A case study of factors impacting on marketing of South African fish oil in the animal feed market

The closure of Marine Oil Refiners (MOR) in 1999 was probably inevitable if results of the Greenpeace protests against the consumption of unsustainable fish oil in 1996 were evaluated. The world's largest biscuit factories excluded fish oil from their ingredients and companies like Unilever responded in a similar manner. However MOR's closure was unexpected and therefore the South African market shift did not align with the international market changes.This research project explores one of the problems with which the fishing industry is confronted with. In particular, the research focuses on the distribution of the fish oil produced in the Fishing Industry after the closure of MOR in July 1999, which was the sole consumer of fish oil. The closure of MOR has effectively left South African and Namibian fish oil-producing companies without an established South African market to sell to.This research deals with marketing strategies for the fish oil producing companies, the problems associated with these strategies and the examination of available alternative solutions to this problem. The effect of changes in the chicken feed market segment on the fishmeal & oil industry will also be addressed.One of the aims of this research was to clarify the factors that impact on the consumption of the current South African fish oil market. The research concluded that the following are important factors that impact on the South African fish oil consumption: Quality of the oil The international fish oil price Comparative competitive prices of fish oil substitutes The growing and declining demand of the different fish oil application markets. The price of heavy furnace oil compared to fish oil selling price. (Heavy furnace oil is used to generate energy) .The research also investigated the impact of low price fish oil substitutes on the South African fish oil producers. The most important substitute in the current South African majority market, the animal feed market, is vegetabl"e oils. The research finding is that the South African fish oil producers must follow the vegetable oil selling price trend.The most important finding of the research is the high priority the fish oil quality achieves in all the fish oil market segments. The South African domestic market is limited in that it is only the animal feed market and the refinery.The alternative market to sell to is the export market. However, the international fish oil market perceives the South African fish oil to be of low quality. A mindset regarding the importance of fish oil quality has to start at the South African fish oil producers. It is vital that the South African fish oil producers institute quality systems to improve their fish oil quality. The South African fish oil producers must gear themselves to become globally competitive.