AKSeafood Marketing Institute Report 2010

Message from the Executive Director Thank you for taking the time to take a look at Alaska Seafood 2011. This report offers

a snapshot of Alaska’s seafood industry today, provides some context as to how Alaska fits into the global seafood market, as well as specific examples of the economic contributions made by a healthy seafood industry to Alaska’s economy. This report also summarizes the role of the Alaska Seafood Marketing Institute (ASMI) in raising the value of Alaska’s seafood harvest, and outlines how it maximizes revenue to Alaska’s public and private sectors.

ASMI’s primary focus is to raise the harvest value of all Alaska seafood from all parts of the state. ASMI thrives due to a cooperative spirit with people representing the many facets of the Alaska seafood industry, processors and harvesters from many different harvest sectors, coming together to work for the common good. The Alaska Seafood Marketing Institute is proud to celebrate over three decades of successful partnership between the State of Alaska and the Alaska seafood industry.

The men and women of the Alaska seafood industry have worked hard to contribute to the success of this endeavor, volunteering thousands of hours of time and expertise to guide ASMI in executing its mission to raise the value of the harvest, and advance Alaska’s goal of sustained economic growth. Benefits can be seen throughout Alaska in communities large and small, to the state’s own treasury, and to businesses in our largest cities and our smallest towns, improving the economic vitality of our state.

Sincerely,

Ray Riutta

Alaska Seafood Marketing Institute1

© Art Sutch

Celebrating 31 years of successful partnership between

the State of Alaska and the Alaska seafood industry

Celebrating 31 years of successful partnership between

the State of Alaska and the Alaska seafood industry

Article 8 – Natural Resources Section 4. Sustained Yield

Fish, forests, wildlife,

grasslands, and all other

replenishable resources belonging

to the State shall be utilized,

developed, and maintained on

the sustained yield principle,

subject to preferences among

beneficial uses.

Adopted by the Constitutional Convention February 5, 1956

Ratified by the people of Alaska April 24, 1956

Became operative with the formal proclamation of

Alaska statehood January 3, 1959

Excerpt from the Alaska Constitution

© Chris Miller

graphics and photos

© Chris Miller

Table of ContentsMessage from the Executive Director. . . . . . . . . . . . . . . . . . . . . . . .1

Mission Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

ASMI’s Role. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Section I: Seafood Industry Snapshot . . . . . . . . . . . . . . . . . . . . . .12

Section II: Threat Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Challenges for Alaska in the Global Marketplace . . . . . . . . . . .18

Section III: Alaska Seafood Accomplishments in Brief. . . . . . . . . .20 Brand Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Section IV: ASMI Strategies and Tactics . . . . . . . . . . . . . . . . . . . .26 U. S. and International Marketing . . . . . . . . . . . . . . . . . . . . . . .26 ASMI Programs and How They Work . . . . . . . . . . . . . . . . . . . 26 U.S. Retail Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 U.S. Foodservice Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . .27 International Marketing and Foreign Agricultural Service . . . . .28 Technical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

Section V: Performance and Raising the Value of the AK Harvest 30 Ex-Vessel Value of Key Commercial Species. . . . . . . . . . . . . . .30 First Wholesale Value of Key Alaska Salmon Products . . . . . . .32 Value of Alaska Seafood Exports. . . . . . . . . . . . . . . . . . . . . . . .34 Alaska Seafood Brand Equity . . . . . . . . . . . . . . . . . . . . . . . . . .36 Alaska Seafood Ranks Second . . . . . . . . . . . . . . . . . . . . . . . . .37

Section VI: Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . .38 Revenue Sources Through FY 2009 . . . . . . . . . . . . . . . . . . . . .38 ASMI Funding Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 FY09 Revenues and Expenditures . . . . . . . . . . . . . . . . . . . . . . .40 FY10 Revenues and Expenditures . . . . . . . . . . . . . . . . . . . . . . .41

Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . Inside Back Cover


© Steve Lee

Alaska Seafood Marketing Institute

© Steve Lee

ASMI’s Mission

The Alaska Seafood Marketing Institute is

a marketing organization with the mission of

increasing the economic value of the Alaska

seafood resource through:

