting A/S
January 25th 2012
© GEMBA Innovation

2. Agenda
 Intro: GEMBA Seafood Consulting
 Report on ”Kartlegning av kunnskab om sjømatmarkedet og
brukerdreven innovasjon i sjømatsektoren”
 Sustainability/Innovation some trends in the markets
 Cases of innovation
 Advices
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3. Intro GEMBA Seafood Consulting A/S
GSC is a consulting company with focus on the seafood sector, economic
analysis and innovation in business processes.
Examples of works in the field of economic analysis:
– Analysis on different markets (European) for seafood products.
– Market analysis of the cold water shrimp markets and organizer of the
ICWPF-2011 in London.
– Economic Impact analysis and development/strategy processes for
Danish ports.
© GEMBA Innovation

4. Intro GEMBA Seafood Consulting A/S
GSC is a consulting company with focus on the seafood sector, economic
analysis and innovation in business processes.
Examples of works in field of innovation:
– ”Kartlegning av kunnskab om sjømatmarkedet og brukerdreven
innovasjon i sjømatsektoren”
– Development of new packaging material for smoked salmon.
– The use of ozone as a disinfectant tool in the fishing industry.
– Energy optimization - trawl fishery in the Baltic Sea.
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5. Report for Nordic Innovation Center (NICe) in 2011
Kartlegging av kunnskap om sjømatmarkedet og brukerdreven innovasjon i
sjømatsektoren
Some of the recommendations in the
report:
More focus on global market innovation in the
Nordic seafood sector.
Innovation funds and companies should focus on
trends like traceability, documentation and shelf
life.
It is needed to analyze the type, extend and
need for user driven innovation. Especially the
market innovation in the salmon sector have
been successful, other sectors could benefit
from this knowledge.
A pan Nordic comparison of the innovation funds
and their impact on the sector is needed.
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6. What is innovation?
One kind of definition:
Innovation is often defined as inventions and ideas that are translated into products or services
that are brought into the market:
Some types of innovation:
Product innovation
New products to existing markets.
Typical
views on Process innovation
innovation New ways of doing things.
in business
Market innovation
Existing products to new markets.
Innovation is a complex process - normally difficult to control and the
results are often surprising!
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7. What is sustainability?
One kind of definition:
For humans, sustainability is the long-term maintenance of responsibility, which has
environmental, economic, and social dimensions:
Some types of sustainability in the case of seafood:
Ecological sustainability, management plan for
stocks, by-catch of threatened species.
Typical
views on
Sustainable fishing methods, reduction of seabed
sustainability destruction, by-catch and discard.
in seafood
sector
Reduction of CO2 emissions, fuel and transport.
Financial sustainability, job creation and welfare.
And the normal reaction is to put some logo´s on the product!!
© GEMBA Innovation

8. The ”consumer sustainability map” in terms of seafood
Do the market ask for sustainability?
Not all countries in Europe have the same awareness of sustainability in
seafood:
 High level of awareness: Germany, Sweden, and UK
 Medium level of awareness: Denmark, Finland, Benelux and the north
part of France
 Lower level of awareness: Spain, Italy, Portugal, Greece and the
south part of France
© GEMBA Innovation

9. The ”consumer sustainability map” in terms of seafood
Market trends Germany:
 82 million inhabitants – big potential in the market.
 Traditionally the market in Germany has always been focused on
price.
 Increased focus on traceability, eco-labeling and sustainability at
consumer level.
 New trends are indicating that quality and especially certification is
becoming more important and is now established in many of the
biggest supermarket chains (LIDL & ALDI).
 The financial crisis in the EU has created insecurity in the German
economy.
© GEMBA Innovation

10. The ”consumer sustainability map” in terms of seafood
Market trends Germany:
 82 million inhabitants – big potential in the market.
 Traditionally the market in Germany has always been focused on
price.
 Increased focus on traceability, eco-labeling and sustainability at
consumer level.
 New trends are indicating that quality and especially certification is
becoming more important and is now established in many of the
biggest supermarket chains (LIDL & ALDI).
 The financial crisis in the EU has created insecurity in the German
economy.
© GEMBA Innovation

11. The ”consumer sustainability map” in terms of seafood
Market trends Italy:
58 million inhabitants – Big markets for seafood in the north –
interesting market.
The financial insecurity has had a big effect on the Italian
economy.
A strong ”discount trend” is now coming up after several years
with stable and increasing prices.
The discount trend may put pressure on “the demand” for
sustainability in coming years
© GEMBA Innovation

12. The ”consumer sustainability map” in terms of seafood
Market trends Italy:
58 million inhabitants – Big markets for seafood in the north –
interesting market.
The financial insecurity has had a big effect on the Italian
economy.
A strong ”discount trend” is now coming up after several years
with stable and increasing prices.
© GEMBA Innovation

13. Can innovation and sustainability be combined?
20 years ago
Food safety
The seafood
market
Innovation
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14. Can innovation and sustainability be combined?
10 years ago
Traceability
The seafood
market
Innovation
© GEMBA Innovation

15. Can innovation and sustainability be combined?
Now!
Sustainability
The seafood
market
Innovation
© GEMBA Innovation

16. Can innovation and sustainability be combined?
Future?
Creativity – Trustability??
The seafood
market
Innovation
© GEMBA Innovation

