- Email: [email protected]
Packaging for export
Packaging for export A case study of underutilized species of finfish
D.C. Williams, Jr, Stephen C. Bushardt and Edward Nissan
The global economy increasingly affects more local industries in various countries each year. As Ballance and Sinclair’ have pointed out, a global restructing at the industry level is taking shape. Export markets provide jobs and revenues for the export firms while enhancing the balance of trade in that country.’ The export of commodity farm products (wheat, corn, soybeans, and cotton) has a long and successful history and, as the global economy continues to develop, the export of non-traditional export commodities will increase. The challenge for food exporters is to develop new product uses, increase the value of these products through private branding, and establish a reputation for quality, all of which allow for higher profit margins. The current study examines packaging problems associated with the early development of a new export market for underutilized species of finfish from the Gulf and South Atlantic region of the USA. There have been various attempts to develop overseas markets for these with contracts involving Nigeria, Egypt, and the Far East.’ Underutilized is a euphemism for species such as Black Drum, Jack Crevelle, Bonita, D.C. Williams, Jr is Professor of Economics, Stephen C. Bushardt is Professor of Mullet, Sheepshead, and sea catfish which have been unmarketable Management, and Edward Nissan is Prowithin the USA. These particular species were generally not harvested fessor of Economics at The University of Southern Mississippi, Southern Station except on occasion for use in cat food. Box 5072, University of Southern MissisThe industry involved primarily small, fiercely independent producers sippi, Hattiesburg, MS 394065072, USA. with limited experience in exporting. The contracts for export were secured in one of two ways. In one approach a trader would negotiate a This work is the result of research sponsored in part by the Gulf and South Atlantic contract with the importer, who would then negotiate with small Fisheries Development Foundations, Inc. independent fish processors in order to secure the needed volume. The and the University of Southern Mississippi. Portions of this study were presented at trader did not process fish himself and did not take physical possession The International Institute of Fisheries of the product. The second approach involved a cooperative where one Economics and Trade, University of South fish processor would negotiate a large contract exceeding his inventory Jutland, Denmark, 7-l 2 August 1988. and invite other processors to take a part of the contract. ‘R.H. Ballance and S.W. Sinclair, Collapse Negative feedback from the buyers prompted industry leaders to and Survival: Industry Sfrategies in a Changing World. George Allen & Unwin, request a study of the packaging problems associated with the industry London, 1983. and to develop recommendations addressing these problems. The Gulf ‘A.G. Kenwood and A.L. Longheed, The and South Atlantic Fisheries Development Foundation sponsored the Growth of the International Economy continued on p 16 study. While the results of the study address marketing problems
This study examines packaging problems associated with development of a new export market for underutilized species of finfish from the USA. Four problems identified were: (1) estimating square footage needed for shipping when the product was packed by weight; (2) deterioration in product quality, primarily associated with the destruction of the carton during shipment; (3) failure of packaging to portray a quality product; and (4) failure to communicate consistent information. Solutions must be consistent with critical constraints in packaging. Constraints include processing technology, methods of transportation, the product, markets, and economies. Recommendations are based upon these constraints.
0308597X/91
/010015-08
0
1991 Butterworth-Heinemann
Ltd
15
Packaging for export: a case study of underutilized .cpecie~ of ,finJ&h
with packaging in this regional industry, the problems are likely to be encountered in other regions, as well as in other food export industries which involve many small producers with little history of successful exporting. associated
Defining the problem The decentralized nature of the industry and the recentness of the industry’s development necessitated the use of such qualitative research tools as interviews, focus groups, and direct observation.4 Interviews were conducted with the manufacturers of packaging materials, fish processors, trucking companies, port authorities, stevedores, and traders. In addition, researchers consulted various people in government and research, and observed the loading of frozen fish aboard ships. Limitations of the study include the inability to observe the unloading of the product or to interview the buyers and consumers in the import country, necessitating the use of information gleaned from seconda.ry sources. In general, a consensus exists regarding the reality of packaging problems but not regarding possible solutions. Each party understands the problem and potential solutions primarily in terms of its own role in the chain of distribution, but fails to reflect a broad understanding of the industry as a whole, which is understandable given that this is a relatively new and fragmented industry. The study identified four specific problems associated with packaging: (1) shipping space, (2) product quality, (3) packaging image, and (4) information transfer. As they are interrelated, recommendations for solving one will affect the others. Shipping
continued from p 15 182&7980. George Allen & Unwin, London, 1983. 3P.M. Earl, Report of Activities During Travel to Nigeria, lvofy Coast, France, West Germany and Greece, Utilization & Development -Branch, Fisheries Service Division. National Marine Fisheries Service, NCAA, United States Department of Commerce, Gloucester, MA, 1981; E.M. Smith and P. Youngberg, The Gateway fo Oriental Markets For Gulf & South Atlantic Fishery Products, National Marine Fisheries Service. NOAA, US Department of Commerce, Pascagoula, Ml,. 1981; E.M. Smith. Foodex 82 & Japan Trade Mission, NOAA, US Department of Commerce, Pascagoula, 1982. %.A. Krueger, Focus Groups: A Practical Guide for rc\pplied Research, Sage Publishina. Newburv Park, CA, 1988; G. McCracken, The* Long Interview, Sage, Newbury Park, CA, 1988. 5B. Reese, ‘Physical distribution: the neglected marketing function’, Industrial Marketing, Vol 46, October 1961, pp 102106.