• Increasing the positive awareness of the Alaska

Seafood brand

• Collaborative marketing programs that align

ASMI and industry marketing efforts for

maximum impact within the food industry

• Long-term proactive marketing planning

• Quality assurance, technical industry analysis,

education, advocacy and research

• Prudent, efficient fiscal management

9

© Art Sutch

ASMI’s RoleASMI is a public-private partnership between the State of

Alaska and the Alaska seafood industry, established to foster economic development of a renewable natural resource. ASMI is playing a key role in the repositioning of Alaska’s seafood industry as a competitive market-driven food production industry. Its work to boost the value of Alaska’s seafood product portfolio is accomplished through partnerships with retail grocers, foodservice distributors, restaurant chains, foodservice operators, universities, culinary schools, and the media. It conducts consumer campaigns, public relations and advertising activities, and aligns with industry efforts for maximum effectiveness. ASMI also functions as a brand manager of the Alaska Seafood family of brands.

Section 1: Seafood Industry Snapshot

The U.S. commercial seafood industry has operated in Alaska for over a century, and since Alaska achieved statehood 50 years ago, the fisheries resources have been managed for sustainability. Thanks to Alaska’s commitment to science-based management, fishing and seafood are not just part of our Alaskan identity, they are part of our economic future. The Alaska seafood industry has successfully repositioned itself in today’s competitive global marketplace as a market-driven food production industry, and demand for our products is strong. Fishing and seafood have given rise to an industry worth $5.8 billion to Alaska

A Diverse PortfolioAlaska’s seafood portfolio is

valuable and full of variety,

including:

• Five species of wild Pacific

salmon

• Shellfish, including shrimp,

king crab, Dungeness crab,

snow crab, scallops, geoducks

• Pacific halibut and black cod

(sablefish)

• Alaska pollock and Pacific cod

• Other whitefish varieties

managed as “groundfish”

(sole, rockfish, flounder)

Alaska Seafood Marketing Institute 12

Seafood Industry Snapshot

in terms of direct and induced economic output.

Alaska’s seafood industry is competitive in the global marketplace, but its ability to succeed is dependent to a great extent on factors and forces it does not control, from natural cycles in the ocean environment to global economic conditions. Investing in infrastructure and seafood promotion is paying off, however, and the value of the harvest has increased substantially in recent years, increasing revenue to private and public sectors alike.

This large and diverse renewable resource industry generates employment from the inside waters of Southeast Alaska to the Gulf of Alaska and the Bering Sea. The seafood industry is Alaska’s largest private sector employer, employing about 53,000 people. Although the largest number of people find employment during the summer, about 11,000 people are employed for nine months of the year.

In addition to providing widely distributed benefits in the business sector, the seafood industry generates more than $100 million in fees and tax revenue for state and local governments, in addition to local property tax and state corporate income tax revenues.

The seafood industry brings $100 million in tax revenue to state and local governments. A portion of this is self-assessment revenue appropriated by the legislature to fund industry-related activities. Examples include the voluntary seafood marketing assessment through which the seafood industry supports ASMI.


© Art Sutch

Alaska Ex-Vessel Value $1.38 Billion in 2009



A laska E x-vessel value $1 .9 B illion in 2009 Value

Pollock

Pacific Cod

Halibu t

B lack Cod

O therG round fishShellfish

Salm on

Herring

Pollock 25%

Pacific Cod 9%

Halibut 10%

Black Cod 6%Other Groundfish 3%

Shellfish 15%

Salmon 30%

Herring 2%

Values shown are percentage of Ex-Vessel value

Alaska Harvest Tonnage by Species in 2009



Pollock 44%

Pacific Cod 11%Halibut 1%

Black Cod 1%

Other Groundfish 22%

Shellfish 2%

Salmon 17%

Herring 2%

Volume %

Pollock

Pacific Cod

Halibut

Black Cod

Other Groundfish

Shellfish

Salmon

Herring

Values shown are percentage of Ex-Vessel volume total tonnageSource: ADFG, NOAA and McDowell Group estimates



Over 4.2 billion pounds of seafood were harvested from Alaskan waters in 2009

Of all the species, Alaska salmon are probably the most widely appreciated by Alaskans, harvested all along the coast and in interior regions on large rivers. The crab fisheries and some of their captains have become familiar to millions of Americans through popular “reality television” shows. Halibut and black cod, although a small portion of the harvest tonnage, are big contributors to the overall value. Alaska’s pollock fishery is the largest, which together with the Pacific cod fishery, contributes nearly half the volume and over half the value of the commercial harvest.



