COUNTRY PROGRESS REPORT ALASKA SEAFOOD MARKETING INSTITUTE FY16 (July 1, 2016 – June 30, 2017) REGION: EASTERN EUROPE (EEU) PR

COUNTRY PROGRESS REPORT ALASKA SEAFOOD MARKETING INSTITUTE FY16 (July 1, 2016 – June 30, 2017)

REGION: EASTERN EUROPE (EEU) PRODUCT: ALASKA SEAFOOD

I. Market Assessment

The expanded EEU market, including Russia, Ukraine, Romania, Moldova, Kazakhstan, Azerbaijan, Georgia, Armenia and the Baltics, present an emerging export destination for Alaska seafood. Russia remains in ASMI’s sphere of interest but has been closed since August 2014 as part of the Russian Food Ban. The remaining region accounts for 100.4 million consumers.

The EEU market is minor in comparison to other ASMI regions, however, offers opportunities for selected products, such as pink salmon roe, that have limited demand in other parts of the world. The ASMI marketing program is at an introductory stage and, activities include trade show attendance, business meetings, representational events that feature Alaska seafood assortment, and trial promotions with local partners. Activities primarily target a trade audience with limited reach to final consumers.

Alaska products currently available on the market include frozen/smoked/salted salmon, frozen salmon ikura, processed salmon roe, cod, pollock and pollock products, pollock roe, cod roe, flatfish and black cod. The potential for Alaska fish is seen in the expansion of modern retail and HRI, the growth of fish consumption in the region and stabilization of the Ukrainian economy.

In most of the EEU countries there are a number of traders already experienced with Alaska seafood and currently involved in direct imports. At the same time, other importers/retailers seek partners in the U.S. that would allow them to do direct business with Alaska. For some, sourcing Alaska seafood is easier via intermediaries in Poland, Germany, Ukraine, or even Southern Europe. These complicated logistics channels prevent ASMI from obtaining exact estimates of the imports entering each EEU country.

Alaska seafood exports to the EEU region increased by 24% in volume from 2015 to 2016 and 6% in value over the same time period, up to 15,802 MT, worth $46.2 million. In 2016, groundfish exports grew by 80% in volume (up to 12,898 MT) and 70% in value (up to $27.5 million), while exports of all salmon species to this region fell by 53% in volume (2,362 MT) and 31% in value ($15.3 million). In 2016, the total export of salmon roe to the region was 999 MT, worth $11.5 million. That is 57% less in volume and 28% less in value than in 2015. The decrease is primarily due to the limited catch of pink salmon during summer 2016. In 2016, 30 MT of pollock roe worth $283,000, was exported to the region. This is a new product to the EEU market that shows potential.

In 2016, Alaska seafood exports to Ukraine, the main country in the region for ASMI, grew by

76% in volume and 56% in value compared to 2015, up to 6,725 MT, worth $21.2 million. In 2016, groundfish exports to Ukraine increased by 214% in volume (up to 5,085 MT) and 158% in value (up to $9.6 million). Export of all salmon species fell by 40% in volume (1,196 MT), but the in value terms it remained stable - $9.3 million. Salmon roe had the biggest share of salmon exports - 614 MT, worth $7.8 million, that is 6% less in volume and 22% more in value than in 2015.

Russia

In 2016, Russia moved from seventh to sixth place in the world by purchasing power parity (PPP) and kept it twelfth position in the world by nominal GDP. The GDP (PPP) is $3.751 trillion (#7 globally), and GDP per capita $26,500.

A combination of falling oil prices, international sanctions, subsequent capital flight and structural limitations pushed Russia into a deep recession in 2015, with the GDP falling by close to 4%. The downturn continued through 2016 when Russian GDP decreased by 0.6% to $1.381 trillion (nominal) and $3.751 trillion (PPP). According to the World Bank projections, Russia is heading towards a moderate growth rate over the 2017/2019 period (between 1.3% and 1.4%), supported by rising oil prices and macroeconomic stability.

Russia is one of the world's leading producers of oil and natural gas and is also a top exporter of metals such as steel and primary aluminum. Governmental support for the agricultural sector has noticeably grown over recent years, aiming to increase the country’s food security and diversify the economy from extractive industries.

The coastline of the Russian Federation is the fourth longest in the world. Russia is the ninth leading producer of fish, with 2.3% of the world’s total. Over half of Russia’s fish is currently exported in low value-added condition, predominantly H&G to Asian markets, which are located close to the main fish-producing areas in the Russian Far East. This may be changing in the near future. According to Ilya Shestakov, deputy minister of agriculture, head of the Federal Agency for Fishery, planned investments into Russian fishery sector between 2017 and 2023 are estimated at 620 billion rubles ($10.6 billion). Investments will go into fleet renewal, coastal factories constructions, and more. The same source reports that the fishery sector to be among fastest- growing contributors to country’s GDP over past years.

According to the Federal Agency for Fishery, in 2016, the domestic fish and seafood catch increased by 5.5% to record-setting 4.8 million MT. The pollock catch increased by 7% to 1.74 million MT, Pacific herring catch increased by 3.4% to 398,900 MT, cod - by 4% to 481,900 MT, crab increased by 14.3% to 57,000 MT.

Seafood exports from Russia increased by 6% to 1.9 million MT, taking 40% of total production. Frozen pollock is the leading export category - 53% (789,000 MT). The export of frozen herring declined by 27.8% to 95,600 MT, representing 7% of seafood exports according to the State Statistic Service.

In 2016, seafood imports to Russia decreased by 8.7% to 511,600 MT, value $1.37 billion. The supply of frozen capelin declined by 67.9% to 9,800 MT; frozen herring - by 31% to 36,100 MT;

2 frozen salmon - by 21.2% to 46,900 MT. At the same time, imports of frozen mackerel increased by 22.1% to 75,800 MT; frozen trout - by 18.4% to 11,600 MT. The top-5 countries are Chile with 24%, Faroe Islands (20.5%), China (15.7%), Vietnam (6.5%), Belarus (6.1%).

According to the Federal Agency for Fishery, current actual production of aquaculture in Russia grew by 14% to 174,000 MT, compared to 2015, which is around 4% of total local production. The top-5 aquaculture species are carp, silver carp, trout, Atlantic salmon, and Chinese carp.

Ukraine

Economic and political instability in 2013/15, the loss of major heavy industry plants to the separatist’s regime, and confrontation with Russia continues to have a negative effect on Ukraine’s economy. In 2014, Ukraine’s GDP contracted by 6.6%, while in 2015 it dropped by 14.3%. The year 2016 hopefully was a turning point; GDP recovered by 2.3% as key reforms took hold. After the EU and Ukraine enacted the Deep and Comprehensive Free Trade Area, while Russia introduced series of trade restrictions, the EU replaced Russia as Ukraine’s largest trading partner. In 2016, GDP (PPP) was $353 billion (#50 globally), and GDP per capita $8,300.

The enormous currency devaluation observed in late 2014 – early 2015 resulted in sudden seafood consumption drop. Early February 2014, the National Bank of Ukraine changed the hryvnia (UAH) into a fluctuating/floating currency in an attempt to meet IMF requirements and to try to enforce a stable price for the currency in the Forex market. In 2014/2015 the UAH lost up to 70% of its value against the U.S. dollar, reaching 42 UAH for 1 USD in January 2015. In 2016, the domestic currency stabilized, and the National Bank of Ukraine imposed prudent controls on the banking and financial sectors. Increased import costs resulting from unpredictable currency devaluation curtailed. Early February 2016, 1 USD was worth about 26 UAH.

