Nofima, in collaboration with the Fisheries and Aquaculture Industry Research Fund (FHF), has looked more closely at the opportunities for Norwegian herring in Brazil. The purpose of this work has been to acquire knowledge about the central conditions in the Brazilian market so that Norwegian companies can base their strategic choices and actions on a broader foundation.
Sardines are extremely popular in Brazil. This market comprises approximately 10 % of the total seafood market in Brazil. However, many of the most important sardine stocks were overfished in the 1980s and 1990s. Fishing bans have now been imposed for parts of the year to protect and develop the most important stocks.
Discussions between Norwegian and Brazilian actors suggest that Norwegian herring can be a substitute for Brazilian sardines. A central question is whether herring shall be sold in periods with limited access to local sardines or as a year-round product.
Regardless of which strategy Norwegian exporters choose, they will encounter a series of challenges in the Brazilian market. The tariff rate for herring and sardines is currently 10 %. However, Brazil uses tariffs actively to protect local industry and consumers.
In the summer of 2010 the tariff for sardines was reduced to 2 % to stimulate increased exports, due to low national catches. In the same period Thai companies increased their export of tinned sardine products, which created challenges for local industry. Consequently, the authorities increased tariffs on canned sardine products from 16 to 32 % to protect local industry. These examples illustrate a challenging environment, which the Norwegian industry has to be aware of.
Herring unknown in Brazil
Norwegian herring has many of the same characteristics as Brazilian sardines, but few Brazilian consumers are familiar with herring (arenque). As a result, several Norwegian companies call herring “Norwegian sardines – herring” (sardinha Noruega - arenque).
All Norwegian companies are recommended to use this term. A combined Norwegian industry can also assess whether it is worth trying to get “sardinha Noruega” approved as the official name for herring in Brazil.
Should be adapted as groceries
Brazilian importers and retailers we have spoken to have commented that Norwegian herring is adapted to the Brazilian market to a low degree. The market structure is different in Brazil than many of the other markets the pelagic fish industry exports its products to, primarily because there is no intermediary to further process the herring prior to consumption.
Product development and product adaptation for the modern grocery trade can be a strategy to increase the export of Norwegian herring to Brazil.
Focus on advantages
The Brazilian grocery trade is intensely competitive and a valuable product is not necessarily a competitive advantage if many products offer the same advantages. With an absence of competitive product advantages, the probability of success is low.
An extremely high number of Brazilians are preoccupied with health and healthiness, and the omega-3 content can be an advantage that can be communicated. Likewise, many Brazilians have positive associations with Norwegian codfish,, which may be utilised in market communication.
Sustainability is gaining increasingly greater attention in many European markets. The Brazilian market is dominated by large multinational supermarket chains, which are interested in ensuring the seafood products they sell, come from sustainably managed fish stocks.
Herring as canned food
Another market possibility is the Brazilian canning industry. The market for canned sardine products in Brazil is around 50,000 tonnes. Spanish companies have already started to import Moroccan sardines to Brazil and are manufacturing canned products.
If Norwegian companies can sell herring as a raw material to the Brazilian canning industry, a higher degree of product adaptation will not be necessary. However, price competition in this segment is expected to be major.
Measures and possibilities
Specific measures and possibilities in the future work in the Brazilian market may include:
- Greater understanding of the customs and tariff system so that possible entry strategies do not create a tariff barrier for Norwegian herring
- Assess the possibilities for getting Norwegian herring approved as sardines in Brazil
- Identify product advantages that may be communicated in the market
- Improve communication with the grocery chains in order to adapt products to the market
- Assess the possibility of Norwegian herring as a raw material for the canning industry