ALASKA2%

GLOBAL98%

ALASKA52%

ALL U.S.48%

Alaska Harvest vs. Domestic

Alaska Harvest vs. Global

U.S. Per Capita Protein Consumption 2009

Source: USDA

Beef

Pork

Poultry

Seafood

16 lbs

61.5 lbs

46 lbs

72.7 lbs

Alaska Salmon vs. Domestic

Alaska Salmon vs. Global

US10%

AK12%

ALASKA90%

GLOBAL88%

SALMON PRODUCTION

TOTAL SEAFOOD VOLUME

There are a number of threats ASMI must counter in order to raise the value of the seafood harvest. Among food proteins, seafood is suffering the greatest negative impact from the economic meltdown, and Alaska’s highest value species are hardest hit. Competing proteins such as farmed fish, beef, pork, chicken and dairy products are often lower priced, and often have well-financed promotional campaigns. Alaska will need to ramp up promotional efforts to win back customers and prevent brand erosion. Whether the concern is contaminants in seafood, confusion over eco-labels, or the global ramping up of aquaculture, ASMI must effectively challenge attacks, and educate the consumer, trade customers and the media about the value of Alaska’s seafood.

Section 2: Threats and Challenges for Alaska in the Global Marketplace

Examples of external threats to increasing brand value: • Continuing global recession results in ongoing uncertainty for

Alaska seafood producers and suppliers.• Global aquaculture: relatively constant wild seafood supply

overtaken by aquaculture, which now produces more seafood than capture fisheries.

• Competing nations, and competing proteins: pork, chicken and beef, dairy and farmed fish are priced lower and have better-funded marketing campaigns. ASMI competes against nations for market share, and in the case of many competing products the governments of the countries (e.g., Norway, Chile, Scotland, Australia) are actively involved in providing funding.

• Following periods of increase in value for particular species, Alaska producers are encountering price resistance.

• Seasonality, consistency of supply, inelasticity of supply: product availability fluctuates within the season and from year to year, and there are upper limits to wild seafood production in sustainably managed fisheries.

• International economics: currency fluctuations, softening of domestic or foreign economies (e.g., ASMI’s U.S. dollars in key overseas markets shrink dramatically when converted to Euros, Yen, and Yuan), tariff and trade barriers.

• Increasing fuel and transportation costs.• Confusion over eco-labels: a proliferation of eco-labels in the

marketplace (labels denoting sustainably produced seafood), and the issues of traceability and country of origin labeling require educating customers at consumer and trade levels about the Alaska Seafood brand and Alaska as the model of sustainable fisheries management.

• Funding: dollars available to support infrastructure and marketing, many federal sources drying up, promotional costs are rising.


Threats and Challenges for Alaska in the Global Marketplace

Section 2: Threats and Challenges for Alaska in the Global Marketplace


© Steve Lee

Section 3: Highlights of Accomplishments during Fiscal Year 2010

• Conducted innovative promotional activities with retail grocers, foodservice distributors, restaurant chains, foodservice operators, universities, and culinary schools to strengthen Alaska brand seafood in the United States, Japan, European Union, and China

• Launched third-party certification program of Alaska fisheries based on the Food and Agriculture Organization’s Code of Conduct for Responsible Fisheries.

• Since 2002, Alaska seafood export value increased nearly 23% from $1.78 billion (645,732 MT) to $2.19 billion (684,541 MT) in 2009.

• Improved alignment with industry trade spending• Offered training to retail and foodservice employees through

online training program “Alaska Seafood U.”• Developed new tools to educate the world about the sustainable

management of Alaska seafood, including new videos posted at www.alaskaseafood.org.

• Provided Alaska Seafood Quality and Handling Training Program to harvesters, tender operators and processors, including online course and certification.

• Created and placed new advertisements emphasizing sustainability of Alaska Seafood in publications read by home cooks, chefs, restaurant owners and retail grocers.

• Developed marketing outreach to the next generation of seafood consumers through college campus outreach, fish taco recipe contest and other Gen Y programs.

• Supporting sales of value-added frozen Alaska seafood products, ASMI expanded awareness of CookItFrozen! resources. Visit specially dedicated website www.CookItFrozen.com.

