Direct sales as an alternative form of distribution for fishermen and fish farmers

EM3 19 TM direct sales Abb. 13Convincing benefits for suppliers and buyers

A lot of primary food producers try to sell part of their products directly to consumers and thereby circumvent other forms of trade. What has long been common practice for agricultural products is now becoming increasingly popular for fish and seafood, too. This marketing principle has advantages for both parties: the producers get better prices and the customers get optimal freshness.

When at around 4 p.m. the "petits bateaux" return to the port of Le Guilvinec on the French Atlantic coast and the fishermen unload their freshly caught fish or langoustines they are already eagerly awaited at the quayside by locals, restaurant operators and tourists. Fish that is not snapped up immediately can be seen shortly afterwards in one of the harbour fish shops, for example "La Marée du Jour", where crowds of customers are also already waiting. Three and a half hours further north-east by car in Cancale a good half dozen colourful stalls have been set up next to the town’s beach. That is where local oyster farmers offer their specialities. It would be hard to get "creuses de Cancale" fresher, or for that matter at a lower price, than here. Fresh fish sales straight from the fishing boat are also popular along the German Baltic coast. Anyone who wants to buy freshly caught cod or herring directly from the fisherman in the harbour of Wismar has to be an early riser: the town’s remaining fishermen usually land their day’s catch around breakfast time. And a lot of German trout producers, too, sell their fish directly to their customers. This sales channel is in the meantime practically indispensable from an economic point of view. Almost all producers offer their products in farm shops or at weekly markets, both fresh and processed – mainly hot smoked. Some trout farmers even have their own snack stands or fish restaurants. Direct sales are more lucrative than supplying to wholesalers and retailers. And they enable even smaller enterprises with relatively low production volumes to stay in business.

 

There are various ways of carrying out direct sales: fresh fish can be sold from the fishing vessel, from a stall in the harbour, from a farm shop next to the fish pond, or at weekly markets, where many regional producers sell their products. Some producers even offer fish and seafood products on the internet. All these forms of direct sales have long been an integral part of the retail landscape and are greatly appreciated by consumers. Even longstanding supermarket customers who collect their weekly food requirements in a time-saving "one-stop-shopping" process gladly make use of this form of trade. Buying fish directly from the producer has the charm of something special, of authenticity, and often even a certain entertainment value, too. People who buy their fish from a fisherman or fish farmer can be sure that they are getting an absolutely fresh product and can at the same time enjoy the satisfying feeling that they have bought locally, seasonally, fairly and sustainably. An additional motive for many of them is probably the price benefit because fish purchased directly from the producer is usually less expensive that that bought at the service counter of the supermarket.

Direct sales increase company earnings

However, buying directly from the supplier sometimes demands a certain flexibility from the customer. Whereas when buying from a trout or carp farmer a customer can be pretty sure that they will actually get the fish they want, there are various imponderables when buying directly from a fisherman. For example, the desired fish might not be available at all. Seasonal factors, closed seasons or various unexpected circumstances can influence a fisherman’s daily catch, or wind and weather can even prevent him from putting out to sea at all. In many fishing locations it’s possible to gain information about the day’s offers via web portals. Immediately after the catch, but at the latest on the journey back to the port, the fisherman will inform potential customers in advance via SMS what he has caught that day. This advance information makes it easier for potential fish buyers to plan their menu besides increasing anticipation and preventing disappointments.

In agriculture the search for alternative ways to generate additional income began as early as the 1980s. Direct sales of raw food products along with other products from the farm's own processing facilities very quickly proved to be a good means of increasing income and securing jobs in structurally weak rural areas. High-quality regional products are particularly appealing to price- and health-conscious buyers, who are often even willing to travel long distances for these special offers. In principle, the direct sales concepts devised by fisheries and aquaculture companies are precisely targeted at this market niche and thus meet the high expectations of a rapidly growing group of consumers. Of course, these sales efforts are not entirely altruistic because (like farmers) fishermen and pond operators also have to meet the challenge of gaining the maximum economic yield from their catch or the fish they produce.