16
space
Once a contract for the sale is established, a ‘trading company’ or the ‘cooperative’ arranges for the fish from many independent processors to be assembled for shipment. While the number of pounds or kilograms to be loaded is specified in the contract, reefer space must be purchased by square footage, posing a difficult problem as different processors use different size cartons for the same type of fish, and different weights may be packed in a carton of a given size. Also, carton ‘breakdown’ (bulging sides) requires more room in a ship. Carton breakdown and tearing apart occur primarily where large fish are involved. The smaller fish are often packaged in a ‘solid pack’ where the fish form a solid block. When stacked, the weight of the contents rests on the solid frozen block in the carton. For larger fish, air spaces are left since the fish are frozen individually and do not form a solid block to conform to the package shape. When the cartons are stacked 20 feet high in the hold of a ship, the contents in the lower cartons shift and the cartons cannot support the weight. Product
quality
Deteriorating product quality during shipment,5 causing the packaging problem; it appears fish frozen whole, and several views. Furthermore, a general lack
results from damage fish to spill. This is more prevalent for the examples were cited of quality
control
MARINE
to the package the most serious larger species of during the inter-
exists.
Specifically,
POLICY January
if
1991
Packaging for export: a case study of underutilized species of finfish
complaints are received from consumers or buyers regarding the quality of part of the shipment, it is often not possible to determine from which processor the fish originated. While most processors are conscientious regarding quality, the present process permits a less conscientious processor to unload old fish which have experienced deterioration by being stored too long. The primary rationale for not identifying the individual processor is that the buyer is purchasing a commodity to be resold as his private brand and the traders and the buyers do not want their source revealed to competitors. Packaging Failure of packaging to portray a quality image is a problem;6 one source in the industry stressed the importance of package appearance by saying the buyers care more about how the cartons appear than about the fish in them. The importance of package appearance will, of course, vary among cultures and specific buyers. Under existing arrangements, a shipment of fish is packaged in cartons of various dimensions and constructions, which are of different weights, use various labels, and are banded differently. Also, the processing date is not indicated, leading to a perception on the part of the buyer or consumer that the quality control standards are not rigid or that they were violated by the seller. One issue that was not recognized to any extent in the interviews is the question of using polyurethane bags (polybags) rather than glazing to protect product quality. Those who use polybags tend to suggest that they are a standard in the industry, while processors using glazing suggest that it is the only realistic method and that polybags are used only by minor fish processors. The real issue involves the perceptions of the buyers. Where different methods are used in the same shipment, the buyer is likely to infer that the quality standards used by the seller are lax. Information transfer
6W.R. Mason, ‘A theory of packaging in the marketing mix’, Business Horizons, Vol 1, 1958, DD 91-95. 7P. Ko&r, Marketing Management: Analysis, Planning and Control, 2 ed, PrenticeHall, Englewood Cliffs, NJ, 1972; W.R. Mason, ‘A theory of packaging in the marketing mix’, Business Horizons, Vol 1, 1958, pp 91-95. ‘E.J. McCarthy, Basic Marketing: A Managerial Approach. Richard D. Irwin, Homewood, IL, 1984.
MARINE
POLICY January 1991
An important function of packaging is a relay of information to the buyer or consumer.7 Packaging as discussed above conveys information that the product is of varying quality. All carton labels should include as a minimum - the country of origin, the type of fish, the weight of the fish, as well as the date of processing and the processor.s While information regarding processing date and processor’s name are sensitive issues for the importer and information which he may not wish to share with the consumer, it is important that this information be included in order to ensure quality control and accountability. If the issue is sensitive to the importer, cooperative, or trader, then it should be in code. Regulations vary among countries, and the required information is usually specified by the importer. One problem is specifying weight in pounds rather than in kilograms. Though many processors expressed a strong desire to use cartons delineated in pounds because the cartons could be used for domestic sales as well, most international markets use the metric system of measurement. Another problem involves identifying the product by ‘box weight’ as opposed to ‘catch weight’. With ‘box weight’, each box is packed with a specific amount of weight. With ‘catch weight’, the weight varies by the amount of fish that will fit in each box, primarily a problem where large
17
Packaging
for export: u casesludy of underutilized
species
offirzfivh
species of fish are involved. While processors prefer to pack by ‘catch weight’ as it is most efficient, the importer would prefer using ‘box weight’ as it facilitates auditing the shipment when it is received.
Critical constraints in packaging The primary constraints to a solution to packaging involve processing technology, methods of transportation, the product. markets, and economics. The constraints may or may not restrict a solution for a specific processor, but reflect constraints for the industry as a whole. Processirlg technology Different independent companies involved in harvesting and processing use a variety of processing techniques.” Some use coils for freezing, and others use blast freezers; some freeze the fish in the box and others use metal trays in which the fish is frozen before packaging. Using metal racks to allow for rapid freezing is yet another technique. While no evidence of varying quality was found. it would be reasonable to expect quality variance. Systematic feedback from buyers and a knowledge of the processor of origin would answer many questions regarding the impact of technology on quality. Another technological constraint involves equipment to place bands on the cartons. Some machines are not large enough to place bands around the ends, and inadequate banding results in the tearing of cartons and spilling of fish. This problem is severe enough to require a change in this particular approach. Another issue is the use of polybags instead of glazing to preserve quality during storage. It appears that all or most of the processors could utilize polybags but only a few had the capability for proper glazing.