• Gained newspaper, magazine, radio, TV and internet exposure for Alaska Seafood in U.S. and key overseas markets.

Highlights of Accomplishments

© Art Sutch


• Increased the value of fresh, frozen, and shelf-stable (canned and pouched) Alaska Seafood in the U.S. and key international markets.

• More than 200 Alaska communities benefit from increases in Alaska seafood product value.

• Expanded use of Alaska canned salmon and explored prospects for use of canned herring in international food aid programs through ASMI’s global food initiative.

• Media tours/trade missions to Alaska from U.S. and Germany, and trade shows in Asia, Europe and U.S.

• Participating Alaska seafood companies at ASMI’s Alaska Pavilion exhibit at the 2010 European Seafood Exposition generated on-site sales of $48,570,000, and $500,650,000 in projected sales for the ensuing year.

• The 2008 value of a “ton unit” of exported Alaska seafood reached a 10-year high of $3,303. In 2009 the “ton unit value dropped slightly to $3,203.“

• Through the Community Development Quota program, many rural coastal communities are participating in Alaska’s largest commercial fisheries, including the pollock fishery. The increases in commercial seafood value bring millions of dollars to participants in the CDQ program.

• Launched an online press room with high definition video clips and still photography at www.alaskaseafood.org.

• Collaborated with organizations promoting Alaska as a visitor destination, and used opportunities to showcase Alaska Grown produce. ASMI’s worldwide promotions of Alaska Seafood showcase Alaska as a destination for visitors. While not the specific goal of ASMI marketing efforts, this is an added benefit that comes at no additional cost.

During Fiscal Year 2010

Brand PowerASMI’s access to the corporate offices of grocery retailers, restaurant operators and

foodservice distributors around the world has successfully increased the value of its corporate partnerships, and achieved increased use and awareness of the Alaska Seafood brand and companion brands. ASMI also cultivates media contacts to increase positive exposure for Alaska and Alaska Seafood.

The relationships built by ASMI have built brand equity for Alaska Seafood that can be leveraged by all Alaska seafood suppliers. As a result of educating chefs, restaurant operators, foodservice distributors and seafood buyers, ASMI has helped Alaska Seafood become one of the top three most popular food brands on menus of the top 500 U.S. restaurant chains, and the brand is increasingly popular in key overseas markets.

More people than ever before are being exposed to the brand and to key messages about what it stands for: “Alaska” signifies wild, natural, unparalleled flavor, superior quality, sustainability, versatility, ease of preparation, and healthfulness. ASMI is committed to building the enthusiasm — and brand equity — for sustainable, wild-caught Alaska Seafood, and the use of the logo on value-added seafood products is increasing.



Wild AlaskaDUNGENESS CRAB

Wild AlaskaPOLLOCK

Wild AlaskaSALMON

Wild AlaskaCOD

Wild AlaskaHALIBUT

Wild AlaskaSOLE


ASMI’s exhibit at the 2010 European Seafood Exposition generated on-site sales

by participating Alaska seafood companies of

$48.57 million and projected sales for the

ensuing twelve months are expected to reach

$500.65 million

© Steve Lee

Wild Alaska Seafood commands

respect in the

marketplace

With hands-on guidance from its seafood industry board of directors and input from dozens of industry experts serving on operational and advisory committees, ASMI applies a range of strategies and tactics tailored to fit specific market segments in the U.S. and overseas. This enables Alaska’s seafood promotion arm to conduct effective consumer retail and foodservice promotions, public relations activities, media campaigns, and technical education, all designed to increase the value of Alaska’s seafood resources and build brand equity.

U.S. and International Markets• Conducts consumer campaigns to strengthen demand for wild and natural Alaska

Seafood, stimulate sales and increase economic value of Alaska Seafood• Executes advertising and public relations campaigns to boost usage of all key commercial

species of Alaska Seafood• Performs outreach at expositions and trade shows• Works with broadline foodservice distributors to maximize Alaska Seafood penetration• Customizes promotion methods with retailers and foodservice operators to build on

strong brand equity to differentiate Alaska Seafood from the competition• Partners with restaurant chains to increase number of restaurants that feature Alaska

Seafood as a branded menu item• Conducts media tours and media outreach to secure positive publicity for Alaska’s

seafood products and the Alaska seafood industry

ASMI Programs and How They WorkPromotional efforts in the U.S. market and key international markets succeeded in

increasing the value of fresh, frozen, and shelf-stable (canned and pouched) Alaska Seafood. The agency conducted innovative promotional activities with grocery retailers, foodservice distributors, restaurant chains, foodservice operators, universities, and culinary schools to strengthen Alaska brand seafood. Quality assurance education training, and technical support are among the resources provided for the seafood industry and promotional partners. Through communications, public relations and advertising activities, millions of people around the world are exposed to positive messages about Alaska Seafood.

