Bord Bia’s Brand Forum Cases in Brand Excellence
Lossie Seafoods: The Pride of Scotland
New Opportunities
In July 2011, Associated Seafoods announced the friendly acquisition of Lossie Seafoods,
one of Scotland's premier smoked salmon specialists for an undisclosed sum. It was a
proud day for directors John Cowe and Charlie Devin, both of whom had been
instrumental in developing an international business around the company's core brand
Pride of Scotland. As of 2011, Lossie Seafoods (Lossie) exported its products to 24
countries and was considering further expansion into India, Sweden, Saudi Arabia, Qatar,
Oman, Thailand, the Caribbean and Norway. Employing 55 personnel including a small
administrative and executive staff, the company had sales of £8 million, over 80% of which
was generated from exports in 2010.
The original business, a white-fish processor and retailer, founded by Cowe's grandfather
had pioneered the development of many new and emerging markets for premium quality
Scottish farmed and smoked salmon around the world beginning in the 1990's.
As a result of the acquisition, it appeared there was potential to further diversify Lossie
Seafoods' core skills and brand harnessing the expertise of its larger parent, Associated
Seafoods. Seizing that opportunity was not without its challenges, however. Among others,
threats included international competition from Norwegian and Chilean producers that
dominated global supply combined with price sensitivity and a quagmire of branding
issues. These all conspired to distract an SME from its core objectives in export markets.
Until that point Lossie Seafoods had managed well due to a blend of strategic foresight,
good fortune and Scottish salmon's positive reputation, but it remained to be seen how
Lossie Seafoods would address these and other issues in the medium-term future as such
pressures only increased.
Background
Based in Lossiemouth Scotland, Lossie Seafoods Ltd started out processing white-fish
and smoking wild salmon caught in local rivers. Over time the firm built up an expertise in
smoking salmon which proved fortuitous as the white-fish sector subsequently collapsed
under pressure from international competition and fluctuating supply. Lossie had invested
in a state-of-the-art purpose built facility in 1988 upgraded to EU food hygiene standards in
1993. Consequently, management evaluated the prospect of entering the salmon
processing business as their only real alternative for longer-term survival.
At the time salmon aquaculture was rapidly taking-off to meet the boom in demand for fish
that wild fisheries simply could not satisfy. Fortunately, the company had three key
ingredients for success; it was an established Scottish business with expertise in salmon
smoking and it had recently hired the right talent to help transform the business. The next
task was figuring how to harness these resources and create a new business from them.
In 1995, Charles Devin, joined Lossie Seafoods from Orkney Seafoods to work as sales
and marketing director. Devin had built a career working with local companies later moving
on to manage Orkney's smoked salmon export business. His experience in exporting,
sales and branding would prove invaluable in fast-tracking Lossie's entry to international
salmon markets and in pinpointing Lossie's value proposition. It was clear that despite the
local industry's export orientation and Scotland's reputation as the original home of
smoked salmon, no business was really exploiting their Scottish roots.
Certain they had identified a real market opportunity, the switch was made. By 1999 the
company had ceased all white-fish operations, moved to bigger premises in nearby
Buckie, making the strategic decision to focus on smoking salmon and exporting the finest
Scottish oak-smoked salmon, initially in whole sides, sliced sides and retail packs.
Building a Brand
From the very beginning of operations as a smoked-salmon producer, Lossie was clear
about its value proposition, its route to market and where sales growth would come from.
Products would be made to order, fresh without reliance on stock and branded under the
name Pride of Scotland. The name and branding was chosen to leverage the associations
with Scotland as the origin of smoked salmon and as a producer of a quality of salmon
distinct from Norwegian, Alaskan or Chilean salmon, being ruddier and leaner.
The salmon was cured using dry salt in the traditional manner and then oak smoked or
smoked over beechwood chips while some product lines were marinated in local single
malt whiskies as well. Additionally, Lossie produced gravadlax available in whole sides,
sliced sides and retail packs. Gravadlax was cured using spices and herbs instead of
smoking.
Focused on superior quality, management deliberately avoided producing own-brand
products for UK supermarkets eager to take advantage of the growing interest in and
availability of the renowned pinky-red fish typically associated with celebratory occasions.
Reflecting on the decision Cowe commented, “we decided we weren't in the business of
buy one get one free”. Management reasoned it could not supply both ends of the value
spectrum and were convinced that despite supermarket pressures on price, discerning
customers would still value quality, provenance and taste.
Instead, Lossie decided to build a brand and deal more directly with trusted business-tobusiness customers. As such it began by targeting restaurants, small hotels, fish shops
and small distributors in the UK and building contacts abroad, supported by local trade
bodies. In export markets it concentrated on small family-owned distributors with whom it
could generate a rapport and relationship about its products. The aim was to develop sales
through higher-end retailers, delicatessens and restaurants. As such, relationships were
critical as Devin observed, “we pride ourselves on not selling from stock and providing
fresh products to customers' own specifications”.
Exporting
While UK sales continued to grow management's focus was primarily on export markets.
Given the size, proximity and levels of demand of the EU market, it seemed logical to
focus efforts there; but Lossie decided to pursue any and all high-value market niches
around the world. Part of the rationale was to 'de-seasonalise' the product while part was
to develop untapped demand in the emerging upper-middle and middle-classes of
developing economies. Commenting on the plan Cowe observed, "traditionally, smoked
salmon makes money from August to December and for the rest of year struggles to break
even. Now we make profits all year round".