%.A. Bjorkengren, ‘Equipment review: packaging trends in frozen food’, INFOFISH: Marketing Digest, No 3, May 1982, pp 3&34; M. Lannelongue, G.F. Hanna, R. Nickelson II, and C. Vanderzant, ‘Storage characteristics of finfish fillets (Archosargus probatocephalus) packaged in modified gas atmospheres containing carbon dioxide’, Journal of food Protection, Vol45, No 5, 1982, pp 44@45. “‘lnfofish, ‘Marine transoort of frozen fish products’, INFOHSH: harketing Digest, No 3, May 1982, pp 14-15. Based on material assembled by Mr A. Bovold of Shipping Research Services for a study commissioned by Infofish.
18
The methods and costs of handling vary depending on where and how the product is shipped. Processed fish are usually shipped by truck to a central place for loading, and the cost is influenced by weight. Glazing tends to add more weight and to increase trucking costs as compared to polybags. Cargo ships are normally used to transport low value species of fish. In shipping by cargo vessel, either a refrigerated container (container reefer) is used or the product is shipped in bulk aboard a refrigerated vessel (reefer vessel). I(’ The dimensions and nature of the refrigerated area in a ship, including the door size, vary among vessels, which tends to limit use of some handling technology. For example, many of the reefer vessels are unloaded by hand, necessitating packaging in smaller containers. Pro&let The underutilized species of finfish vary considerably in size, with some weighing only a few ounces while others weight 30 lb or more. The major problem results from the larger species when they are frozen and shipped whole since they do not freeze into a solid block. Reportedly, buyers insist on buying the whole fish including the head because the head is the primary means by which the final consumer tests for quality, along with gill odour and eye clarity. Also, some processors may not possess, or are reluctant to invest in, the capital equipment necessary for more refined processing.
MARINE
POLICY January
1991
Packaging
for export: a case study of underutilized
species of finfish
If these constraints can be overcome, there will be several advantages, especially with the large fish. For example, fillets can be frozen into a solid block, reducing shipping cost by eliminating the air space associated with whole fish. The head contains a low amount of food value per pound as compared to the fillets, so the cost per unit of food value would be reduced. Critical to consumer acceptance of headless fish is consumer confidence of quality. Markets
The product and packaging must meet the cultural demands of the market, taking into account that consumers in the retail markets of the world are very diverse in their product and packaging demands. The people interviewed stressed the stringent demands of customers in Japan and other developed countries, and accentuated those customers’ willingness to pay for quality. On the other hand, consumers in some underdeveloped parts of the world, while demanding quality packaging, tend to be more concerned with the price of the product and rely on the fish head for ascertaining quality. The distribution network in the consumer country will influence the packaging needs. ” For example, in Nigeria the majority of the fish are distributed in the port city by women who purchase a carton of fish, say 20 kg, and sell the fish in smaller lots from baskets. In other countries, the fish are likely to be retailed by fish vendors at local markets or sold in restaurants, etc. In all cases the fish are sold by the exporter as a commodity as opposed to a private brand. Thus, the constraints on the packaging vary depending upon whether or not the fish is repackaged in the importing country prior to resale. Economics
Underutilized species of finfish have not been exported extensively from the USA in the past primarily because this has not been economically feasible. An important component in the price of the delivered product is packaging. Historically, the cost of packaging has been approximately l-1.5dlb. While the cost of packaging may appear low, a small increase could result in a significant percentage increase in costs, and, given the apparent sensitivity of demand to price changes, the cost of packaging is a significant restraint. The sensitivity of demand reflects in part the treatment of the fish as a commodity and the absence of successful branding which can provide the consumer with assurances of quality and the producer with higher profit margins.
Recommendations It appears that some of the packaging problems could be alleviated by developing industry-wide standards. Size and construction of the cartons, internal packaging, banding, product weights, and external package information should all be standardized. “E.M. Smith, Foodex 82 & Japan Trade Mission, National Marine Fisheries Service, NOAA, US Department of Commerce, Pascagoula, MI, 1982; E.M. Smith and P. Younabera. The Gafewav to Oriental Markets “For-‘Gulf & Souih Atlantic Fishery Products, National Marine Fisheries Service, NOAA, US Department of Commerce, Pascagoula, MI, 1981.
