How can sustainability be used to market shrimp in China? Henrik Aarestrup Vice President Emerging Markets – BioMar Group

What is a sustainable shrimp? There isn’t any easy definition as sustainability is characterized by a number of trade-offs BioMar has over the last decade worked to assess the sustainability of our products through Eco-Efficiency calculations While it provides a solid knowledge it is hard to communicate the complex relations behind sustainability to the consumers Picture shrimp In practice products labeled as sustainable tend to focus on one or a few parameters like carbon footprint, responsible use of resources, good farming practice, etc…

How can we differentiate a product on sustainability? Corporate Sustainability Product Sustainability Differentiation Risk Management Must have Strategic program for continuous improvement Sustainability leader Advanced sustainability differentiator Company initiatives Premium products Voluntary global standards Extended product standards Industry standard follower Company activities Product requirements Legal compliant player Legal compliance or sticking to voluntary global standards is not enough to demand a differentiation premium on sustainability

Creating an advanced sustainability differentiated product Double Omega-3 compared to ordinary salmon Sustainably optimized ingredients such as microalgae Marine ingredients derived from trimmings of wild-caught fish processed for human consumption Responsible farming methods Added a bit of clean blue Artic marketing…

An example of someone just following the flow… The ASC certification is difficult and costly to achieve, so why not use all the good elements a bit better in story telling?

Lessons to be learned from the Organic market 30 years from first certifications to achieve a somewhat clear positioning of organic food Danish consumers are world champions in purchasing organic food, but just 13% of food sold in Denmark is certified organic China is today the fourth largest market for organic food – but organic share in China is below 1% Fish & shrimp are far behind with less than 1% of total organic consumption Top 9 organic market shares and China Luxemburg Switzerland Sweden Austria USA Germany Holland France China Denmark

Why do the consumer chose organic food products? 1. Personal Health Food safety No Antibiotics No GMO No Pesticide residue No Additives 2. Perceived Product Quality Taste Texture Freshness Natural 3. Environment & Ethical Protecting Nature No spread GMO Animal welfare No pesticide in nature While the health and quality are shared between Western and Chinese consumers the distance to number three on the list is larger in China

Global environmental issues have more limited value as differentiators in China than in Western countries Environmental degradation is a major concern among urban Chinese consumers The near environment – and particularly air pollution - is top of mind Mass market understanding of global environmental issues is however limited This reduces the value of global environmental issues as differentiator

Taking it into shrimp product development… Farmed without antibiotics No chemicals used in farming Good farming practice No Palm oil (deforestation) No overfishing (scarce marine feed ingredients) Protect habitat (mangrove) Strong sustainability stories in Europe will not necessarily work in China The three top items are both important for the sustainability and relevant to the Chinese consumer The three lower items are much more relevant among Western consumers than with Chinese consumers

Summing up… Sustainability can be used in marketing shrimp towards the Chinese consumer – however companies must go beyond the industry standard to achieve a premium price Product attributes related to food safety and personal health are and will for some time ahead remain stronger arguments than degradation of some far away environment Caring for the environment can be turned into good stories speaking to the “longing for the traditional” among Chinese urban consumers Fraudulent use of labeling and green washing is a major risk in the Chinese markets – relying merely on certificates is not a guarantee for success