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Alaska Fish Factor: Discounts a Double-Edged Sword

21 March 2016
 Alaska Fish Factor: Laine Welch Laine Welch has been covering news of Alaska’s seafood industry for print and broadcast since 1988. She also has worked ‘behind the counter’ in wholesale and retail seafood businesses in Alaska and Cape Cod, MA. Laine lives in Kodiak, Alaska.

US - If a fisherman gets 50-cents a pound for his reds, how can the fish fetch $10, $15 or more at retail counters?

“It’s all the other stuff that happens after he sells the fish. A lot of costs, margins and profits are included in that retail price,” said Andy Wink, a Fisheries Economist with the McDowell Group in Juneau.

It’s an ‘apples and oranges’ comparison when it comes to using weights paid for the raw goods and the end product. A lot of weight is lost going from a whole fish, which fishermen are paid on, to a fillet at retail counters.

“Most sockeye fillets amount to 40 to 50 per cent of the round fish weight. If fishermen sold sockeye at $0.50 per pound, there’s about $1.10 of raw material cost in a $10 per pound fillet sold at retail,” Wink explained. “This might seem like a high mark up, but it’s a decent reflection of all the costs and acceptable margins built into the product.”

The average wholesale price Alaska processors received for sockeye salmon (round) at the end of 2015 was $2.40 per pound, according to the state Dept. of Revenue; and $5.73 per pound for fillets.
Costs add up as the fish makes its way to retail counters, where most will tout a “full retail price,” and then tweak it throughout the year using discounts and promotions.

“A retailer will run sockeye promotions of say, $9.99 a pound. That way they can say they have discounted the product $8 so it looks like a big saving for the consumer.

"Instead of promoting the fish for four weeks, maybe they will run it for 10 or 15 weeks out of the year. It just depends on how much success they have with it,” he explained, adding that processors and distributors often have to pay (or reduce their prices) to get a retailer to promote product at a discounted price.

The increased supply of sockeye from back to back bumper years at Bristol Bay also has had a big impact on what buyers are willing or able to pay.

The big harvests mean more of the reds must be sold through discounts; that leads to a lower wholesale price, which affects the exvessel (dock) price.

“Promotions and discounts are a double-edged sword,” Wink said. “They lead to lower prices, but are a necessary tool to move larger volumes of product through the supply chain. Without them, inventories would swell and product would go to waste.”

Grundens for gals – Grundens, the go to brand for heavy duty rain gear, has launched a line for women.

“Women would send us emails saying, ‘We love your gear, we wear it all the time, but it’s built for guys," said Eric Tietje, Global Product Director. “Either the sleeves are too long or they are too big in the shoulders. It was really just uncomfortable and cumbersome for women to wear.”

Mr Tietje credits a push by the social media site Chix Who Fish, for getting the new gear rolling.

“All these women really banded together and became a loud voice, telling retailers that they are a market that is not being served,” he said. “We heard from lobster women in Maine, female marine researchers, and women in Alaska.”

The result: Sedna Gear, designed for a fishing woman’s dimensions. The new line of rain gear has brought a wave of good responses, beyond the better fit.

“The women have told us that by creating this product, it recognizes and validates what they do in the industry, and that means something,” Tietje said, adding that it’s made a big difference on deck.

“It’s not just a piece of clothing,” he said.” We view these as pieces of equipment that people use to do their job.”

Coming soon from Grundens: light weight gear and base layers for women, ceramic coatings on outer gear for added safety, and fabrics using Alaska crab shells that absorb sweat and eliminate odoUr. (That product is produced by Juneau-based Tidal Vision LLC.)

ComFish flash – Big names, hot topics and fish competitions are headlining the 36th annual ComFish Alaska trade show, hosted March 31-April 2 by the Kodiak Chamber of Commerce.

In the line up: Alaska Senators Murkowski and Sullivan both are scheduled to hold open meetings; as are state commercial fisheries director, Scott Kelly, and Rep. Louise Stutes (R-Kodiak), who also chairs the legislative Fish Committee.

Gunnar Knapp, director at the Institute of Social and Economic Research at the University of Alaska/Anchorage, will discuss salmon markets and how the state’s fiscal crunch might affect fisheries.

Alex Stone of the Washington, D.C.-based consulting firm Booz Allen Hamilton will provide updates on Navy training exercises in the Gulf of Alaska.

Presentations also include: impacts of ocean acidification on crab fisheries, slow growing halibut, better trawling methods, new fishing vessel safety regulations, the ‘graying of the fleet,’ challenges in access to Alaska fisheries, a cannery history and much more.

ComFish wraps up on April 2 with the annual fish filleting contest organized by Ocean Beauty Seafoods. It includes contestants from each of Kodiak’s seven processing plants who are timed and judged on fillet and trimming speed, form and quality.

New to the ComFish line up is an Alaska Sea Grant Fishermen’s Showcase featuring contests in knot tying, net mending, hook throwing, coiling and more. The ComFish dates are March 31-April 2 in downtown Kodiak.

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