MARINE
POLICY January 1991
Carton
size
Two different fish and one underutilized smaller carton size is already
size cartons are recommended, one for small species of for large species. Table 1 lists common soecies of I finfish in the USA that are or may be exported. The should measure 23 inches x 13 inches x 5’/x inches. This in common usage in the industry and is often referred to
19
Packaging
for rxporf:
a case study of underutilized
sprcies
of finfish
Table 1. Recommended
carton sizes for common fish. Large carton 39 inches x 19 inches x 7 inches
Small carton 23 inches x 13 inches x !Y/s inches Mullet Blue Fish Lady Fish Blue Runners Sheepshead
Black Drum Jack Cravelle Bonita Blackfin Tuna
Spanish Sardine Thread Herring Croker Sea Catfish
as a ‘20-kilo carton’, or a 44 lb box. However, some processors use boxes of slightly different dimensions, and others band two smaller boxes together to obtain the approximate equivalent of the ‘20-kilo carton’. The recommended size for the larger carton is 38 inches x 19 inches x 7 inches. The industry uses cartons of approximately this size, but the specific dimensions tend to vary. The two major sizes in use are referred to as an ‘80-lb’ or a ‘100-lb’ carton. Since 100 lb equals 45.36 kg, and 80 lb equals 36.29 kg, the recommended dimension is referred to here as a ‘40-kilo’ carton. It should be stressed that the dimensions recommended may need to be adjusted before being adopted as the industry standard. Carton comtruction Different processors use cartons of various constructions. The ‘20-kilo’ carton should be constructed of single wall, 200 lb test, corrugated cardboard (RCS carton). A heavy medium with water resistant adhesive is necessary for added strength. A telescoping carton with separate bottom and tops, of course, could be used. Regardless of the type used, the inside should be wax-coated. Wax-coating the outside, which would increase cost by another 1.5X, is not recommended, as wax-coated exterior increases the chances of cartons sliding off the stack and being damaged. The larger ‘40-kilo’ carton should utilize the telescoping design. The top should be single wall, 275 lb test, corrugated cardboard, and the bottom should be 275 lb test, double wall, corrugated cardboard. A heavy medium with water resistant adhesive should be used for both the tops and bottoms. The insides of the tops and bottoms should be wax-coated. The exterior of the carton should not be wax-coated because it would increase cost as well as cause handling problems. Each of the corners of the tops and bottoms should be secured by three staples, and the folding flaps should extend inward seven inches. Internal packaging From the discussions, the researchers tend to view a heavy glaze as more effective in preserving the quality of the fish, while polybags tend to be more effective than an inadequate glaze. The quality of glazing can vary significantly, while polybags tend to provide more consistent results. All processors were capable of using polybags, but many may lack proper equipment for effective glazing. Polybags give a neat, consistent projection of the fish and appear to be more economical, overall, than glazing. Thus, it was recommended that three mil polybags be used. Banding
procedures
The ‘20-kilo’ carton should have two cross bands and one band going from end to end of the carton, and the ‘40-kilo’ carton should have three
20
MARINE
POLICY January
1991
Packaging for export: a case study of underutilized species of finfish
cross bands and one going from end to end of the carton. This appears to be the minimum acceptable level of banding. Though few processors used any bands going from end to end on the large cartons, it appears that one band in this direction is needed. Tests in use may indicate that two bands around the ends would be more feasible. Product weights The weight of the package should be specified in kilograms. Ideally, the ‘20-kilo’ carton should contain 20 kilograms of fish, and the ‘40-kilo’ carton should contain 40 kilograms of fish. Unfortunately, meeting these requirements is no easy task because of the varying size of the different species of fish. However, the smaller species should be packed by ‘box weight’, and the larger species could be packaged by catch weight where it is impractical to achieve the correct ‘box weight’. The processor should, however, employ statistical methods to ensure that the average content weights 40 kilograms. Externalpackage
information
Each carton should have a label which specifies the country of origin, the weight, the species of fish, and the type of fish, ie whole, fillet, etc. The species could be specified by common name. For example, Black Drum fish could be labeled Black Drum as opposed to Pogonias Cromis. Furthermore, the labels should specify the date the product was processed, and the processor should be identified by code. Specifying the date the product was processed communicates the freshness of the fish, and allows the person responsible for meeting the contract to exert some level of quality control. By identifying the processor, a potential course of action exists if a particular processor does not meet quality requirements. Using external package information on an attachable label would be advantageous. These labels can be more attractive than printing directly on the carton, and special purchase of cartons would not be required for each contract of fish delivery. The standard carton should be used and the information relative to the contract could be put on the label and attached to the cartons.
Summary Packaging problems were experienced in efforts to establish foreign markets for underutilized species of fish from the USA. These problems, which included estimating shipping space needed, product quality, marketing image, and information transfer, stemmed in part from the fact that shipments consisted of fish processed by many independent firms using different processing and packaging techniques. There is a need to establish industry standards consistent with processing technology, methods of transportation, nature of the product, market requirement, and economics. The industry is in need of closer cooperation and coordination among processors as they increasingly engage in cooperative contracts. Many Japanese manufacturers who are fiercely competitive at home have coordinated their efforts in developing new markets with significant success. Increasingly, cooperative arrangements are being developed in the auto industry which involve sharing technology. These arrangements can function as a model with adaptation for future development in the fish export
MARINE
POLICY January 1991
21
Packaging
far export: a case study of underutilized species offinfish
“W R Smith, ‘Product differentiation and market segments as alternate marketing strategies,’ Journal of Marketing, July 1956, pp 3-8.
22
industry. Emphasis should be placed on getting a good quality product to the consumer in an efficient manner. The issue of quality can not be overstressed, and a potentially important development in the industry will be the development of private brands as opposed to commodity marketing.12 The poultry industry as well as catfish producers increasingly uses producer brand names which have become synonymous with quality. The same trend is increasingly being seen in the beef industry. The development of private brands in the marketing of underutilized species of finfish would allow higher profit margins and reduce the price sensitivity of the product. Before private brands can develop, product differentiation must occur. Product differentiation can develop if the producers can create real quality differences through rigorous quality control, and perceived quality differences through packaging as other methods of product differentiation are limited.
