UK giant throws back NZ hoki

Unilever, the branded consumer goods giant, has abandoned what was seen as a potentially lucrative campaign to sell New Zealand hoki on the British market after lacklustre sales.

Its hoki products, which had been packaged under the Birds Eye label, failed to woo Britons in sufficient numbers from their preferred cod and haddock and the project was dropped completely earlier this year.

"I can confirm that as of now Unilever no longer sells hoki in any form at all in the UK," a company spokeswoman told the New Zealand Herald.

This means that Germany is now the only European Union market where Unilever markets hoki products. And in Germany, hoki is not now sold as a separately branded product but as one among other white fish.

This more cautious strategy followed the near bankruptcy of Frosta, an independent German frozen fish producer, because of its premium-priced strategy for hoki-based products.

It is a disappointing conclusion to a campaign which was launched with such high hopes for the New Zealand hoki industry, worth $240 million a year. And its failure is one of Unilever's few mistakes in its frozen fish products, which Europe-wide turns over 700m ($1.25 billion) a year.

The details of hoki's withdrawal from Britain are contained in a report commissioned by Unilever on the perils of marketing sustainable fish products.

Published by the Forum for the Future, a sustainable development charity that works with some 150 companies, the report shows that Unilever badly miscalculated the appeal of hoki to cod and haddock-loving Britons. Even for Unilever, whose 2004 revenues totalled 40.17bn, the hoki campaign was a bold one. It was based on breaking British consumers' long love affair with traditional fish by appealing to their green conscience. Namely, that hoki is fished sustainably whereas the North Sea cod beds are reputedly close to collapse.

After conducting detailed market research, in early 2002 Birds Eye launched two hoki steak products.

One was a six-steak pack that daringly replaced the equivalent cod product, a line worth 20 million ($52 million) a year. The other was a two-steak pack sold alongside the existing product. By July of the same year, Birds Eye followed up with a third product - packs of 10 hoki fish fingers.

All the packs were labelled prominently as "New Zealand hoki", capitalising on our reputation for purity of product. The packs also bore an "Ocean Friendly" logo and the MSC label, for Marine Stewardship Council.

All pre-launch tests indicated that shoppers would rush hoki. Birds Eye's marketing director for icecream and frozen food, Chris Pomfret, was quoted at the time as saying that Britons would like hoki once "they got it in their mouths".

The fish's oiliness compared to cod was not considered an impediment to the sales strategy, which was based on hoki products being priced as much as a third cheaper than the unsustainable cod.

Almost immediately things started going wrong. Although consumers had reacted favourably at (free) tastings, it turned out they were less willing to part with money for hoki products.

Then Unilever fell foul of the ruthless pricing of the highly competitive British supermarkets chains. Because cod is a big seller, supermarkets typically price it at low margins to compete against each other.

This drove cod below hoki in price.

As the report noted: "By 2004, in some supermarkets, cod fish fingers were actually cheaper than the more sustainable hoki option, making a complete mockery of suggestions that cod stocks might be in danger."

Although about 13 per cent of buyers of cod steaks switched to hoki, and about ten per cent of fish finger buyers did so, it wasn't enough. However even before 2002 was out, the writing was on the wall when most retailers stopped stocking the steak products. Hoki fish fingers, whose batter disguises the oilier taste, lasted another year but were steadily delisted through 2004. And now you can't buy Birds Eye hoki products anywhere in Britain.

In Germany, Unilever's Iglo, the equivalent brand to Birds Eye, tried something less risky after seeing the market share of its Bremerhaven neighbour, Frosta, collapse by over 50 per cent when it tried to sell hoki at a 10 per cent premium. Instead of going out on a limb by branding hoki separately, Iglo packaged it with other white fish such as pollock, saithe or hake.

According to the report, this worked well: "German shoppers buy the products and don't seem to mind whether it's pollock or hoki inside. The success of this approach makes you wonder if Unilever shouldn't try the same thing in the UK."

However, there is no indication that Unilever, whose fingers have been burned, has any plans to do so.