In Europe, price sensitivities among mainstream consumers only helped to differentiate
Pride of Scotland further. As the largest markets for salmon products in Europe, both
France and Germany had established traditions of eating salmon regularly throughout the
year but they were also dominated by Norwegian brands that could and did compete on
value for money as opposed to taste or meat quality. Lossie adhered to its marketing
strategy carving a niche at the higher end of the market, taking pride in its commitment to
tailor products according to customers' needs. On one occasion for example, the company
worked round the clock to prepare and supply 450 kilos of smoked salmon for Russian
president, Vladimir Putin who was so impressed with the quality of the fish he wrote a
letter of thanks. The publicity and the endorsement were invaluable to management as
they considered developing the Russian market further as a result.
Having undertaken its research Lossie found potential demand in many emerging markets
where smoked salmon was perceived as a luxury and where, although the customer base
was relatively small compared to the mass markets of Europe and Asia, an information
gap persisted and consumers clearly valued the qualities that a brand like Pride of
Scotland offered. In short, Lossie targeted discerning consumers in markets as disparate
as Hong Kong, Austria, Lebanon, Kuwait, Jordan and Mexico. In many of these cases it
pioneered the market for premium brands of Scottish farmed and smoked in Scotland. In
fact as of 2010, it claimed to be the only Scottish salmon-smoker exporting to Moscow,
Copenhagen, Beirut, Mexico City and Amman in Jordan.
Branding Issues
Key to the success of Lossie Seafoods' Pride of Scotland brand was its relationship based
marketing strategy. In that way it could control the messages about its product, gain
valuable feedback and market information and protect the brand from competitive forces.
With growth in the smoked salmon industry branding had become increasingly complex for
Scottish salmon producers. On the one hand, benefiting all Scottish salmon producers,
Scottish salmon was the first fish and the first foreign product to obtain the prestigious
Label Rouge quality mark granted by the French Ministry for Agriculture. The mark acted
as dual recognition of the superior quality and the origin of Label Rouge Scottish salmon.
This was a major boon in particular for differentiating fresh Scottish salmon from its lighterhued Norwegian counterparts for example.
At the product level several non-Scottish products had entered UK, US and European
markets using branding, product names and packaging claiming Scottish origins either
through packaging designs or confusing terminology. The result was that lower quality
products, trading on Scottish associations were eroding brand equity for reputable brands
such as Pride of Scotland which guaranteed traceability and authenticity. Eventually in
2010 the industry as represented by the Scottish Salmon Producers Organisation (SSPO)
secured Protected Geographical Indication (PGI) Status from the EU for all 'Scottish
farmed salmon smoked in Scotland'. The industry had secured PGI status for all Scottish
farmed salmon in 2004 but this further qualification offered companies like Lossie the
specific protection required in the EU at least.
In 2006, Lossie Seafoods entered into a strategic partnership with leading Irish smokedsalmon processor, Nolans. Domestic and export sales growth had been continuing rapidlyat rates approaching 40% with sales nearing £4 million, more than 80% of which were
generated abroad. The partnership allowed both Lossie to streamline some operations
such as filleting and reduce costs associated with waste and boxing products.
Commenting on the relationship Devin asserted, “it has been a great partnership. We
wanted somebody on board with knowledge of the smoked salmon business, so it has
been a good move for us and a good move for them”.
The partnership also began paying dividends in terms of official recognition. In 2007
Lossie collected three industry awards including the prestigious Food From Britain Food
and Drink Export Awards 2007. It marked the beginning of a slew of awards over the
following years including Scotland's Food and Drink Excellence Award, the SCDI
Excellence in International Business Award and the SCDI Outstanding Achievements in
Exports Award among others.
Future Prospects
In general Lossie's future seemed extremely bright. Sales were booming – in Mexico for
example sales were growing at 35% per year and the partnership with Nolans had helped
streamline costs while bringing additional expertise to the business.
In the medium-term, management was focused on more immediate and accessible growth
markets across two regions- Europe and the Middle East. In the latter Lossie had already
developed connections in Kuwait, Bahrain and Jordan. Meanwhile in Europe it had
eventually broken into the Danish market, supplying some of the country's most exclusive
stores. From there it hoped to penetrate Iceland, Sweden and even Norway. Commenting
on the prospect of penetrating the Norwegian market, Devin acknowledged that “if we can
do that, it would be like taking coals to Newcastle. It would be the ultimate deal.”
But looking to long-term future growth management knew Asia was calling. It was
estimated that by 2030, two-thirds of the the world's middle classes would be living in Asia
– a massive market for seafood products considering the cultural affinities to fish and
seafood across the region. The opening of new markets such as China represented a
tantalising prospect for all Scottish salmon producers. China consumed almost 220,000
tonnes of salmon in 2009 and the portion of that from Atlantic salmon was growing steadily
each year. Although Norway dominated supply to the Chinese market, opportunities
remained for premium priced products to tap into China's burgeoning middle-classes and
taste for affluence. It seemed Lossie's relationship based marketing strategy was well
suited to penetrating pockets of demand in China's urban centres targeting affluent
Chinese consumers but other challenges would surely arise in branding, packaging,
labeling, pricing, human resources and distribution.
The acquisition by Associated Foods represented another major transition in the
company's growth trajectory, bolstering its international outlook while at the same time
presenting management with decisions about how to market Pride of Scotland as a brand
in a larger portfolio of Scottish seafood products.
Key Learnings For Irish Brands
1. Aligning country-of-origin-effects with marketplace perceptions can pay off if
supported by an effective marketing mix. Lossie Seafoods used a marketing mix
that afforded them optimal control of message, distribution and pricing to support
their premium quality position and market niche as the Scottish smoked salmon
brand
2. Certain trends endure the world over – provenance and quality for example- a
brand that can deliver on adds value tot he core product and may command a price
premium.
3. Lateral thinking can help bypass business challenges such as seasonal demand,
thereby opening up previously unseen market opportunities
Annexes
Annex 1: Selection of Pride of Scotland Products