MARINE
POLICY January
1991
D.C. Williams, Jr, Stephen C. Bushardt and Edward Nissan
The global economy increasingly affects more local industries in various countries each year. As Ballance and Sinclair’ have pointed out, a global restructing at the industry level is taking shape. Export markets provide jobs and revenues for the export firms while enhancing the balance of trade in that country.’ The export of commodity farm products (wheat, corn, soybeans, and cotton) has a long and successful history and, as the global economy continues to develop, the export of non-traditional export commodities will increase. The challenge for food exporters is to develop new product uses, increase the value of these products through private branding, and establish a reputation for quality, all of which allow for higher profit margins. The current study examines packaging problems associated with the early development of a new export market for underutilized species of finfish from the Gulf and South Atlantic region of the USA. There have been various attempts to develop overseas markets for these with contracts involving Nigeria, Egypt, and the Far East.’ Underutilized is a euphemism for species such as Black Drum, Jack Crevelle, Bonita, D.C. Williams, Jr is Professor of Economics, Stephen C. Bushardt is Professor of Mullet, Sheepshead, and sea catfish which have been unmarketable Management, and Edward Nissan is Prowithin the USA. These particular species were generally not harvested fessor of Economics at The University of Southern Mississippi, Southern Station except on occasion for use in cat food. Box 5072, University of Southern MissisThe industry involved primarily small, fiercely independent producers sippi, Hattiesburg, MS 394065072, USA. with limited experience in exporting. The contracts for export were secured in one of two ways. In one approach a trader would negotiate a This work is the result of research sponsored in part by the Gulf and South Atlantic contract with the importer, who would then negotiate with small Fisheries Development Foundations, Inc. independent fish processors in order to secure the needed volume. The and the University of Southern Mississippi. Portions of this study were presented at trader did not process fish himself and did not take physical possession The International Institute of Fisheries of the product. The second approach involved a cooperative where one Economics and Trade, University of South fish processor would negotiate a large contract exceeding his inventory Jutland, Denmark, 7-l 2 August 1988. and invite other processors to take a part of the contract. ‘R.H. Ballance and S.W. Sinclair, Collapse Negative feedback from the buyers prompted industry leaders to and Survival: Industry Sfrategies in a Changing World. George Allen & Unwin, request a study of the packaging problems associated with the industry London, 1983. and to develop recommendations addressing these problems. The Gulf ‘A.G. Kenwood and A.L. Longheed, The and South Atlantic Fisheries Development Foundation sponsored the Growth of the International Economy continued on p 16 study. While the results of the study address marketing problems
This study examines packaging problems associated with development of a new export market for underutilized species of finfish from the USA. Four problems identified were: (1) estimating square footage needed for shipping when the product was packed by weight; (2) deterioration in product quality, primarily associated with the destruction of the carton during shipment; (3) failure of packaging to portray a quality product; and (4) failure to communicate consistent information. Solutions must be consistent with critical constraints in packaging. Constraints include processing technology, methods of transportation, the product, markets, and economies. Recommendations are based upon these constraints.
0308597X/91
/010015-08
0
1991 Butterworth-Heinemann
Ltd
15
Packaging for export: a case study of underutilized .cpecie~ of ,finJ&h
with packaging in this regional industry, the problems are likely to be encountered in other regions, as well as in other food export industries which involve many small producers with little history of successful exporting. associated
Defining the problem The decentralized nature of the industry and the recentness of the industry’s development necessitated the use of such qualitative research tools as interviews, focus groups, and direct observation.4 Interviews were conducted with the manufacturers of packaging materials, fish processors, trucking companies, port authorities, stevedores, and traders. In addition, researchers consulted various people in government and research, and observed the loading of frozen fish aboard ships. Limitations of the study include the inability to observe the unloading of the product or to interview the buyers and consumers in the import country, necessitating the use of information gleaned from seconda.ry sources. In general, a consensus exists regarding the reality of packaging problems but not regarding possible solutions. Each party understands the problem and potential solutions primarily in terms of its own role in the chain of distribution, but fails to reflect a broad understanding of the industry as a whole, which is understandable given that this is a relatively new and fragmented industry. The study identified four specific problems associated with packaging: (1) shipping space, (2) product quality, (3) packaging image, and (4) information transfer. As they are interrelated, recommendations for solving one will affect the others. Shipping
continued from p 15 182&7980. George Allen & Unwin, London, 1983. 3P.M. Earl, Report of Activities During Travel to Nigeria, lvofy Coast, France, West Germany and Greece, Utilization & Development -Branch, Fisheries Service Division. National Marine Fisheries Service, NCAA, United States Department of Commerce, Gloucester, MA, 1981; E.M. Smith and P. Youngberg, The Gateway fo Oriental Markets For Gulf & South Atlantic Fishery Products, National Marine Fisheries Service. NOAA, US Department of Commerce, Pascagoula, Ml,. 1981; E.M. Smith. Foodex 82 & Japan Trade Mission, NOAA, US Department of Commerce, Pascagoula, 1982. %.A. Krueger, Focus Groups: A Practical Guide for rc\pplied Research, Sage Publishina. Newburv Park, CA, 1988; G. McCracken, The* Long Interview, Sage, Newbury Park, CA, 1988. 5B. Reese, ‘Physical distribution: the neglected marketing function’, Industrial Marketing, Vol 46, October 1961, pp 102106.