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Strategies and Tactics

U.S. Retail MarketingThe domestic retail marketing program works to align with Alaska seafood suppliers

and retailers to support their sales and marketing programs. Over the years, the retail program has worked with every major supermarket chain in the country. ASMI capitalizes on the latest seafood consumption and preparation trends by working with chefs, home economists, quality experts and key food industry influencers. Resources for retailers include a wealth of literature and sales aids and interactive web-based training for retail seafood counter personnel. Consumers have direct access to recipe collections and preparation videos through ASMI’s website.

U.S. Foodservice MarketingThe domestic foodservice marketing program is designed to help both commercial and

non-commercial foodservice operators handle, menu and promote wild Alaska seafood products. Through an extensive chef network and programs with professional schools, such as the Culinary Institute of America at Greystone, ASMI offers expertise – as well as a wide range of promotional and educational materials – to help operators capitalize on the latest seafood and eating trends.

International MarketingThe focus of the international promotional effort is on key markets: Japan, the European

Union and China. The main activities are retail and foodservice promotions, technical seminars, chef and retail Alaska Seafood training, Alaska tours for members of the overseas trade and press, trade shows, outbound trade missions, advertising and public relations. The program is active in mature markets including Western Europe and Japan as well as conducting limited explorations in the emerging markets of Ukraine, China and Russia. ASMI is meeting with success in efforts to increase the value of fresh, frozen, and shelf-stable (canned and pouched) Alaska Seafood in key international markets.

Section 4: Asmi Strategies and Tactics

27

Section 4: ASMI Strategies and Tactics


International Marketing and Foreign Agricultural Service

Overseas marketing activities receive substantial support from the federal government through the United States Department of Agriculture (USDA). ASMI applies annually for USDA Foreign Agricultural Service (FAS) funds from the Market Access Program (MAP). The amount of MAP funds awarded to ASMI, and the timing of their receipt, are subject to annual congressional budget appropriation. ASMI, the State of Alaska, the Alaska seafood industry and the federal government work together to increase volume, value and/or market share in mature markets, and to further develop emerging markets.

TechnicalThe Alaska seafood industry and businesses promoting Alaska Seafood have access to seafood technical support

through ASMI’s in-house technical program. This proram offers information on matters of food safety, quality, nutrition and food labeling, as well as environmental issues, fisheries sustainability and seafood purity. The technical staff works in collaboration with the marketing staff to research and develop educational materials and programs. It also works with the Alaska seafood industry in the area of quality assurance, and educates producers and customers about proper handling at every point from harvest to plate.

CommunicationsThe communications program supports the marketing programs through media relations activities and press

interviews, participation in seafood industry trade shows, preparation of reports and press releases, and advancing the education effort for sustainable seafood. It serves as liaison with the seafood industry, policy makers, the business community, and local, state and federal officials.

© Art Sutch

Section 5: Performance

Raising the Value of the Alaska Seafood Harvest

ASMI is accomplishing its mission of increasing the economic value of Alaska seafood resources, providing economic benefit to state and local governments, and to private sector businesses. The following measures are used by ASMI to report on its performance to the State of Alaska.

Ex-Vessel Value of Key Commercial Species

The ex-vessel value of key commercial Alaska seafood species fell to $1,380,000 in 2009, down from $1,627,000 in 2008, a decrease of 27%. This was due essentially to three key factors: 1) continuing global economic turbulence, 2) substantial reductions in the pollock total allowable catch, and 3) lowering in value of Pacific cod due to rebounds in Atlantic stocks. “Ex-vessel” value is the price paid to harvesters.

Analysis of results and challenges: Over the past several years, Alaska has succeeded in raising the value of the seafood harvest; however, reduced harvest quotas and the global recession led to a decline in overall value of the resource in 2009. Value (ex-vessel) of key commercial species totaled nearly $1.3 billion in 2009, falling short of the 0.5% growth target for the year (-27 % growth from 2008 to 2009).