EM3 19 TM direct sales Abb. 2From fisherman to consumer without intermediaries

Direct sales (sometimes called direct marketing or self-marketing) in the narrower sense means the sale of one's own products directly to end consumers without making use of intermediaries such as trading or processing companies. As described above the supplier can use various distribution and sales channels for this purpose: sale from the fishing vessel, farm shops, weekly markets, mobile sales stands, delivery services or via the internet. A further distribution channel is via supply to external farm shops which can in this way broaden their product range, or to selected retailers, regional catering and bulk consumer businesses. This is also regarded as direct marketing but since it requires an intermediate step before the products reach the end consumer it is referred to as "direct marketing in the broader sense".

Choosing a direct sales option demands consideration of numerous factors as well as operational and individual requirements. These will include the location and size of the business, the population density and purchasing power in the region, the local supply situation and competitive field, the time required for necessary transport routes, as well as the necessary investment and personnel costs. The fisherman’s commitment as well as, more generally, his personal abilities and talents, will also play an important role. A certain entrepreneurial skill is necessary, a good antenna for picking up nutritional trends, and the courage to take risks. That, too, can be very helpful when leaving traditional marketing channels or opening up new sales opportunities.

Buying from the producer is a real alternative for shoppers

Direct sales enable primary producers to achieve higher sales and more attractive profits than is possible using traditional distribution methods, selling to wholesalers, intermediaries and retailers. However, for this to work the producer has to manage his business well and must be able to offer an attractive assortment. Particularly helpful in the start-up phase is a network of reliable customers who buy the company's products quite frequently or regularly. The growing popularity of this sales form among customers proves that there is great interest in direct sales, especially in the fish sector. When shopping, many customers like to take the opportunity to find out more about the origin of the fish, fishing methods or conditions in the aquaculture business and they can do this best in a personal conversation with the producer. The preferred preparation methods of the fish on offer and recipe tips are also always a welcome topic.

Whereas fishermen only offer fish from their own catches when selling fresh fish at the quayside, farm shops of some aquaculture businesses now also buy additional products from external suppliers to round off their own range. This can enable better use of existing processing capacity besides enhancing the range for customers. (If you smoke your own trout anyway, you can also add mackerel, salmon or halibut to the smoke.)

Like any sales channel, however, selling directly to the end consumer does not only have advantages but also some disadvantages. One of the biggest advantages of direct selling is probably the fact that the supplier has control over the marketing process at every phase and can influence it himself accordingly. With the appropriate customer frequency high sales can thus be achieved in a relatively short period of time, which immediately benefits the business in full. In order to achieve this, however, it has to be accepted that people from outside the company – usually with their own vehicles – can come onto the company premises at all times, something which can disrupt normal business processes. In order to limit the risk of the introduction of fish diseases the fish farm should be well secured and fenced in. A fisherman, on the other hand, hardly needs any additional equipment to sell fish from his fishing boat which reduces the investment costs. Scales for determining the weight of the fish and suitable packaging materials are usually sufficient. Apart from setting up a farm shop, offering fish at weekly markets is probably the most costly and time-consuming option because it requires a suitably refrigerated sales stand and a transport vehicle. In addition, there are often barriers for new entrants to particularly rewarding markets and these can be as high as the stand fees. For smaller enterprises it can also be difficult that the owner is absent from the company during the sales period at the weekly market. Of course it is in principle possible to hire an additional sales assistant but the necessary costs often eat up the hoped-for profit.

Consumer expectations must never be disappointed

From whichever angle one views the situation it is hardly possible to find a generally valid, optimal solution for direct sales. Despite the problems mentioned above, market stalls can be very worthwhile if the offer is right and the market is visited frequently by customers who are really willing to buy. Farm shops, on the other hand, require less effort – apart from the investment required to set up the shop. A family member who has the necessary time and lives close-by can often take on the task of serving the customers. But it is still necessary to come up with something to attract customers to the farm and into the shop, especially in sparsely populated areas with poor transport connections. The advertising effort can be correspondingly high and it will only pay off if the product range offered meets the customer's expectations. Although supplementing the product range with additionally purchased products contributes to increasing attractiveness, it also puts pressure on the supplier to sell the goods as quickly as possible because freshness is an absolute must where direct sales are concerned, perhaps the most important sales argument that customers expect. However, this pressure is offset by the enormous freedom the supplier has in pricing his product range. In the farm shop, fish products are rarely under direct price or competitive pressure because the nearest fish supplier is often quite a long way off. Nevertheless, calculating prices should of course be performed with a sense of proportion if the customer is to come back again.

