Mowi moves to take advantage of shifting market in Japan

Mowi’s Japanese operations remain robust, despite recent supply-chain challenges and an increasingly competitive marketplace, according to Mowi Japan Sales and Marketing Director Michinori Hoshijima.

Bergen, Norway-based Mowi is by far the world’s biggest Atlantic salmon-farming company, having produced an equivalent of 449,000 gutted-weight tons (GWT) in 2021. While the company did not disclose its sales in Japan for 2021, overall, the entire Japanese market consumed 64,400 metric tons of salmon in 2021, meaning the Japanese market represents a relatively small percentage of the company’s overall sales, which reached EUR 4.2 billion (USD 4.5 billion) last year. 

According to customs data from Japan’s Ministry of Finance, the country’s imports of fresh Atlantic salmon from Norway in 2021 amounted to 13.3 million kilograms, valued at JPY 14.2 billion (USD 123 million, or EUR 113 million). Atlantic salmon represents close to 20 percent of the Japanese salmon market, and close to 90 percent of the fresh Atlantic salmon is Norwegian.

Salmon volumes sold in Japan have been fairly flat in recent years due to a declining population and stagnant wages, and the market was heavily impacted by Japan’s intensive response to the COVID-19 pandemic. It has since evolved in a more-segmented direction, according to Hoshijima, with imported farmed Atlantic salmon primarily being used for sashimi and sushi due to its higher cost, while lower-cost frozen coho from Chile is primarily used for cooked dishes, such as the popular kirimi, thin slices used for grilling.

Just as the pandemic’s impact on salmon sales was beginning to fade in the beginning of 2022, the twin challenges of rising prices and limited availability have harmed Atlantic salmon sales in Japan in the first half of 2022. The Norwegian Seafood Council (NSC) announced on 14 July that Norway’s fish exports in the first half of 2022 reached NOK 70.1 billion (USD 6.84 billion, EUR 6.82 billion), the highest first-half-year value on record. But exports to Japan, which also include shipments of mackerel, decreased by 20 percent, largely because chilled air-freighted Atlantic salmon had to be rerouted due to the closure of Russian airspace. After Russia’s move, which came in response to Japan’s condemnation of its invasion of Ukraine, Mowi’s shipments to Japan were rerouted. Much is now sent via Dubai in the United Arab Emirates or Doha in Qatar, where the cargo is transferred to another plane (but not re-iced) to continue on to Japan, according to Hoshijima.

Mowi Japan has its headquarters at Tokyo’s Tsukiji Wholesale Market, and a sales office near Osaka’s Shin-Osaka Shinkansen bullet train station. It also has three processing facilities: two near Narita Airport serving Tokyo, and one near Osaka’s Kansai International Airport. All three processing facilities are mainly used for removing pinbones and skinning, Hoshijima said.

To save weight on shipping, most of Mowi’s exports to Japan are in the form of pinbone-in fillets, which weigh 25 percent less than the head-on gutted (HOG) form. The ratio of fillets to HOG has been increasing annually, and fillets now represent around 70 percent of Mowi Japan’s total sales by volume, with HOG sales accounting for much of the remaining sales. Besides saving on shipping costs, the fillets, which are deboned in Norway, keep quality better than HOG. The major fillet form in Japan is trim C, pinbones out, skin-on, scales off. Hoshijima said Atlantic salmon have thick scales compared to trout and coho, and since Japanese eat the skin on cooked salmon, it is important to remove scales.

“The fillets are mostly to retail at fixed prices for six months or one year,” Hoshijima said. “If the price is good, we’ll offer more HOG.”

Hoshijima said Mowi Japan’s HOG salmon goes mostly into the markets for foodservice at spot prices.

He said that in contrast to Japan, the Chinese market is still about 90 percent foodservice, so prices in China respond faster to changes in spot prices, which he said have undergoing bigger swings due to supply-chain challenges and the cost of production.

“Next year, I expect another increase on raw material costs,” Hoshijima said.

Prices that Mowi charges in each country are mainly based on the production situation, the Norway spot price, and transportation cost, rather than being adjusted to the local demand situation to capture more market share, Hoshijima said. Japan used to have about a 10 percent share of Norway’s exports, and at that time the Japanese buyers had more leverage on price, but now it has only about a 2.5 percent share, reducing its bargaining position, he said.

“There is a June-July gap when [Mowi’s] supplies are short and so prices are often a little higher. However, generally we can supply year-round – that’s why salmon has been so popular," Hoshijima said.

And prices for Atlantic salmon rising to unprecedented levels globally over the past year have accelerated Japan’s salmon market segmentation, with farmed salmon going through a premiumization. While Mowi has competition in Japan from fresh coho from the country’s Tohoku region, there is a two-month gap in supply of wild-caught Japanese salmon that Mowi is still able to take advantage of, Hoshijima said.

“There is a June-July gap when supplies are short and so prices are often a little higher. However, generally we can supply year-round – that’s why [our] salmon has been so popular,” Hoshijima said.

Though Australia exports fresh Atlantic salmon to Japan, and there is farmed coho production in the Tohoku region, Hoshijima said Mowi’s main competition in the Atlantic salmon market in Japan comes from other Norwegian companies. But he is keeping his eye on land-based projects under development in the country.

“I think our main competitor will be land-based in the future. Japan has a high concentration of land-based projects, though there are still some problems, and no land-based salmon project has been profitable so far.”

While Mowi is not pursuing fully land-based production yet, the company has the technology to do so through its existing land-based post-smolt operations, Hoshijima said.

“If it’s shown that it can be profitable, that’s something we can move into,” he said.

Photo courtesy of Mowi Japan