Performance

$0

$400

$800

$1,200

$1,600

$2,000

Val

ue (

$ m

illi

ons)

2003 2004 2005 2006 2008

Source: ADF&G, NMFS, SMIS estimatesCombined value of salmon, pollock, P-cod, sablefish & halibut,

shellfish, other groundfish

2007

Alaska Ex-Vessel Value,Key Commercial Species

2009

2008-200927% Decrease

Source: ADF&G, NMFS, SMIS estimatesCombined value of salmon, pollock, Pacific cod, sablefish and halibut,

shellfish, other groundfish

2010 Highlights: • The ex-vessel value of Alaska pollock and Pacific cod fell by

34% ($249 million), accounting for most of the decline in total ex-vessel value across all fisheries. Alaska pollock and Pacific cod account for 55-to-65% of Alaska fisheries by volume and roughly a third of their overall value.

• The North Pacific Fishery Management Council (NPFMC) lowered the TAC (Total Allowable Catch) for Alaska pollock by 18% in 2009, and while Pacific cod harvests were similar to 2008, the price of cod fell due, in part, to the rebound of wild cod stocks, especially in the North Atlantic and the current financial crisis in Iceland.*

• Salmon values fell 12% to $398 million; sockeye were the only salmon species that didn’t see lower ex-vessel prices.

• Halibut and sablefish values fell by 18% in 2009. The decline in ex-vessel value stems from lower quotas assigned to each species as well as recession-related problems in the restaurant industry.

• Shellfish values were essentially unchanged although the ex-vessel price for Bristol Bay red king crab and snow crab increased.

• For the second time in the past 10 years, the seafood industry paid over $100 million to federal, state, and local governments in the form of taxes, fees, and self-assessments (not including income taxes).

• Alaska seafood was far from the only protein source to be affected by the economic downturn; producer prices of pork, beef and chicken declined 13%, 10% and 4% in 2009. Collectively, the ex-vessel price per pound of Alaska seafood declined 11% in 2009.

Continuing support for marketing efforts will be needed to return ex-vessel values to those seen in 2008 and continue the upward growth trend. The outlook for 2010 is much improved as markets for Alaska seafood around the globe are rebounding from the poor


31


economic conditions that plagued businesses in 2009. According to preliminary information from Alaska Department of Fish & Game and trade press reports, early season prices for salmon, halibut and sablefish have generally increased. Through November 2010, export values are up for salmon, Alaska pollock and Pacific cod compared to last year. Future threats to the value of Alaska’s fishery resource include foreign competition from Russia which harvests many of the same species, a possible resurgence of Chilean salmon farming, aggressive targeting of U.S. salmon market by Norwegian farmed salmon producers, adapting Alaska seafood to be incorporated into changing palates, and the ever-present competition from other protein sources which fund their own expansive marketing campaigns.

*Iceland is the second largest cod producer in Europe behind Norway. The 2008/2009 financial crisis hit Iceland extremely hard, causing their currency to lose over half of its value relative to the dollar. As a result, it made their cod much cheaper from the European and American buyer’s point of view.

First Wholesale Value of Key Alaska Salmon Products

First wholesale value of selected Alaska salmon products decreased 9.5% from 2008 to 2009. At $967 million in value the 2009 season still ranks well above 2007, 2006 and 2005 seasons. Regaining an upward trend benefits Alaska’s economy through job


$0

$200

$400

$600

$800

$1,000

Val

ue (

$ m

illi

ons)

2002 2003 2004 2005 2006 2007

Alaska Salmon Value Growth:Ex-Vessel and First Wholesale

Ex-Vessel First Wholesale Value, selected products

Source: ADF&G, AK Dept. of Revenue Selected products: fresh and frozen H&G, fresh and frozen fillet,

salmon roe, canned salmon

$1,200

2008 2009

Source: ADF&G, AK Dept. of RevenueSelected products: fresh and frozen H&G, fresh and frozen fillet,

salmon roe, canned salmon


More than 200 Alaska communities involved with Alaska salmon and more than

886 Alaska salmon processors benefit from

improvements in the market

creation, increased commerce, and increased revenue to state and local governments. Preliminary numbers from 2010 indicate a rebound in value of the salmon harvest. Coupled with strong harvest numbers, the 2010 salmon season looks to be the most valuable since 1992.