Today, upmarket restaurants like to buy their raw materials in the region and if possible directly from the producer. On the surface this seems to be quite lucrative and direct sales of fish can also benefit the supplier. However, deliveries to this customer group can involve quite a lot of effort, something which is often overlooked. The order quantities of restaurants fluctuate and delivery is usually expected at short notice. Direct sales to restaurants are therefore only worthwhile if the restaurant is nearby or the delivery is paid for separately. Direct sales to large-scale caterers and canteen kitchens can be just as difficult. These customers usually order larger quantities and also well in advance, because the menus are often fixed weeks in advance. However, in the case of large batches they usually expect calibrated and ready-to-cook goods, which not every direct seller can afford. In their search for new customers, many suppliers have high hopes of selling fish via the internet, overlooking the fact that this route can also be costly and no less difficult. The internet has the reputation of being a modern, convenient, stress-free and time-saving supply channel for almost all products, and this increasingly also applies to fresh fish and other fish products. However, it is really only convenient for the buyers because the supplier has numerous obligations and risks that arise from this sales option. For example, the additional costs for packaging and shipping are borne by the supplier and he must also bear the costs if the customer is of the opinion that a fish product does not come up to the expected quality standard. In addition, there is work involved in setting up and maintaining the website: everything that is advertised there should actually be available. Internet buyers are often price-sensitive and compare the offers and prices of different suppliers meticulously before placing an order. In case of doubt, it is better not to rely on the loyalty of such customers; even a price difference of a few cents can make them turn their backs. Anyone who disappoints a new customer will soon lose him again anyway.

EM3 19 TM direct sales Abb. 1Legal regulations must be observed

Direct sales, too, must of course comply with existing legislation on fisheries and aquaculture products and this can sometimes be difficult for small artisanal fisheries producers for organisational and logistical reasons. That is why inspectors responsible for monitoring direct fish sales from the fishing boat often turn a blind eye to the labelling obligation demanded by the current Food Information Regulation (LMIV-VO (EU) No. 1169/2011). This attitude should not be hoped for with regard to the EU ‘Hygiene Package’, however, which focuses on Regulations (EC) No. 852/2004 and (EC) No 853/2004, as these consumer protection provisions are strictly controlled everywhere. According to this, every direct seller is fully responsible for ensuring that his products are manufactured, processed, packaged, stored and transported under appropriate hygiene conditions. This can be an enormous challenge on a vessel that has just entered port from its fishing trip, even if the rather vague wording "appropriate" hygiene conditions still leaves the inspectors room for interpretation. Which small fishing boat, for example, has washbasins for cleaning hands or fish and how many fishermen change their working clothes before selling fish to private customers at the quayside?

Knowledge of food hygiene is essential

Direct sellers of fish are generally regarded as registered food business operators. However, food law approval is only required for direct sales if the operators sell their fish products to wholesalers or abroad. Legislation differentiates according to the quantity and processing status of fish products and imposes graduated obligations on direct sellers. If small quantities of primary products are sold directly to consumers or restaurants within a radius of 100 km no special registration or approval is required. "Small quantities" in the sense of the hygiene package means quantities that are customary in households in the case of direct supply to the final consumer. In the case of supply to retailers or restaurants the wording refers to quantities corresponding to a daily sales volume of the establishment. The term "primary production" covers farming and catching, slaughtering, bleeding, gutting and cleaning, removal of fins and refrigeration of fish products.

When supplying larger quantities from primary production to final consumers or restaurants the requirements of Annex I of Regulation (EC) 852/2004 must be observed too. These demand, for example, that the direct marketing establishment must register with the responsible administrative authority before the start of the sale. In addition, the applicant is required to have comprehensive expertise in food hygiene, and this must be demonstrated to the authority. People who have completed vocational training, such as a fisherman or fish farmer, are presumed to have the appropriate specialist knowledge without having to undergo an additional examination.

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