The most significant factor depressing imports is the low disposable incomes of the Ukrainian population. Disposable income decrease had a major impact on seafood imports. At the same time, according to the State Statistic Service, during 2016, real wages grew by 6.5%. Ukraine is a price- taker on the world seafood market, with the exception of salmon roe where its demand and share are significant. According to the Ukrainian State Statistics Service, the inflation in 2016 came down to 13.9%; while it was 43.3% in 2015 and 24.9% in 2014.

An IMF four-year loan program, worth about $17.5 billion, was agreed in eight tranches over 2015 and 2016, subject to conditions regarding economic reforms. However, due to the lack of progress on reforms, only two tranches worth $6.7 billion was paid in 2015. The third tranche of $1.7 billion was planned for June 2016 subject to the bringing into law of 19 further reform measures. Ukraine failed to fulfill the conditions and the fund reduced the size of the tranche from $1.7 billion to $1 billion and realized it in September 2016. Some Western analysts believe that large foreign loans are not encouraging reform, but enabling the corrupt extraction of funds out of the country.

In 2016, Ukraine’s seafood market stabilized as the government got inflation and other indicators under relative control. Stabilized disposable incomes had a positive impact on U.S. seafood exports, which grew by 16% compared to 2015. However, the 2016 U.S. seafood exports worth $37.8 million remain small in comparison to previous years.

Ukrainian consumers traditionally relied on domestic freshwater fish for household consumption, while processors relied on the Black and Azov Sea catch for the processing industry. As Ukraine’s fishing fleet aged, supply decreased by 20 times to 15,800 MT in 2015. The remaining Ukrainian fishermen saw little profit on the domestic market for higher-value products, preferring to sell their catch overseas. Low disposable incomes were another factor that kept Ukrainian catch out of the country.

In 2016, the average fish consumption Ukraine reduced from 15 kg to 10-12 kg per person. Cheap poultry took share from both red meat and fish. Local fish and seafood supply took roughly 25- 30% of the volumes of imported fish and seafood.

In 2016, the market for fish and seafood in Ukraine began to show signs of recovery, which is reflected in importers reviews and statistics. According to the Global Trade Atlas, in 2016 Ukraine imported 294,000 MT of fish and seafood (226,000 MT in 2015). Norway remains the leading supplier – 63,000 MT in 2016. Countries that managed to considerably increase supply volumes in 2016 are Iceland – 47,500 MT (112% growth), Canada 23,000 MT (166% growth), Argentina (900% growth), the UK - 11,300 MT (145% growth). The United States keeps its position of the fifth fish supplier to Ukraine; in 2016 the U.S. supplied 18,000 MT. Top Alaska export items to Ukraine and salmon green roe, H&G pollock, and H&G pink salmon with total volume of 6,725 MT.

Romania

Romania is the second largest consumer market in East-Central Europe after Poland, with a population of 19.6 million consumers. The population is slowly decreasing every year; the drop is due to emigration and demographic decline. Romania has been a member of the European Union since 2007.

In 2016, GDP (PPP) was $441.6 billion (#41 globally) and GDP per capita (PPP) was $22,300 (#83 globally). In 2016, the deflation rate was -1.6%. The two main drivers of economic growth are exports and domestic demand increase, stimulated by the reduction of VAT on food from 24% to 9% in 2015. The main trade partner is the European Union, which accounts for 70% share of Romania's international trade.

Although Romania has achieved progress and continues developing, it is still behind most European countries in terms of economic development. 22.4% of Romanians live below the poverty line as of 2012. The middle class is still developing. The main problems are population aging, significant tax evasion, inadequate medical care and public debt. Corruption also remains one of the main obstacles for the business.

Romanian domestic fish production has been on an upward trend over the past five years, but 80% of demand is met by imports. In 2016, total domestic production of fish and seafood was 21,000 MT – 11,000 MT from aquaculture and 9,921 MT marine and inland catch.

According to the Global Trade Atlas, in 2016, the total fish import value was $249 million or

91,500 MT. Leading fish exporters and re-exporters to Romania were the Netherlands - 16,186 MT (21.5%), followed by Spain (15%) and Poland (13%). The U.S. supplies are ranked at 22nd place with 571 MT, worth $1.6 million, which is 18% more in value and 36.8% more in value than it was in 2015.

In 2016, the total amount of imports from Alaska to Romania was 154 MT, worth $356,000. Alaska pollock, pink salmon, chum, and salmon roe were imported from Alaska directly to Romania. The volume increase was 2,602% and the increase in value was 609%. Alaska seafood is imported to Romania through other European countries such as the Baltic States, the Netherlands, Spain, Germany, Poland, and others. Due to complex logistics routes for Alaska seafood, exact volumes are concealed.

Romanian consumers traditionally prefer meat products, and the consumption of fish and seafood is below the EU average but is growing. According to Eurofish estimates, per capita consumption was 6.3 kg in 2015. Alfredo Seafood company states the main obstacles for higher fish consumption are concerns about fish quality, the fact that people do not know how to cook and clean the fish and the price which may be higher than the price for meat products. Fish is still associated with the fasting period, and consumed mostly during religious holidays or fast.

The majority of fish and seafood are distributed and sold in retail chains. Modern retail is well developed. Its share is 53% of total sales as of 2013 according to DoingBusiness.ro. Leading international and local chains include Metro Cash&Carry, Carrefour, Mega Image, Billa, Kaufland, Selgros, Auchan, Cora, Profi, Lidl, and Rewe.

The fish and seafood assortment in Romania is quite wide: carp, mackerel, salmon, different species of white fish. Fish is sold frozen, salted and smoked, which is produced locally. Salmon roe is available in cans or jars; no frozen roe was observed in retail. The selection of processed white fish, in the form of breaded sticks and surimi, is mostly imported from other EU countries such as Poland and Germany. One of the specifics of the Romanian market is roe salads - spreads made of vegetable oil and roe. The top four preferred species are trout, carp, mackerel, and salmon. New forms of fish and seafood products are on demand, such as fillets and steaks, or ready-to-eat products. Such products of Alaska origin are available on the market from Polish and Dutch processors.

Due to continuous GDP growth and increased consumer confidence in the economy, the HRI sector continues development, which stimulates demand for fish as well.

The Romanian market presents the potential for different kinds of salmon, salmon roe and ikura, crab, cod, halibut, and sole.

Kazakhstan

Kazakhstan is the second largest former Soviet republic after Russia, while population density is among the lowest globally. The economy of Kazakhstan is the largest in Central Asia; the country possesses enormous oil reserves as well as minerals and metals. The country also has considerable agricultural potential with its vast steppe lands accommodating both livestock and grain

5 production. Kazakhstan is landlocked and depends on Russia to export its oil to Europe. In 2010, Kazakhstan joined Russia and Belarus to establish the Customs Union in an effort to improve trade. The union was later joined by Armenia and Kirgizia and is now known as the Eurasian Economic Union. In 2016, GDP (PPP) was $451.3 billion (#42 globally) and GDP per capita (PPP) was $25,200.