Analysis of results and challenges: First wholesale value of Alaska salmon dropped 18% to $967 million following six years of continuous growth.

The ex-vessel value of the salmon catch reached $398 million in 2009 – a drop from $452 million in 2008.

As first wholesale values recover, the ratio paid to harvesters increases and many Alaskans participate in the fishery. This increases economic profitability and generates employment.

Returning to an upward value trend requires ongoing support for promotion. The industry is responding to consumer preferences for fillets, boneless and skinless portions, new shelf-stable products, and new value-added products, including many products made using frozen pink salmon that in previous years would have been destined for canning.

As wholesale values began to recover in 2004 and climbed to over $1 billion in 2008, harvesters were paid an average 43% of wholesale value. Participation in Alaska salmon fisheries rebounded with salmon values. More than 200 Alaska communities involved with Alaska salmon and more than 886 Alaska salmon processors, ranging from harvesters processing their own catch to medium and large processing companies, benefit from improvements in the market.

Challenges include global economic conditions, price resistance, seasonality, consistency of supply and resulting price fluctuations, higher fuel and transportation costs, proliferation of eco-labeling schemes, lower prices for competing proteins, and issues affecting international exports of Alaska seafood.

33

© Steve Lee

Source: NMFS

Value of Alaska Seafood ExportsSince 2002, the value of Alaska seafood exports increased nearly

23% from $1.78 billion (645,732 MT) to $2.19 billion (684,541 MT) in 2009. While the total value declined slightly last year due to the financial crisis and smaller than anticipated harvests of key species, the overall decline is remarkably small. Additionally, the 2009 value of a “ton unit” of exported Alaska seafood dropped slightly from a 10-year high of $3,303 to $3,203.

Analysis of results and challenges: More than half of the Alaska seafood harvest is exported. Volume and value of Alaska seafood exports to ASMI program countries decreased in 2009. The tonnage of Alaska seafood exports to ASMI program countries decreased 4% and value declined at 7%.

A look at export growth over a five-year period shows that from 2004 to 2009 the value of exports to ASMI program countries grew 10%, compared to only a 3% increase in value for countries where ASMI does not have ongoing marketing activity. The value basis for exports is “free alongside” value at port of export, which captures the value of the finished product ready to export.

Japan remains Alaska’s largest seafood trade partner, with Europe and China constituting the second and third largest export markets, respectively. ASMI is also conducting promotional activities in emerging markets in Eastern Europe, Russia and is investigating Brazil.

Total Alaska seafood exports, including countries where ASMI is not active, were valued at $2,185,924,000. The value of Alaska seafood exports to ASMI program destination countries grew 10% from 2004 to 2009, while the value of Alaska seafood exports to



0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2004 2005 2006 2007 2008 2009

Value (Millions $)

Volume (MT)

Alaska Seafood Exports to ASMI Program Destinations

other countries grew only 3% during that period.

ASMI is meeting many challenges, which include global economic conditions and confusion over labeling issues, including a profusion of eco-labels that have the potential to erode Alaska Seafood brand value. Other challenges include international currency fluctuations, tariffs and trade barriers affecting international trade, changing customer demands reflecting changes in eating habits and lifestyle, international changes in food safety regulations, price resistance, seasonality and consistency of supply, inelasticity of supply, increasing transportation costs, low prices on competing proteins including farmed fish, and well-funded campaigns promoting other proteins.

© Art Sutch


Alaska Seafood Brand EquityAlaska Seafood held second place among food brands on U.S.

restaurant menus in 2010.Analysis of results and challenges: Alaska Seafood has increased

its brand equity in the U.S. Measuring its popularity on the menus and among consumers helps chart its progress. The Alaska Seafood brand ranked second in popularity among food brands on the menus of the top 500 restaurant chains over the past eight years, however the goal is to be “Number One.”

A wide majority of U.S. restaurant diners have a positive impression of the Alaska Seafood brand (77%) as a result of Alaska Seafood Marketing Institute foodservice promotions and informing the public about wild Alaska Seafood. Alaska salmon is preferred 84% to 16% over Atlantic salmon in restaurants. The economic downturn has resulted in reduced spending in U.S. restaurants and this has created a particular challenge for Alaska Seafood. Sixty percent of U.S. seafood consumption occurs away from home, and people are eating out less frequently, spending less when they do go out by ordering less expensive proteins, or going to less expensive restaurants.