16
space
Once a contract for the sale is established, a ‘trading company’ or the ‘cooperative’ arranges for the fish from many independent processors to be assembled for shipment. While the number of pounds or kilograms to be loaded is specified in the contract, reefer space must be purchased by square footage, posing a difficult problem as different processors use different size cartons for the same type of fish, and different weights may be packed in a carton of a given size. Also, carton ‘breakdown’ (bulging sides) requires more room in a ship. Carton breakdown and tearing apart occur primarily where large fish are involved. The smaller fish are often packaged in a ‘solid pack’ where the fish form a solid block. When stacked, the weight of the contents rests on the solid frozen block in the carton. For larger fish, air spaces are left since the fish are frozen individually and do not form a solid block to conform to the package shape. When the cartons are stacked 20 feet high in the hold of a ship, the contents in the lower cartons shift and the cartons cannot support the weight. Product
quality
Deteriorating product quality during shipment,5 causing the packaging problem; it appears fish frozen whole, and several views. Furthermore, a general lack
results from damage fish to spill. This is more prevalent for the examples were cited of quality
control
MARINE
to the package the most serious larger species of during the inter-
exists.
Specifically,
POLICY January
if
1991
Packaging for export: a case study of underutilized species of finfish
complaints are received from consumers or buyers regarding the quality of part of the shipment, it is often not possible to determine from which processor the fish originated. While most processors are conscientious regarding quality, the present process permits a less conscientious processor to unload old fish which have experienced deterioration by being stored too long. The primary rationale for not identifying the individual processor is that the buyer is purchasing a commodity to be resold as his private brand and the traders and the buyers do not want their source revealed to competitors. Packaging Failure of packaging to portray a quality image is a problem;6 one source in the industry stressed the importance of package appearance by saying the buyers care more about how the cartons appear than about the fish in them. The importance of package appearance will, of course, vary among cultures and specific buyers. Under existing arrangements, a shipment of fish is packaged in cartons of various dimensions and constructions, which are of different weights, use various labels, and are banded differently. Also, the processing date is not indicated, leading to a perception on the part of the buyer or consumer that the quality control standards are not rigid or that they were violated by the seller. One issue that was not recognized to any extent in the interviews is the question of using polyurethane bags (polybags) rather than glazing to protect product quality. Those who use polybags tend to suggest that they are a standard in the industry, while processors using glazing suggest that it is the only realistic method and that polybags are used only by minor fish processors. The real issue involves the perceptions of the buyers. Where different methods are used in the same shipment, the buyer is likely to infer that the quality standards used by the seller are lax. Information transfer
6W.R. Mason, ‘A theory of packaging in the marketing mix’, Business Horizons, Vol 1, 1958, DD 91-95. 7P. Ko&r, Marketing Management: Analysis, Planning and Control, 2 ed, PrenticeHall, Englewood Cliffs, NJ, 1972; W.R. Mason, ‘A theory of packaging in the marketing mix’, Business Horizons, Vol 1, 1958, pp 91-95. ‘E.J. McCarthy, Basic Marketing: A Managerial Approach. Richard D. Irwin, Homewood, IL, 1984.
MARINE
POLICY January 1991
An important function of packaging is a relay of information to the buyer or consumer.7 Packaging as discussed above conveys information that the product is of varying quality. All carton labels should include as a minimum - the country of origin, the type of fish, the weight of the fish, as well as the date of processing and the processor.s While information regarding processing date and processor’s name are sensitive issues for the importer and information which he may not wish to share with the consumer, it is important that this information be included in order to ensure quality control and accountability. If the issue is sensitive to the importer, cooperative, or trader, then it should be in code. Regulations vary among countries, and the required information is usually specified by the importer. One problem is specifying weight in pounds rather than in kilograms. Though many processors expressed a strong desire to use cartons delineated in pounds because the cartons could be used for domestic sales as well, most international markets use the metric system of measurement. Another problem involves identifying the product by ‘box weight’ as opposed to ‘catch weight’. With ‘box weight’, each box is packed with a specific amount of weight. With ‘catch weight’, the weight varies by the amount of fish that will fit in each box, primarily a problem where large
17
Packaging
for export: u casesludy of underutilized
species
offirzfivh
species of fish are involved. While processors prefer to pack by ‘catch weight’ as it is most efficient, the importer would prefer using ‘box weight’ as it facilitates auditing the shipment when it is received.
Critical constraints in packaging The primary constraints to a solution to packaging involve processing technology, methods of transportation, the product. markets, and economics. The constraints may or may not restrict a solution for a specific processor, but reflect constraints for the industry as a whole. Processirlg technology Different independent companies involved in harvesting and processing use a variety of processing techniques.” Some use coils for freezing, and others use blast freezers; some freeze the fish in the box and others use metal trays in which the fish is frozen before packaging. Using metal racks to allow for rapid freezing is yet another technique. While no evidence of varying quality was found. it would be reasonable to expect quality variance. Systematic feedback from buyers and a knowledge of the processor of origin would answer many questions regarding the impact of technology on quality. Another technological constraint involves equipment to place bands on the cartons. Some machines are not large enough to place bands around the ends, and inadequate banding results in the tearing of cartons and spilling of fish. This problem is severe enough to require a change in this particular approach. Another issue is the use of polybags instead of glazing to preserve quality during storage. It appears that all or most of the processors could utilize polybags but only a few had the capability for proper glazing.