The government of Kazakhstan realizes that country’s economy suffers from an overreliance on oil and extractive industries and has made initial attempts to diversify its economy by targeting sectors like transport, pharmaceuticals, telecommunications, petrochemicals and food processing for greater development and investment.

Modern retail and HRI businesses are in the beginning phase of development. The share of modern retail chains is less than 30% of total sales. Leading international and local chains include Ramstore, Metro Cash&Carry, Carrefour, Magnum, and A-Store. Development of modern retail and HRI, improvements in logistics, positive trends in consumer incomes, and interest in European cuisine create the potential for increasing fish consumption.

Domestic fish production is in river fish species. The aquaculture industry offers limited supply. In 2015, just 730 MT of fish was produced. In Soviet times production was close to 10,000 MT. Annual fish consumption per capita is at just 5.2 kg. The government expresses concern over low fish consumption and took action to increase consumption to 19 kg. The Kazakhstan state program on agricultural development 2018-2021 includes plans to increase domestic trout, sturgeon and carp aquaculture production to 5,000 MT by 2021.

Fish imports have been on the decline over recent years, partially due to the increase of supplies from Russia, which does not qualify as an import, as both countries are in the Eurasian Economic Union. In 2016, according to the Global Trade Atlas, total fish imports were 23,000 MT, with 50% originated from Norway, followed by Estonia and Iceland. Norway supplies chilled salmon, as well as herring.

The Kazakh market presents the potential for salmon and salmon roe, pollock, surimi, flatfish.

Georgia

Georgia is located in Southwestern Asia and borders with the Black Sea, Turkey, Russia, Azerbaijan, and Armenia. The population is 3.7 million (2016 est.); 1.1 million people live in Georgia’s capital Tbilisi.

Georgia sustained a total increase in real GDP of 40% in 2003-2008, which was mostly based on inflows of foreign investments and robust government spending. However, GDP growth slowed after the conflict with Russia in August 2008 and the global recession. In 2016, GDP (PPP) was $37.17 billion (#113 globally), that is 2.7% more than in 2015; GDP per capita (PPP) was $10,000 (#113 globally). In 2016, the inflation rate in consumer prices was 2.1%.

During the last ten years, the Georgian government worked on the liberalization of the economy with reductions in regulations, taxes, and corruption in order to develop new business and attract

6 investments. The World Bank highly evaluated Georgia’s anti-corruption efforts. At the moment, Georgia is considered to be one of the world’s easiest places to do business.

Georgia's economy is based on agriculture, including wine production, mining; chemical sector. Approximately 55.6% of the workforce is employed in agriculture. Georgia aims to expand trade with China, negotiations over trade agreement are in progress.

Fish consumption in Georgia remains low – based on a 2013 estimate it is 0.9 kg per person, among lowest in the region. Georgia is a traditional meat-eating country. Local fish production is underdeveloped, in spite of the access to the Black Sea, lakes, and rivers. Fish consumption is actively promoted, and some aquaculture enterprises, mostly trout, are established.

Modern retail is in the beginning phase of development. Leading international and local chains include: Carrefour, Goodwill, Spar, Fourchette, Fresco, Smart, and 2 Steps.

According to Global Trade Atlas data, in 2016, 20,000 MT of fish and seafood were imported into Georgia, and the total value amounted to $36.6 million. The biggest exporting country was Iceland with 21.7% of the volumes, followed by Norway (16.8%) and Spain (13%). The U.S. ranked 5th with 9.7% of the market - 1,899 MT. Considerable amounts of fish and seafood brought to the seaport Poti, are re-exported from Georgia to other countries such as Armenia, Kazakhstan, and Azerbaijan. In 2016, the total amount of imports from Alaska to Georgia was 531 MT, worth $1.4 million, that is 45% less in volume and 35% less than it was in 2015 due to the scarce supply of pink salmon. Pink, Chinook, chum, coho, salmon roe, and flatfish were imported from Alaska to Georgia.

The market presents the potential for both premium and middle-class Alaska species including all salmon species, frozen ikura and salmon roe, black cod, Alaska pollock and sole.

Azerbaijan

The Republic of Azerbaijan is located at the crossroads of Eastern Europe and Western Asia. Azerbaijan’s population is 10 million people. In 2016, Azerbaijan GDP (PPP) was $165.5 billion (#73 globally), GDP per capita $17,400.

Prior to the decline in global oil prices in 2014, Azerbaijan's high economic growth was attributable to rising energy exports. Oil exports remain the main driver, but efforts to boost Azerbaijan's gas production are underway, including investments in agriculture.

2016 marked a year of economic recession for Azerbaijan, the first in two decades. GDP decreased by 3.8% in 2016 compared to last year. Annual inflation rose to 15.6% annually, driven mainly by the devaluation of the local currency, manat, and rising domestic food prices. Investment and consumption fell sharply due to a deep cut in public investment, banking sector distress, and a drop in real income.

Corruption and economic structural inefficiencies remain a deterrent to long-term growth, particularly in non-energy sectors. Several other obstacles impede Azerbaijan's economic progress,

7 including the need for increased foreign investment in the non-energy sector and the continuing conflict with Armenia over the Nagorno-Karabakh region.

The disparity of income in the country remains high. According to Knight Frank, in 2015, the number of millionaires and multi-millionaires was 5,600, and 240 people respectively. A considerable amount of luxury trade centers, premium cars dealers, top hotels and restaurants operate in Baku, which offers potential to suppliers of high-end products.

In the 2000’s, the average annual fish consumption in Azerbaijan was less than 1 kg per capita. This is far below the global average, which offers the potential for growth. In the past five years, consumption of fish and fish products in Azerbaijan increased by 21%, according to the State Statistics Committee. Demand for fish is much higher than current consumption, and while there is a limited supply, traditions, high prices, and the wide availability of meat prevent the rapid increase in fish consumption.

According to the State Statistics Committee, in 2016, 678 MT of fish were caught in the Republic: 300 MT (sprats, kutum, herring, mullet). In 2016, Azerbaijan imported 9,547 MT of fish and seafood worth $15 million, predominantly from Russia.

In terms of overseas logistics, there are several ways to deliver containers to Azerbaijan: through the port of Poti, Georgia, through the Iranian port of Bandar-e’Abbas, or on a container train from China through Kazakhstan to Alyat port in Azerbaijan.

The Azeri market presents the potential for premium segment species such as king salmon, black cod, chum and salmon roe.

Moldova

Moldova is situated in the Southeastern part of Europe and borders with Ukraine and Romania. Country’s population is 3.5 million and it is decreasing due to population migration to the EU and Russia. About 45% of the total population resides in urban areas, and 725,000 people live in Chisinau, capital of Moldova.

Moldova remains one of the poorest countries in Europe. Approximately 21% of the population lives below poverty line (2013 est.). In 2016, Moldova’s GDP (PPP) increased by 4% up to $18.92 billion (#141 globally). GDP per capita (PPP) was $5,300 (#169 globally). The inflation rates for consumer prices were 6.4% in 2016 and 9.6% in 2015.

Historically Moldova was closely linked with Russia, and Russia’s recession had a negative impact on Moldova’s economy. The two countries have their own ups and downs, as a measure of influence, Russia sets sanctions on Moldova’s agricultural products now and then. Moldova seeks to integrate with the European Union. In 2014, the Moldovan Government signed an Association Agreement with the EU, advancing the Coalition's policy priority of EU integration. In 2015, most European countries resolved the need for visas for Moldovans.

