The abalone consumer education and promotion ballot closes this Sunday at 6.00pm AEDT. If you haven’t made your mind up yet we encourage you to go to the website www.abalonepal.com and look at the information that we have put there to help you decide.
The aim of the proposed Consumer Education and Promotion Program is to increase the value of the industry by $100million cumulatively over five years. To do that we will need to attract a premium price for our products.
One question people have asked is how high can the abalone price go?
The Levy Investment Proposal that was included in your voter packs provides a lot of information about historical price trends for Australian wild-caught abalone. We also asked Ewan Colquhoun, an expert in levies investment, about what is happening in the global abalone market and how that impacts on our price. You can watch a short video with his response here.
Most of issues that impact on the price we receive for our abalone are largely or completely outside the control of the industry. What we can control is how we communicate with our consumers and the story we tell. The story we tell will impact on the value that the consumer perceives for Australian wild-caught abalone. That is what the Consumer Education and Promotion (CEP) Program is all about.
Last week Undercurrent News published an article that was shared with us by the Australasian Abalone Association. The headline “Abalone price crash in China opens market opportunities” certainly grabbed our attention! The article itself is firewalled (you can read the full article by signing up to receive the Undercurrent News newsletters). Here are three key points:
- The price of a single abalone now is as cheap as CNY 3 per piece. This is about the same as the price for a head of cabbage.
- Larger abalone do get higher prices but there has been a price drop across the board for Chinese farmed abalone of between 20% and 25%.
- Fierce competition is compelling Chinese abalone businesses to promote and differentiate their product.
Source: Undercurrent News
We can’t compete with Chinese farmed abalone on price.
The challenge for our industry is to get consistent and stable increases in price for Australian wild-caught abalone at a time when competition is driving prices down. To do that we need to get closer to the people who consume our products.
Jing Daily, a luxury branding newsletter from China, recently published an article about prestige pricing. Prestige pricing is where prices are set at a high level due to a perceived quality.
The Jing Daily article talks about the need for premium brands to establish “added luxury value” (ALV) which is a value that is based on perceived social status. This is what people will pay a high price for, not the product features. The added luxury value is driven by the brand story not the product.
A well-executed prestige pricing strategy will cause the demand to go up when the price goes up! This is absolutely counterintuitive to what most people expect.
Here is an example of how this works.
Who would pay USD2000 or even USD1000 for an omelette? People do! A New York hotel has been selling omelettes for USD1000 each for about a decade. They recently increased the price to $2000 and the demand for the omelette went up! The perceived social status associated with buying and eating the omelette caused this to happen. It got even more prestigious.
Here is an abalone example. In September 2018 nearly 500,000 RMB (about AUD100,000) was spent by a group of eight people for one meal. One of the main dishes on the privately customized menu was one abalone of approximate 1.2 kg, cooked with rice wine, at a price of 102 400 RMB. That is more than AUD20,000 for one abalone!
Value as they say is in the eyes of the beholder!
With declining quotas Australian wild-caught abalone products are becoming rarer. As they become rarer, they become more valuable.
We have an opportunity as an industry to get a higher price for our abalone, but we must be able to tell a compelling story that resonates with the consumer and make them want to pay more for our product.
This is what the levy funds will be used for. Experts in each of five key markets will be contracted by the Fisheries Research and Development Corporation to undertake activities to create a price premium for Australian wild-caught abalone by increasing the perceived social status of our products.
It is a trial, after five years another vote will be conducted to decide whether to continue the levy or not.
Have your say on the future of our industry. Make your vote count.