%.A. Bjorkengren, ‘Equipment review: packaging trends in frozen food’, INFOFISH: Marketing Digest, No 3, May 1982, pp 3&34; M. Lannelongue, G.F. Hanna, R. Nickelson II, and C. Vanderzant, ‘Storage characteristics of finfish fillets (Archosargus probatocephalus) packaged in modified gas atmospheres containing carbon dioxide’, Journal of food Protection, Vol45, No 5, 1982, pp 44@45. “‘lnfofish, ‘Marine transoort of frozen fish products’, INFOHSH: harketing Digest, No 3, May 1982, pp 14-15. Based on material assembled by Mr A. Bovold of Shipping Research Services for a study commissioned by Infofish.
18
The methods and costs of handling vary depending on where and how the product is shipped. Processed fish are usually shipped by truck to a central place for loading, and the cost is influenced by weight. Glazing tends to add more weight and to increase trucking costs as compared to polybags. Cargo ships are normally used to transport low value species of fish. In shipping by cargo vessel, either a refrigerated container (container reefer) is used or the product is shipped in bulk aboard a refrigerated vessel (reefer vessel). I(’ The dimensions and nature of the refrigerated area in a ship, including the door size, vary among vessels, which tends to limit use of some handling technology. For example, many of the reefer vessels are unloaded by hand, necessitating packaging in smaller containers. Pro&let The underutilized species of finfish vary considerably in size, with some weighing only a few ounces while others weight 30 lb or more. The major problem results from the larger species when they are frozen and shipped whole since they do not freeze into a solid block. Reportedly, buyers insist on buying the whole fish including the head because the head is the primary means by which the final consumer tests for quality, along with gill odour and eye clarity. Also, some processors may not possess, or are reluctant to invest in, the capital equipment necessary for more refined processing.
MARINE
POLICY January
1991
Packaging
for export: a case study of underutilized
species of finfish
If these constraints can be overcome, there will be several advantages, especially with the large fish. For example, fillets can be frozen into a solid block, reducing shipping cost by eliminating the air space associated with whole fish. The head contains a low amount of food value per pound as compared to the fillets, so the cost per unit of food value would be reduced. Critical to consumer acceptance of headless fish is consumer confidence of quality. Markets
The product and packaging must meet the cultural demands of the market, taking into account that consumers in the retail markets of the world are very diverse in their product and packaging demands. The people interviewed stressed the stringent demands of customers in Japan and other developed countries, and accentuated those customers’ willingness to pay for quality. On the other hand, consumers in some underdeveloped parts of the world, while demanding quality packaging, tend to be more concerned with the price of the product and rely on the fish head for ascertaining quality. The distribution network in the consumer country will influence the packaging needs. ” For example, in Nigeria the majority of the fish are distributed in the port city by women who purchase a carton of fish, say 20 kg, and sell the fish in smaller lots from baskets. In other countries, the fish are likely to be retailed by fish vendors at local markets or sold in restaurants, etc. In all cases the fish are sold by the exporter as a commodity as opposed to a private brand. Thus, the constraints on the packaging vary depending upon whether or not the fish is repackaged in the importing country prior to resale. Economics
Underutilized species of finfish have not been exported extensively from the USA in the past primarily because this has not been economically feasible. An important component in the price of the delivered product is packaging. Historically, the cost of packaging has been approximately l-1.5dlb. While the cost of packaging may appear low, a small increase could result in a significant percentage increase in costs, and, given the apparent sensitivity of demand to price changes, the cost of packaging is a significant restraint. The sensitivity of demand reflects in part the treatment of the fish as a commodity and the absence of successful branding which can provide the consumer with assurances of quality and the producer with higher profit margins.
Recommendations It appears that some of the packaging problems could be alleviated by developing industry-wide standards. Size and construction of the cartons, internal packaging, banding, product weights, and external package information should all be standardized. “E.M. Smith, Foodex 82 & Japan Trade Mission, National Marine Fisheries Service, NOAA, US Department of Commerce, Pascagoula, MI, 1982; E.M. Smith and P. Younabera. The Gafewav to Oriental Markets “For-‘Gulf & Souih Atlantic Fishery Products, National Marine Fisheries Service, NOAA, US Department of Commerce, Pascagoula, MI, 1981.