Moldova's economy heavily depends on the agriculture. This sector employs 34% of the

8 workforce (2016 est.).

The main challenges for the economy remain corruption, political uncertainty, dependency on Russian political and economic decisions, and unresolved separatism in Transnistria region.

Although Moldova is landlocked, there is one port, Giurgiulesti, on the Black Sea. The aquatic fauna is represented by freshwater fish including catfish, carp, and bream. The main source of local fish production in aquaculture. In 2014, fish production was 8,400 MT.

The total import volume of fish in 2016 was 25,500 MT. Iceland, Norway, Latvia, Spain, Argentina are the leading seafood suppliers. The U.S. supplied 1,000 MT of fish in 2016. Most of Alaska fish is shipped to Moldova through Lithuania, Ukraine or Romania. Only Alaska pollock was imported from Alaska directly to Moldova.

The per capita fish consumption is growing, currently, it is 11 kg. Fish consumption is stimulated by the government. In 2016, the first Local Fish Festival took place, promoting fish as a healthy product.

Modern retail is in the beginning phase of development. Leading international and local chains include Green Hills, Linella, Fourchette, No.1, Metro Cash&Carry, Fidesco and others.

There is a social gap between the population in Moldova, that is why both premium and table fish species are on demand. Thus, the market presents the potential for all kinds of Alaska seafood including pollock, surimi, flatfish, salmon, salmon roe, and black cod.

Armenia

The Republic of Armenia is a mountainous country in the South Caucasus region of Eurasia. Armenia has a population of three million and is densely populated. Armenian diaspora that live outside the country is estimated at 8 to 11 million people. The GDP (PPP) is $25.78 billion (#138 globally), and GDP per capita $8,600.

Under the old Soviet central planning system, Armenia developed a modern industrial sector, supplying machine tools, textiles, and other manufactured goods to sister republics, in exchange for raw materials and energy. Armenia has since switched to small-scale agriculture from the large agroindustrial complexes of the Soviet era. Armenia has two open trade borders, Iran and Georgia, while its borders with Azerbaijan and Turkey have been closed since the 90’s, as a result of Armenia's ongoing conflict with Azerbaijan over the separatist Nagorno-Karabakh region.

Armenia joined the WTO in January 2003. The government has made some improvements in tax and customs administration in recent years, but anti-corruption measures have been ineffective. Armenia will need to pursue additional economic reforms to strengthen the rule of law, in order to regain economic growth.

Armenia is particularly dependent on Russian commercial and governmental support. Key Armenian infrastructure is Russian-owned and/or managed, especially in the energy sector.

Remittances from expatriates working in Russia are equivalent to about 20% of GDP and partly offset the country's severe trade imbalance. Armenia joined the Eurasian Economic Union in January 2015.

The average annual per capita consumption of fish and fish products in Armenia remains as low as 1.75 kg per capita. In 2015, Armenia imported a record 3,600 MT of fish and seafood. Membership in the Eurasian Union changed the import statistics in favor of Russian supplies. The U.S. supplied 250 MT of fish to Armenia in 2015.

The Armenian market presents the potential for low-priced species such as pollock and pink salmon, as well as pink salmon roe.

Latvia

Latvia is situated in Northeast Europe, on the eastern coast of the Baltic Sea. The population of the country is 1.9 million people; 698,000 live in its capital Riga, which is the biggest city in the Baltic States. The population is slowly decreasing. 67.4% of the population is urban (2017 est.). Latvia’s coastline is almost 5,000 km. Riga and Ventspils are the largest ports in Latvia. Both of them have cold storages. Latvia joined the EU in 2004, the eurozone in 2014.

Before the recession of 2008, in 2006-2007, Latvian GDP grew by more than 10% annually. In 2009, GDP fell by 18%, and it is still slowly recovering. The IMF, EU, and other international donors had to provide financial assistance to Latvia. In 2016, GDP (PPP) was $50.62 billion (#103 globally), which is 2% more than in 2015. GDP per capita (PPP) was $25,700 in 2016. The inflation rate was 0.1% in 2016.

Because of its geographical location, transit logistics services are developed. More than half of GDP is contributed by exports. As of 2015, the main import partners are Lithuania (16.9%), Germany (11.3%), Poland (10.5%), Russia (8.2%), Estonia (7.8%), Finland (5.2%), and the Netherlands (4%). The main import commodities are machinery and equipment, consumer goods, chemicals, fuels, and vehicles.

In 2015, the total Latvian fish catch was 32% lower than in 2014 and amounted to 82,300 MT. The main species caught in the Baltic sea are Baltic herring, cod, turbot, sprats, and others. The aquaculture production was just 863 MT (Eurofish data), 64% of aquaculture volumes were in carp. Latvia imports mainly raw fish materials for further processing. The fish processing industry is highly developed in the country since its Soviet past. There are about 100 fish processing plants. In 2015, the overall volumes of the Latvian fish processing industry were 80,000 MT, worth $153 million. Different types of products such as frozen, salted, smoked, ready-to-eat fish products, and canned fish are produced there. One of the largest fish processing plants is Kaija. It mostly produces canned sprats (120,000 cans a day) and mackerel (50,000 cans a day). It also processes a certain amount of salmon imported from the U.S. (USDA data).

After the introduction of the Russian food ban in August 2014, EU countries became the main destination for export of fish products from Latvia. In 2016, the value of fish and seafood exports was $126 million. The main export destinations were Lithuania, Estonia, Denmark, Germany, and

Poland. In 2015, Latvia exported 53% of its fish products to the EU, compared to 40% in 2014. In 2015, 30 fish processing companies got the permission to export fish to China. However, in the first ten months of 2016, Latvia exported only 119 MT of fish products there, according to USDA.

As of Global Trade Atlas data, in 2016, Latvia imported 70,000 MT of fish and seafood, worth $161 million, which was 19.7% more in volumes and 21.7% more in value than in 2015. In 2016, the major suppliers were Lithuania (22%), Poland (19.6%) and Estonia (10.8%); Sweden and Norway also had about 10% of the market share each. In 2016, there were no direct imports to Latvia from Alaska.

Fish and seafood are sold in specialized fish stores, supermarkets, and traditional markets. In 2014, the average annual fish consumption in Latvia was 25,5 kg per capita; fish is traditionally an important part of daily diet in Latvia. Alaska pollock, herring, mackerel, carp, salmon, and trout are the most popular species among the Latvians.

The Latvian market presents the potential for most of Alaska species, especially those that can be further processed, as well as for different kinds of salmon, salmon roe and ikura, Alaska pollock, pollock mince and surimi, and sole.

Lithuania

Lithuania’s population is 2.8 million people; it is slowly decreasing. Most part of the population, 66.5%, live in cities. Vilnius is the capital, 622,000 people live there (2016 est.). Lithuania joined both NATO and the EU in 2004; Lithuania joined the eurozone in 2015.

The Lithuanian economy suffered in 2008-09 from the global financial crisis, but it recovered and became one of the fastest growing economies in the EU. The Lithuanian government is working on improving the business environment and liberalizing labor laws. In 2015, Lithuania opened a natural gas terminal, reducing Lithuania’s dependence on Russian gas from 100% to approximately 30% in 2016. In 2016, GDP (PPP) was $86 billion (#86 globally), which is 2.3% more than in 2015. In 2016, GDP per capita was $30,000. In 2016, deflation rate was -0.7%.