17. Can innovation and sustainability be combined?
Push for
innovation
from the
sector
consumption The
market
Sale
Processing
Sea Catch/
food Production
sector
Push for
sustainability
from the
market
© GEMBA Innovation

18. Product innovation
 Most people think in terms of product innovation.
 But classic product innovation is not always the best answer.
Product innovation?
 Sustainability as a product innovation leads to better prices and
secure sales.
© GEMBA Innovation

19. Case: Market innovation in Nigeria - Herring
The export of herring to the seafood market in Nigeria is a prime
example of market innovation!
The figure below shows that it is possible to expand the market
drastically.
Norwegian export of frozen herring
to Nigeria
160 000
140 000
120 000
100 000
ton
80 000
60 000
40 000
20 000
-
2006 2007 2008 2009 2010
But how do the market regulate innovation?
© GEMBA Innovation

20. Case: Market innovation in Nigeria - Herring
And what did happen in 2011??
Norwegian export of frozen herring to
Nigeria
160 000
140 000
120 000
100 000
ton
80 000
60 000
40 000
20 000
-
2006 2007 2008 2009 2010 2011
© GEMBA Innovation

21. Case: Market innovation in Nigeria - Herring
Probably due to increase in price due to lower quota for Norwegian
spring spawning herring
Norwegian export of frozen herring to Nigeria
160 000 8
140 000
Price jump!:
7
2010: 4.40 Nkr.
120 000
6
2011: 7.00 Nkr.
100 000
NKR/kg
Eksport/ton
Ton
80 000 5
NKR/kg
60 000
4
40 000
3
20 000
- 2
2006 2007 2008 2009 2010 2011
The example shows that market innovation can lead to improved
export but change in demand, surplus and prices can change effort in
market innovation in short time.
© GEMBA Innovation

22. Case: The MC Donald case
 MC Donalds chose Espersen A/S due to sustainability/traceability
 Espersen A/S chose Hermes A/S due to sustainability/traceability
 Prices for certified fish are not always higher.
 But the sale is more secure.
 Hermes had less problems during the ”cod crisis”
© GEMBA Innovation

23. Case: Product innovation in sustainability – MSC certified plaice
MSC certified plaice from the North Sea have been sold for 2 - 4 DKK
above the price for non - certified plaice.
This example shows it is possible to gain better profit margins by
certification (MSC).
Average price for plaice sold at the fish auction in the Port of
Hvide Sande in 2011
16
14
12
10
DKK/kg
8 MSC
Conv.
6
4
2
0
jan feb mar apr may jun jul aug sep oct nov dec
© GEMBA Innovation

24. Case – Process Innovation
Proces innovation:
 Prawns from Ilulissat:
 199 DKR/kg.
 Prawns from City of Matane:
 +8%
A new product line and new
packaging - made for TESCO telling
the story about sustainability in
fishery and sustainability in the
processing – wind energy from
local area!

© GEMBA Innovation

25. Case: Process innovation and sustainability – Katrine Kim R 254 - NEXØ
Experiments from the Baltic cod trawler fleet shows it is possible to reduce
fuel consumption up to 38 % per kg. cod.
The project utilized Dynema-wires, pelagic trawl doors and Dynema panels in the
trawl.
The example shows that sustainable process innovation is very important way to
secure the profitability in the fishing sector.
© GEMBA Innovation

26. Case: Process innovation in sustainabillity
What is next step?
A new project in North Sea to convince the fishermen at the west coast!
But the results need to be communicated throughout
the whole value chain so processors and traders are
able to gain from the results!
© GEMBA Innovation

27. Case: Product innovation in Europe - trendsetters
The trendsetters in product innovation are typically located close to the markets
Seafood Prix d'Elite that is a competition in European Seafood Exhibition goes to
new and innovative products in the European seafood market.
I the period 2008-2010 the competition was won by
2 German enterprises
1 UK enterprise
1 Spanish enterprise
1 Dutch enterprise
1 Danish enterprise
Apparently the Nordic seafood sector is not doing so
much in product innovation
© GEMBA Innovation

28. Summary:
The “cases”:
Sustainability in market innovation:
It can work without sustainability - but demand/ supply and price can easy
change the situation (Herring in Nigeria) – sustainability can secure the market
position and reduce the downs (Hermes/Espersen).
Sustainability in product innovation:
The MSC may work and give higher prices (Plaice from Hvide Sande) –
but nothing is sure!!
Sustainability in process innovation:
Some companies try to tell the story (Prawns from City of Matane)– but it must
be told throughout the whole value chain (Energy consumption in the fishery)!
Nordic trendsetters in product innovation: Non or few!
© GEMBA Innovation

29. Some good advices!!
 Market innovation can expand the market, which secures the
prices.
 Markets like Africa, Brazil, India and China are opportunities for even
more seafood.
 Innovation in sustainability gives better profit margins and/or
secures the sale of the product.
 Ongoing process innovation are very important to keep the sector
competitive - but the results need to be communicate in a better
way throughout the value chain into the market – if the seafood
sector should gain the full potential and benefit from the work with
sustainability and innovation.
© GEMBA Innovation

30. Nordic Marine Innovation Conference - Competition and cooperation
Innovation as a driver for competitiveness in the Nordic marine sector
Jens Henrik Møller
GEMBA Seafood Consulting A/S
JM@GEMBA.DK
Thank you for your attention! WWW.GEMBA.DK
© GEMBA Innovation