MARINE
POLICY January 1991
Carton
size
Two different fish and one underutilized smaller carton size is already
size cartons are recommended, one for small species of for large species. Table 1 lists common soecies of I finfish in the USA that are or may be exported. The should measure 23 inches x 13 inches x 5’/x inches. This in common usage in the industry and is often referred to
19
Packaging
for rxporf:
a case study of underutilized
sprcies
of finfish
Table 1. Recommended
carton sizes for common fish. Large carton 39 inches x 19 inches x 7 inches
Small carton 23 inches x 13 inches x !Y/s inches Mullet Blue Fish Lady Fish Blue Runners Sheepshead
Black Drum Jack Cravelle Bonita Blackfin Tuna
Spanish Sardine Thread Herring Croker Sea Catfish
as a ‘20-kilo carton’, or a 44 lb box. However, some processors use boxes of slightly different dimensions, and others band two smaller boxes together to obtain the approximate equivalent of the ‘20-kilo carton’. The recommended size for the larger carton is 38 inches x 19 inches x 7 inches. The industry uses cartons of approximately this size, but the specific dimensions tend to vary. The two major sizes in use are referred to as an ‘80-lb’ or a ‘100-lb’ carton. Since 100 lb equals 45.36 kg, and 80 lb equals 36.29 kg, the recommended dimension is referred to here as a ‘40-kilo’ carton. It should be stressed that the dimensions recommended may need to be adjusted before being adopted as the industry standard. Carton comtruction Different processors use cartons of various constructions. The ‘20-kilo’ carton should be constructed of single wall, 200 lb test, corrugated cardboard (RCS carton). A heavy medium with water resistant adhesive is necessary for added strength. A telescoping carton with separate bottom and tops, of course, could be used. Regardless of the type used, the inside should be wax-coated. Wax-coating the outside, which would increase cost by another 1.5X, is not recommended, as wax-coated exterior increases the chances of cartons sliding off the stack and being damaged. The larger ‘40-kilo’ carton should utilize the telescoping design. The top should be single wall, 275 lb test, corrugated cardboard, and the bottom should be 275 lb test, double wall, corrugated cardboard. A heavy medium with water resistant adhesive should be used for both the tops and bottoms. The insides of the tops and bottoms should be wax-coated. The exterior of the carton should not be wax-coated because it would increase cost as well as cause handling problems. Each of the corners of the tops and bottoms should be secured by three staples, and the folding flaps should extend inward seven inches. Internal packaging From the discussions, the researchers tend to view a heavy glaze as more effective in preserving the quality of the fish, while polybags tend to be more effective than an inadequate glaze. The quality of glazing can vary significantly, while polybags tend to provide more consistent results. All processors were capable of using polybags, but many may lack proper equipment for effective glazing. Polybags give a neat, consistent projection of the fish and appear to be more economical, overall, than glazing. Thus, it was recommended that three mil polybags be used. Banding
procedures
The ‘20-kilo’ carton should have two cross bands and one band going from end to end of the carton, and the ‘40-kilo’ carton should have three
20
MARINE
POLICY January
1991
Packaging for export: a case study of underutilized species of finfish
cross bands and one going from end to end of the carton. This appears to be the minimum acceptable level of banding. Though few processors used any bands going from end to end on the large cartons, it appears that one band in this direction is needed. Tests in use may indicate that two bands around the ends would be more feasible. Product weights The weight of the package should be specified in kilograms. Ideally, the ‘20-kilo’ carton should contain 20 kilograms of fish, and the ‘40-kilo’ carton should contain 40 kilograms of fish. Unfortunately, meeting these requirements is no easy task because of the varying size of the different species of fish. However, the smaller species should be packed by ‘box weight’, and the larger species could be packaged by catch weight where it is impractical to achieve the correct ‘box weight’. The processor should, however, employ statistical methods to ensure that the average content weights 40 kilograms. Externalpackage
information
Each carton should have a label which specifies the country of origin, the weight, the species of fish, and the type of fish, ie whole, fillet, etc. The species could be specified by common name. For example, Black Drum fish could be labeled Black Drum as opposed to Pogonias Cromis. Furthermore, the labels should specify the date the product was processed, and the processor should be identified by code. Specifying the date the product was processed communicates the freshness of the fish, and allows the person responsible for meeting the contract to exert some level of quality control. By identifying the processor, a potential course of action exists if a particular processor does not meet quality requirements. Using external package information on an attachable label would be advantageous. These labels can be more attractive than printing directly on the carton, and special purchase of cartons would not be required for each contract of fish delivery. The standard carton should be used and the information relative to the contract could be put on the label and attached to the cartons.
Summary Packaging problems were experienced in efforts to establish foreign markets for underutilized species of fish from the USA. These problems, which included estimating shipping space needed, product quality, marketing image, and information transfer, stemmed in part from the fact that shipments consisted of fish processed by many independent firms using different processing and packaging techniques. There is a need to establish industry standards consistent with processing technology, methods of transportation, nature of the product, market requirement, and economics. The industry is in need of closer cooperation and coordination among processors as they increasingly engage in cooperative contracts. Many Japanese manufacturers who are fiercely competitive at home have coordinated their efforts in developing new markets with significant success. Increasingly, cooperative arrangements are being developed in the auto industry which involve sharing technology. These arrangements can function as a model with adaptation for future development in the fish export
MARINE
POLICY January 1991
21
Packaging
far export: a case study of underutilized species offinfish
“W R Smith, ‘Product differentiation and market segments as alternate marketing strategies,’ Journal of Marketing, July 1956, pp 3-8.
22
industry. Emphasis should be placed on getting a good quality product to the consumer in an efficient manner. The issue of quality can not be overstressed, and a potentially important development in the industry will be the development of private brands as opposed to commodity marketing.12 The poultry industry as well as catfish producers increasingly uses producer brand names which have become synonymous with quality. The same trend is increasingly being seen in the beef industry. The development of private brands in the marketing of underutilized species of finfish would allow higher profit margins and reduce the price sensitivity of the product. Before private brands can develop, product differentiation must occur. Product differentiation can develop if the producers can create real quality differences through rigorous quality control, and perceived quality differences through packaging as other methods of product differentiation are limited.
MARINE
POLICY January
1991