Although Lithuania has a relatively short coastline of 90 km, Klaipeda it one of the most important seaports in the region. Alaska fish shipped not only to the Baltics but also to Belarus, Romania, Moldova, goes through Klaipeda.

According to Eurofish data, in 2015, the total fish catch in Lithuania was 83,705 MT, which was 44% less than in 2014. Almost all harvest from long-distance ocean fisheries and 85% of the Baltic Sea catch were sold directly to foreign countries.

Lithuania is an important fish processing country. About 95% of fish raw materials are imported into the country and a significant share of processed fish is exported as value-added products. In 2016, Lithuania exported fishery products for $438.8 million. Surimi products represented about 30% of the total export volume, according to Eurofish statistics. The main markets for surimi are Germany, Belgium, and Italy; about 5% of the total export volumes go to the CIS countries.

According to the Global Trade Atlas, Lithuanian companies imported 129,976 MT fish worth $504 million in 2016. The biggest suppliers were Sweden with the 29% of volumes followed by Norway (17%), Latvia (7.8%), Russia (7%) and the U.S. (5.8%). In 2016, chum, pink and sockeye salmon, canned salmon, salmon roe, Alaska pollock (fillet, surimi, mince), Pacific cod, by-products (liver/roe) were imported to Lithuania from Alaska. In total, exports from Alaska amounted to 7,673 MT, worth $21.8 million. That is 2% increase in volume and 16% decrease in value compared to 2015.

As of 2015, in Lithuania, there were 49 fish processing plants. The total fish processing production amounted to 107,900 MT in 2015, which was 18% higher than in 2014. About 35% of processed products are preserved fish, mainly surimi, smoked fish (35%), fish fillets (14%), canned fish (11%) and other fish products (5%).

Viciunai group is the largest fish processor in Lithuania and one of the largest producers of surimi products and fish in Europe. Their annual production is about 120,000 MT. According to USDA data, the Viciunai group imports Alaska pollock, white fish and salmon from the U.S. Alaska salmon faces tight competition from a product from Norway. For surimi products Vici imports frozen blocks of white fish, surimi and mince from the U.S. and Asia. For breaded fish sticks, produced in the plant in Estonia, it imports Alaska pollock from Alaska.

In Lithuania, fish and seafood are sold both in specialized fish stores and supermarkets. The fish consumption in Lithuania is growing: in 2015 it was 19 kg per person, which was 12% more than in 2014. The most popular species are herring, mackerel, salmon, carp, trout, and Alaska pollock products.

The Lithuanian market presents the potential for almost all kinds of the fish, especially for Alaska pollock for further processing, besides that – for different kinds of salmon, salmon roe and ikura, crab, and sole.

Estonia

Estonia, located on the Baltic Sea and the Gulf of Finland, has a coastline of 3,700 km. Its population is 1.3 million (2016 est.), most of it, 67.4%, is urban. As of 2015, 413,000 people live in Estonia’s capital Tallinn. Estonia joined NATO and the EU in 2004, and the eurozone in 2011.

Estonia’s economy is a modern market-based economy; the per capita income level is one of the highest in the Baltic region. The government is aiming to create a free market, open for business. The main economy drivers are electronics, telecommunications, and trade. The economy grew actively in 2011-2012, but in 2013, it slowed down. In 2014, GDP growth was 2.9%, but it fell below 2% in 2015-2016 due to lower demand on Scandinavian and Russian export markets. In 2016, GDP (PPP) was $38.45 billion (#109 globally); GDP per capita (PPP) was $29,300. The inflation rate was 0.8% in 2016.

According to Eurostat data, in 2015, the total local fish catch was 70,800 MT. The main species harvested in Estonia are sprat, Baltic herring, and cod. Fish processing accounts for about 13% of the Estonian food industry, and fish and seafood products form 28% of foodstuff export. There are

12 about 83 fish processing companies in Estonia. The main processed fish products are frozen, salted, spiced, dried fish, as well as preserves and ready-to-eat products, produced both for the domestic and international markets. Estonian companies dominate the industry; Lithuanian Viciunai group also owns a plant in Estonia. The Estonian Association of Fishery unites 35 members, that produce about 85% of the total volumes of processed fish in Estonia, according to USDA data.

According to the Global Trade Atlas, in 2016, Estonia imported 30,000 MT, worth $103 million, that is 24% less than in 2015 in volume terms. The major suppliers to Estonia were Finland with 21% of the volume, Sweden (16%) and Latvia (12.8%). In 2016, the U.S. exported 658 MT worth $1.4 million to Estonia. In 2016, Estonia exported 77,102 MT of fish and seafood for $123 million, which is 25% less in value, but almost the same in volumes. The import and export decrease can be attributed to the Russian food ban, as Russia was an important export market for Estonia. In 2016, the major export destination for fish and seafood from Estonia were Ukraine, Belarus, and Denmark.

In 2016, the total amount of imports from Alaska to Estonia was 622 MT worth $1.4 million. Alaska pollock fillets and Alaska pollock mince were imported. The volume increase amounted to 53% and the increase in value was 27%. In 2015, imports of Alaska pollock (except fillets) grew as well by 41% compared to 2014 due to a higher demand by the domestic market and positive perception by consumers, according to USDA data. The major competitor of U.S. Alaska pollock on the Estonian market is Russian pollock, which enters the market in spite of the political issues.

The average fish consumption is 18 kg per capita (2014 est.). It is lower than the EU average, but still fish is an essential part of Estonia’s traditional menu. Herring, mackerel, trout, and carp are the most popular species. Pollock and salmon are gaining popularity in the market. Consumption of pollock is growing because of relatively low prices compared to other fish.

The Estonian market presents the potential for Alaska pollock as well as for different kinds of salmon, salmon roe, and ikura and sole.

Market assessment update

The EEU market presents an emerging export destination for Alaska seafood. In FY2016/17, ASMI EEU program expanded into the Baltics – Lithuania, Latvia, and Estonia. Ports of these countries often become receiving harbors for Alaska seafood, while cargo is consigned for the customers operating in other EEU countries At the same time, the Baltics have a long-standing history of fish-processing. The annual volume of pollock surimi arriving into Lithuania from Alaska exceeds 7,500 MT; the product is reprocessed in Lithuania and is further distributed across European states.

On August 6, 2014, the Russian Food Ban came into effect, blocking most of the fish supply into the country, except for Asian and Latin American supplies. The Ban was presented by the Russian government as a protection measure that would support domestic production. At the end of 2016, the United States imposed further sanctions on the Russian Federation in response to its suspected interference in the 2016 U.S. elections. New measures included the expulsion of 35 Russian

diplomats, the closing of two Russian diplomatic compounds and new sanctions against six Russian individuals and five entities.

1. Performance Measures Table

Target Audience: Importers, re-processors, distributors, and retailers

CONSTRAINT-PERFORMANCE MEASURE TABLE

SECTOR: TRADE

Constraint: Limited awareness of Alaska seafood, its availability, versatility and quality among the target trade. Limited handling of Alaska seafood. Opportunity: Increase in the number of target trade keen on adding quality fish and seafood in their assortment. Constraint: Unsatisfactory storage and handling procedures in wholesale and retail cause quality losses and reduce confidence in Alaska seafood. Opportunity: Consumers’ interest in healthy living and home cooking, plus growth in fish and seafood consumption in the region, push wholesalers/retailers to capitalize on this trend.

