UrnerBarry’s Retail Feature
Activity Report

Atlantic Salmon

Dec. 4, 2020

Similar to most animal protein commodities, Atlantic salmon retail features have also recovered from the sudden drop from the initial stages of the pandemic.

When looking at all Atlantic salmon *retail ad features and prices beyond June (week 19 to week 47), while still below last year, promotions this year are above those seen in 2018 despite experiencing a strong demand. In addition, average retail feature ad **price during the same period is at the lowest level since 2016, which makes sense as that year the market suffered a supply shock caused by an algae bloom in Chile.

*Atlantic Salmon features include all “Atlantic Salmon” features labeled as such by each retailer, in addition to some in-house adjustments for those retailers that do not label farmraised salmon as “Atlantic Salmon”. If the ad does not specify “Frozen” it is assumed to be “Fresh”.
**Prices include “Portions” and “Steaks” which at times can affect the overall average price as fresh portions can be sold per piece at a much higher $/lb.—e.g. an ad for $5.99 each for a 5 oz. portion on a tray pack = $19.17/lb.

In so many words, salmon retail feature ads have been following a historical seasonal pattern since June with average retail ad prices dropping over a $1.00/lb. year-over-year. Meanwhile, prices at the wholesale level, have dropped between 18 and 25% (depending on the measure taken) during the same period year-over-year. If we use our in-house weekly margin measure for retail ad price relative to wholesale prices, which is delayed by about 7 weeks and smoothed by 6 weeks—and is not a measure of profitability, but rather a trend index—suggests that while significant savings have been passed on to the consumer, retailers are enjoying attractive buying prices relative to retail ad prices.

Again, while this is no secret, it is always important to illustrate what is being reported anecdotally with hard data. Retail features for all Atlantic Salmon from week 19 to week 47 are shown below.

Sr. Analyst, UrnerBarry Consulting
Angel Rubio — arubio@urnerbarry.com

Average retail feature ad price per pound for all Atlantic salmon dropped from $9.41 in 2019, to $8.38 in 2020, or a decrease of about 10%. Wholesale prices, have dropped anywhere between 18% and 25% during the same period year-over-year.



Seasonal and Linear behavior Retail Features, Atlantic Salmon

The charts on the left illustrate cyclical behavior of weekly retail ads for all Atlantic salmon. This chart clearly illustrates the seasonal increase in promotions during Lent, and then a seasonal drop thereafter. This year, promotions during the initial stages of the pandemic remained well below the historical average and outside of seasonal patterns—as expected. Starting in June approximately, feature ads recovered, and average feature prices dropped significantly.

We should see a seasonal increase in promotions as we head into the second week of December.

The bottom right chart illustrates the overall weekly linear trend for feature ads and average feature ad price.


Wholesale vs. Retail

*Margin Ratio: is not a measure of profitability, but rather a trend index that takes weekly retail feature ads smoothed using a 6-week moving average, and then delayed between by about 8 weeks.

The chart on the left illustrates when wholesale prices increase (using UB Index as a benchmark), retail feature ads (Buying Opps) tend to increase or remain above a support level. Using an in-house calculated *margin, we can measure relative price increases between the wholesale market and the retail feature ad price. Correlations between this margin and retail feature ads tend to change in both intensity and whether these are positive or negative depending on the period analyzed. For example, in 2012, correlation was strong and negative, while in 2013, margins were even stronger yet positive. These correlations could also break entirely at times. However, overall correlations since 2012 is positive (the higher the margin, the higher incentive to increase promotions).

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