© Art Sutch

Alaska Seafood Supports CommunitiesAnalysis of results and challenges: Communities throughout Alaska benefit from increases in the value of Alaska Seafood and from a healthy seafood industry. The communities and the State of Alaska share the benefit of increased value of the seafood species through the increased revenue generated by the Fishery Resource Landing Tax and by the Fisheries Business Tax. These revenues have in-creased substantially during the last five years, with the combined revenue achieving an average increase of 9% per year over the last five years.

The revenue is used by communities to provide public services including public education and public safety, health clinics and to reduce the tax burden on residents. Currently 62 communities benefit, up from 52 communities in 2003, and 57 communities in 2004.

Alaska Seafood Marketing Institute raises the value of the harvest so that the state and communities will benefit. In many coastal communities, the seafood industry is not only one of the most important industries as a generator of tax revenue, but is also one of the largest freight users and utility customers, often reducing costs to residents.


2nd Place - This is uP from 3rd

Place in 2001!source: daTassenTial

research 2004


Alaska Seafood Ranks Second Among the Most Popular Food Brands

on U.S. Menus

Section 6: Financial Information

0

2000

4000

6000

8000

10000

12000

FY03 FY04 FY05 FY06 FY07 FY08 FY09

Other Federal Grants

Industry Contributions

Federal MAP Funds

ASMI Revenue Sources

General Fund

Revenue sources* FY03 FY04 FY05 FY06 FY07 FY08 FY09GF 0 0 0 0 1000 500 750Other Federal Grants 772 1900 9609 2000 2991 948 0Industry Contributions 4400 4800 5800 6700 7300 8000 11185Federal MAP Funds 3000 3700 3900 4100 4355 4700 5132*Please note these revenues do not include funds carried forward from fiscal year to fiscal year which are used to supplement fiscal year marketing promotions.


Financial Information

© Steve Lee


$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

General Fund

Total SeafoodAssessments

ASMI Funding Sources for the Past 30 Years in 000s

FISCAL YEAR


© Steve Lee



FY 2009 Expenditures

FY 2009 Revenues and Expenditures

MAP Federal Grant

State GF Projected ReserveForward

0.5% IndustryAssessment Tax

State GFProjected Reserve

Forward


MAP Federal Grant

Sustainability

International

Admin/Consolidated Costs

Public Relations Campaign

Seafood Technical

Communications

Foodservice

Retail

U.S. PR Campaign

Sustainability

International

U.S. Retail

U.S. Foodservice

Communications

Technical


FY 2009 Revenues (in $000s)Projected reserve forward 2,1850.5% Industry Assessment tax 9,000MAP Federal Grant 5,130State GF 750TOTAL 17,065

FY 2009 Expenditures (in $000s)Admin/Consolidated Costs 2,200Technical 400Communications 400U.S. Foodservice 1,800U.S. Retail 1,800International 7,110Third-Party Certification 500U.S. PR Campaign 1,000TOTAL 15,210

FY 2009 Revenues



FY 2010 Revenues and Expenditures

FY 2010 Revenues

FY 2010 Expenditures

FY 2010 Revenues (in $000s)0.5% Industry Assessment tax 8,082MAP Federal Grant 4,496State GF 2,669TOTAL 15,247

FY 2010 Expenditures (in $000s)Admin/Consolidated Costs 1,727Technical 363Communications 466U.S. Foodservice 2,032U.S. Retail 2,074International 6,183Global Foodaid 201Third-Party Certification 200U.S. PR Campaign 2,000TOTAL 15,247

Indus try taxM A PS tate GF

State GF


MAP Federal Grant

A dm inS eafood tec hCom m unic at ionfoodservic eretailint lg lobal foodaids us tainP R

U.S. PR Campaign

Sustainability

International U.S. Retail

U.S. Foodservice

CommunicationsTechnical


Global Foodaid

Through ASMI, people representing the many facets of the

Alaska seafood industry – processors and harvesters and many

different harvest sectors – work together for the good of all

© Art Sutch

© Art Sutch

Documents

AKSeafood Marketing Institute Report 2010