FY 15 FY16 FY16 PERFORMANCE MEASURES BENCHMAR GOAL ACTUAL K 1. # trade representatives aware of Alaska 67 72 76 seafood industry (out of 130) 2. # trade partners that purchase Alaska seafood 20 22 25 (out of 130) 3. Trade preference for wild Alaska salmon roe 20% 21% 20% over other sources 4. # trade partners active in ASMI marketing 8 11 12 campaign (out of 130) 5. # of retailers stocking Alaska seafood (out of 15 17 19 50 retailers)

The region’s constraints, as well as performance measures, were tailored based on existing conditions (exclude Russia due to the Russian Food Ban, include Ukraine and new ASMI markets: Romania, Moldova, Kazakhstan, Azerbaijan, Georgia, Armenia, Lithuania, Latvia, Estonia). Due to budget cuts, ASMI activities 2016-17 were amended, including the cancellation of third-party research. Results quoted were gathered by the OMR.

2. Results of Evaluations/Impact on Constraint or Opportunity

In the light of the truncated ASMI marketing program in the region, no research survey was conducted to evaluate season 2016-17. The statistics above are built on the overseas marketing representative’s (OMR’s) internal surveys. Constraints and performance measures were tailored due to the expansion of the geography of ASMI EEU marketing program and fourth year of the embargo on U.S. food imports to Russia. 14

Quantitative results of 2016-17:

17 business trips: Kiev, Ukraine – coordination of Alaska Seafood masterclass Kiev, Ukraine – maintenance of existing trade and HRI contacts Tbilisi, Georgia – meetings with local importers, attendance of AgroFoodDrink Tech Expo Bucharest, Romania – coordination of Alaska Seafood representational event Bucharest, Romania – attendance of Taste Ambassador trade show Almaty, Kazakhstan – coordination of Alaska Seafood representational event Astana, Kazakhstan – attendance of World Food Kazakhstan Riga, Latvia – coordination of Alaska Seafood representational event Tallinn, Estonia – coordination of Alaska Seafood representational event Vilnius, Lithuania – coordination of Alaska Seafood representational event Berlin, Germany – EU strategic session Moscow, Russia – attendance of World Food Moscow Moscow, Russia – attendance of Fish Conference Moscow, Russia – attendance of Prodexpo trade show Brussels, Belgium – attendance of Seafood Expo Global Anchorage, USA – attendance of All Hands meeting Seattle, USA – IMC meeting

Seven trade shows World Food Ukraine, Kiev, Ukraine World Food Kazakhstan, Almaty, Kazakhstan AgroFoodDrink Tech Expo, Tbilisi, Georgia World Food Moscow, Moscow, Russia Prodexpo, Moscow, Russia Seafood Expo Global, Brussels, Belgium Taste Ambassador trade show, Bucharest, Romania

TV Focus Magazin, channel Prima TV – coverage of ASMI representational event in Romania Kanal D, news section – coverage of ASMI representational event in Romania

Internet Antena Sars Rai da Buni, stream video – coverage of ASMI representational event in Romania Teo Show - Interview with the chef – coverage of ASMI representational event in Romania 10 Facebook postings, food-themed pages – coverage of ASMI representational event in Romania 10 Facebook postings, food-themed pages– coverage of ASMI New Year presentation and in- store promotion in Ukraine

Other Nine street billboards – coverage of ASMI New Year presentation and in-store promotion in Ukraine

SMS bulk delivery – 4,000 recipients - coverage of ASMI New Year presentation and in-store promotion in Ukraine Direct mailing – 60,000 - coverage of ASMI New Year presentation and in-store promotion in Ukraine Radio announcements - coverage of ASMI New Year presentation and in-store promotion in Ukraine In-store announcements - coverage of ASMI New Year presentation and in-store promotion in Ukraine Total estimated coverage category ”Other” – 1,600,000 consumers

Total audience: 1,950,000 audience, total equivalent ad value – more than $160,000

PM1

Focus on the extensive ground-work in the region allowed ASMI to have personal communication with target professionals several times through the season, which increased awareness of Alaska seafood and maintained interest in it. Seventy-six representatives of top-management of import/wholesale/retail businesses obtained information on Alaska seafood. Country breakdown: 31 - Ukraine, 9 - Romania, 8 - Moldova, 11 - Georgia, 5 - Azerbaijan, 6 – Kazakhstan, 2 – Latvia, 2 – Lithuania, 2 – Estonia. These metrics counted only top management of importing and retail companies and excluded middle-level managers. ASMI was able to collect 14 trade leads through the season, which allowed Alaska business get connected and send proposals to new potential markets.

PM2

Twenty-five companies imported Alaska seafood, including Ukrainian buyers (Universal Fish Company, Gelios, Fozzy Group, Ocean TD, 7th Continent, Flagman), Romanian buyers (Ocean Fish, De Silva, Groenlanda, Intertrade, Macromex, Negro 2000, Alfredoseafood), Estonian (Kalakala&Pojad), Lithuanian (Viciunay Group), Moldovan (Selida Lux, Dalmors Grup, Viocris Impex), Georgian (Seafood Group, Euro Caucasus, Marshe, Mariami), Azerbaijanian (RR Food), Kazakh (Alaska Seafood, Kingfisher).

Russia was not part of the performance measures, however, remains in the program. Two Moscow trade shows and specialized Russian FISH Conference were attended in order to maintain relations with former importers of Alaska seafood and obtain up-to-date information on fishery sector development in the Russian Far East and other areas that compete with Alaska by assortment. Several Russian importers continue to order salmon green roe from Alaska, which arrives in Belarus for re-processing and re-export to Russia, this product is not covered by ASMI marketing campaign.

PM3 This number is an estimate provided based on total number of EEU region companies purchasing Alaska roe out of an estimated 110 EEU seafood importers and retailers. The number went down because Ukrainian buyers reduced overall purchases of high-end seafood, including roe. We know

16 buyers in Ukraine source from Alaska due to the embargo on Russian seafood in Ukraine. Competition for Alaska is now coming from farmed salmon from the EU.

PM4

Loss of the Russian market and financial obstacles in Ukraine had a negative effect on overall EEU export volume, which reduced region’s promo budget and limited ASMI’s marketing activities, putting more focus on trade servicing, rather than promotions. Another factor that blocked ASMI from increasing the number of trade partners that were active with ASMI marketing campaign, was lack of marketing experience among partners on new markets (Romania, Moldova, Kazakhstan, Azerbaijan, Georgia, Armenia, Lithuania, Latvia, Estonia). In spite of the fact that most of importers/retailers see benefits in joint promotions, not many are ready for a prompt launch of the collaboration. As geography of the program in the region expands and existing connections deepen, ASMI managed to increase the number of active partners. In MY2016/17, collaboration was established with twelve partners, increase by four companies if compared to MY2015/16 results.

Promotion briefs: Ukraine: UFC - salmon roe promotion in retail Fozzy Group - salmon roe tastings Auchan - salmon roe tastings Don Mare - Days of Alaska Gelios - cod and pollock roe tastings

Romania: Ocean Fish - salmon roe retail promotion in Kaufland, Carrefour, Auchan Intertrade - representational event DeSilva Exclusive - Taste Ambassador trade show

Moldova: Selida Lux - retail promotion in Ocean Product store Viocris Impex - salmon roe retail promotion in Metro Cash&Carry, Fourchette, Green Hills

Georgia: Seafood Group - keta retail promotion in Goodwill

Kazakhstan: Alaska Seafood - representational event

The share of modern retail in EEU is still low if compared with other ASMI regions, the concentration of modern retail remains limited and competes with traditional markets. The region lacks professionals and technologies in logistics and merchandising. Many EEU countries are traditionally into meat consumption, which puts a question over the quality of fish handling. In order to address this matter, ASMI makes attempts to educate local trade on fish handling techniques. In 2016-17, over 400 middle-level managers received ASMI technical manuals. The

17 materials were distributed by ASMI at representational and professional events. Activity was also managed in cooperation with loyal Alaska fish importers along their distribution database. Distribution happened via Ukrainian partners (UFC), Moldovan partners (Selida-Lux), Kazakhstan (Restaurant Critics of Kazakhstan). ASMI blog www.alaskaseafood.ru was updated with materials in five languages available for download from across the region.

PM5

Retail Alaska assortment includes frozen/smoked salmon (pink, chum, sockeye), frozen salmon ikura, processed salmon roe, pollock and pollock products. Gourmet retailers also stock king salmon and black cod. List of retailers that stock Alaska seafood: Ukraine (Auchan, Silpo, GoodWine, Novus, Don Mare, ATB), Romania (Carrefour, Lidl, Auchan), Moldova (Metro, Ocean Product), Georgia (Carrefour, Goodwill), Azerbaijan (Bravo Supermarket), Latvia (Maxima, Rimi), Lithuania (Gelsva), Estonia (Coop, Maxima). ASMI demo formats in retail included: samplings, presentations, prize drills, consultations, enhanced displays, shelf-talkers and gifts for purchase. Selected promotions were supported by a marketing campaign, such as New Year promotion at Don Mare with Ukrainian Fish Company. The promoted product new to the market was pollock roe; cooperation on this project is expected to continue and support the movement of pollock roe into Ukraine, which is needed by Alaska pollock industry.

Several fish importers of the EEU region operate specialized fish stores, such stores exist in Ukraine, Romania, and Moldova. In 2016-17, ASMI used these platforms to advertise Alaska seafood and outreach final consumers and business audience, such as restaurants sourcing fish in these stores. Cooperation was cost-effective and positive. Windows of the Ocean Product fish store, which is operated by Selida-Lux and located in the center of Chisinau in Moldova, were decorated with Alaska images. The ASMI logo was placed on the windows as well. ASMI leaflets were distributed at cashier desks. Romanian leading fish importer, Ocean Fish, placed ASMI banners in their stores and also decorated seven trucks with Alaska branding, trucks deliver seafood in Bucharest and across Romania, which made a truck a moving advertising billboard for ASMI.

ASMI materials are now available in Russian, Ukrainian, Romanian and Georgian in hard copies, as well as electronically via www.alaskaseafood.ru. During 2016-17, new technical materials were translated and designed, utilizing knowledge of ASMI technical department. For instance, Retail and HRI Seafood Quality Primers describe fish handling practices, quality importance, beating the spoilers, temperature and humidity regimes, shelf life and provide trimming guidance. Due to an expanding program geography, additional branded roll-ups were produced for event decoration. Man height cardboard bears were produced following ASMI Brazil’s success with this item, for the event and retail stores decoration.

ASMI continues to maintain the www.alaskaseafood.ru blog in Russian, the language spoken in most of the countries of the region. The blog covers basic ASMI info on the industry, species, technical information and recipes. It also gives updates on catch and ASMI activities in the region, as well as ASMI participation in global fish events. On average, 10,000 unique visitors use the blog annually. A newsletter in Russian and English was sent out quarterly in order to keep the local trade updated on Alaska catch results, upcoming events, and showcase cooperation

18 opportunities.

2. Conclusion/What did you learn? New realities of the EEU market stimulated ASMI to reconsider its constraints and PM’s in the region. The decision was timely and allowed more transparent and reasoned control over the program.

During season FY2016-17, ASMI mainly focused on trade servicing projects that led to the expansion of the contact database and deepened relations with the target audience. ASMI implemented the full range of trade servicing tools, including business trips across the region, attendance at trade shows, generation of trade leads, trade advertisement, as well as representational events for the target audience. As a result, estimated performance measures showed positive shifts in ASMI’s results on the market.

At the same time, there is a lot to be done in the upcoming seasons. All newly added countries remain in ASMI’s focus, however, in the future, more attention will be given to Ukraine, Romania, and Moldova, countries with higher fish consumption, and good assortments of Alaska seafood available. ASMI looks for cost-effective ways to reach target business audiences in multiple countries operating limited marketing budget. Russia remains in ASMI’s sphere of interest, this market is vital to ASMI roe producers once pink salmon catch exceeds the average.

ASMI proposes to replace PM 3 “Trade preference for wild Alaska salmon roe over other sources.” Ukraine is not receiving Russian salmon roe due to political matters, therefore, the earlier proposed measure is no longer relevant. The newly proposed measure is reflective of the entire region performance and focuses on technical education: “# of managers that received ASMI technical manuals (out of 1300).”

CONSTRAINT-PERFORMANCE MEASURE TABLE

SECTOR: HRI

Target Audience: High-end restaurant sector in the key markets of Moscow, St Petersburg and the western Russian regions.

Constraint: Limited awareness and handling of Alaska seafood among HRI distributors and institutions. Lack of preference for wild Alaska seafood over competitive seafood species.

Constraint: Historically low fish consumption in the region has created a lack of skills for cooking fish.

Opportunity: The HRI sector in the EEU region continues to develop with restaurants opening, which offers new market sectors for wild Alaska seafood.

PERFORMANCE MEASURES FY15 FY16 FY16 BENCHMARK GOAL ACTUAL

1. Prompted awareness of the high quality, 21% 22% 30% versatility and aspiration appeal of Alaska seafood 2. # HRI partners in region (HRI importers, 19 21 21 distributors, and restaurants) (out of 10) 3. # of Alaska seafood products promoted by 14 14 14 HRI importers, distributors, and restaurants (out of 18)

Due to the cuts in program budget, ASMI activities during season 2016-17 were amended, including the cancellation of third-party research. Results quoted are provided by the OMRs. PM 1: 313 out of 1,050 total: Ukraine (118 out of 250), Romania (57 out of 250), Moldova (3 out of 170), Georgia (4 out of 100), Azerbaijan (60 out of 200), Kazakhstan (70 out of 200). Additionally, ASMI outreached the audience in the Baltics.

PM 2: List of partners in the EEU region: 7th Continent, Gelios, Universal Fish Company, Don Mare, Fozzy Group (Ukraine), Beat Group (Azerbaijan), Ocean Fish, Negro2000, De Silva, Expert Factor, Alfredo Seafood (Romania), Selida-Lux, Viocris Impex, Yamato Group (Moldova), Seafood Group, West Invest, Stema, Mariami (Georgia), Alaska Seafood, Kingfisher, Restaurateur Club Kazakhstan (Kazakhstan)

PM 3: Pink, keta, sockeye, coho, king salmon, keta salmon roe, pink salmon roe, pollock, cod, pollock roe, cod roe, black cod, scallops, flatfish.

3. Results of Evaluations/Impact on Constraint or Opportunity No third party research survey was conducted in evaluation of season 2016-17. The statistics above are built on the overseas marketing representative’s (OMR’s) survey.

The EEU HRI program shrank. The closure of the Russian market and economic crisis in Ukraine have affected sales of premium seafood. In Ukraine, the Alaska seafood assortment for HRI shifted from high-end to cheaper species, while certain volumes of black cod supplies were preserved. ASMI continued with outreach to the HRI sector in Ukraine, which was done through market visits, trade show attendance, and distribution of educational materials.

PM1

Following initial progress in the markets of Kazakhstan, Romania, Lithuania, Latvia and Estonia and Azerbaijan in FY2015-16, ASMI coordinated representational events across the region that featured a wide assortment of Alaska fish species to the target HRI audience. Total audience exceeded 313 representatives of the target audience. Tastings that accompanied events allowed ASMI to demonstrate the taste and texture of Alaska seafood to chefs, cook-it frozen tips, and importance of using the single-frozen material.

During season 2016-17, ASMI partnered with five local companies in the coordination of joint HRI promotions: Ukraine - 7th Continent, UFC; Azerbaijan - Beat Group; Kazahkstan - Restaurant Critics of Kazakhstan; Estonia - Kalakala.

As a result of events, media coverage reached 350,000 on-line readers. USDA offices in Kazakhstan, Romania, Poland, and Turkey that jointly cover the region, were informed and invited to the events. USDA representatives often made welcome remarks to the audience at the beginning of the presentation.

Event briefs:

In July, ASMI coordinated representational event in Baku, Azerbaijan, that hosted Azerbaijani chefs, importers, distributors, and press. The main goal of the event to present keta and pink salmon roe, pollock, cod, keta, sockeye, coho, pink salmon and king salmon to the audience. General background on Alaska seafood industry was unveiled by ASMI representatives during the event. Dishes with Alaska fish were presented by respected Moscow chef Nikolai Chernishov, who previously worked with seafood in Japan.

Another HRI event took place in Bucharest, Romania. Audience: Romanian chefs, importers, distributors, retailers, media, bloggers and local celebrities. ASMI showcased salmon roe, pollock, chum, pink salmon. Dishes were prepared by a local celebrity chef - Patrizia Paglieri – a great professional and public person and judge of the Romanian TV project Master Chef. In preparation for the ASMI event, Patrizia developed the menu of eleven courses out of five Alaska seafood species.

In September, ASMI donated Alaska sockeye and black cod for the Ambassador’s events in Tallinn, Estonia and Riga, Latvia where importer companies, distributors, HRI representatives, retail, Amcham members, media, and food bloggers received relevant printed materials and tried Alaska fish. ASMI representatives had a booth at the event and were able to distribute printed materials.

In October, ASMI hosted a representational event in Almaty, Kazakhstan. The event hosted local chefs, importers, distributors, retailers, and press. The event was co-organized by Restaurant Critics of Kazakhstan – a popular networking association with active restaurateur club and over 63,000 followers on Facebook. The event featured eight Alaska fish species: sockeye, chum, king and pink salmon, pollock, cod, black cod, chum salmon roe. The menu of eight courses was developed and offered for tasting to the audience.

PM 2 and 3

In June, ASMI partnered with the leading Ukrainian fish importer. In order to support UFC sales of Alaska seafood to local restaurant/canteen sector, ASMI coordinated educational master class. The event allowed 40 Kiev chefs, restaurateurs, caterers to obtain information on assortment and quality of Alaska wild salmon, salmon roe, and white fish. Products under promotion: sockeye, chum salmon roe, black cod, pollock.

Exposure of Alaska seafood to the audience of restaurant owners, chefs, and professional media creates an initial push, which is expected to lead to trial or repeated orders of fish from Alaska. The superb global reputation of Alaska seafood is known HRI circles, however, ability to sample an assortment of Alaska seafood and obtain comments from reputable chefs stimulates actual purchases.

ASMI trade databases were updated. Distributors that have Alaska seafood in assortment in Ukraine, Romania, Moldova, Georgia were added/excluded from the general list of restaurant suppliers at http://alaskaseafood.ru/where_to_buy/. This allowed the HRI sector to find suppliers of Alaska seafood available on the market.

4. Conclusions The HRI program works in the initial stages of market development. With the recovery of the Ukrainian economy and outreach to ASMI’s new markets, Alaska exports are expected to rebound to higher levels. The potential for the return of the Russian market exists, however, remains vague. The strategy of providing the restaurant owners and chefs with Alaska fish samples, presentations and informal communication with colleagues that have knowledge of Alaska seafood is helping to create interest that leads to sales. Representational events for the trade proved to be an efficient way to engage the target audience in the region. In MY2016-17, promotional methods will remain trade outreach, representational events, printed materials production, recipe development, and trade PR. The focus will be given to pollock products reflecting the needs of the industry.

New realities in the EEU market stimulated ASMI to reconsider its constraints and PM’s in the region. ASMI proposes the following additions to the constraints and performance measures:

Target Audience: HRI supplier, institutions, chefs, other opinion-makers across the region.

ASMI proposes to replace PM 1 “Prompted awareness of the high quality, versatility and aspiration appeal of Alaska seafood” with a measure that is more reflective of the entire region, including newly added Baltic states: “HRI representatives aware of Alaska seafood, its high quality, versatility and aspiration appeal (out of 1200)” The FY 16 baseline would be 313.

ASMI proposes to replace PM 2 “# HRI partners in the region (HRI importers, distributors, and restaurants) (out of 10)” with a measure more reflective of the entire region: “# HRI representatives active in ASMI marketing campaign (out of 30)” The FY 16 baseline would be 5.

Overall Market Recommendation

ASMI has made progress in raising awareness about Alaska seafood and its quality attributes in both the trade and HRI sector. As a result of the ASMI marketing program, the number of companies handling Alaska seafood and the number of companies that wish to highlight Alaska seafood in their assortment increased. Importers and wholesalers in countries newly added to the ASMI program start to consider the Institute as a reliable partner, the source of information and asset in finding a supplier from Alaska. Consumer-oriented and wholesale activities highlight Alaska product in distribution and assist with faster sales for importers, which is recognized and 22 appreciated by trade. Distribution of Alaska seafood in modern retail has increased, which is reflected in the relevant performance measure. Modern retail is seen as a major vehicle to move sales of fish nowadays and in the future. In-store promotions will remain part of the program to support loyal Alaska partners.

The marketing program was abbreviated due to political and economic problems in the region. Maintenance of earlier achieved results in Ukraine are in ASMI’s focus, at the same time, efforts are put on testing new potential markets in the region. Due to multi-stage logistics between Alaska and most of the new markets in the EEU, statistics lacks transparency on actual volumes imported. Market visits, however, show that Alaska seafood is available in most of the target countries, but the region remains emerging. Newly identified constraints and performance measures are expected to give more reasoned control over the program.

For FY 2017-18, a program on technical assistance will be put in place in order to increase the overall quality of Alaska seafood on shelves. Corresponding performance measure was added to the Performance Measure table. The focus will be given to pollock products reflecting the needs of the industry.