Seafood is one of the key growth categories in grocery with total retail sales of seafood up 4% to £2.4bn in the year to May. Scotland's fish industry is in pole position to tap the potential of both farmed and wild catch, two powerhouses of the Scottish economy - but it faces many challenges.

One of the biggest is the green agenda. Ensuring methods are sustainable and harvest mechanisms sensible will be crucial to the future of the catch sector, says Mike Park, executive chair of the Scottish White Fish Processors Association.

"Fishermen are aware that it is necessary to create sustainability to create stability to provide security for the next generation," he says.

"There have been significant changes in a relatively short period but these are changes the fishermen knew were long overdue."

Scottish farms must also address growing questions about the sustainability of their operations. While farmed salmon poses no threat to the world's wild stocks of seafood, fish feed taken from wild stocks is still being used by many of the farms and increasing demand means that supplies are running out.

To counteract this problem, the Soil Association, the Marine

Stewardship Council, Waitrose and the fish farming company Aquascot joined forces a year ago to take the concept of certified sustainability into the area of fish meal and oil for organic farmed salmon production.

The partnership's aim was that within four years, all fish meal and fish oil incorporated into Soil Association organic fish diets should come exclusively from MSC-certified sources. However, it's early days yet and to get a clearer picture of progress to date the industry is set to undertake its first sustainability assessment.

As well as sustainability issues, the farmed salmon industry, much of which is now owned by Norwegian multinational Pan Fish and its subsidiary Marine Harvest, has had to contend with the encroachment of the international aquaculture industry into its sector, ironically, especially from Norway (Pan Fish Norway competes with Pan Fish Scotland). With commodity salmon from Norway appearing in British supermarkets, the challenge for Scottish farms is to hold their own by driving up premium values.

The smarter players in fish farming have responded to the perennial threat of commoditisation by diversifying into potentially more lucrative species, particularly farmed as opposed to wild cod. No Catch... Just Cod from Johnson Seafarms is the first major cod farming operation in the British Isles and this premium product has been snapped up by Sainsbury's and Tesco. The producer has also brought out an organic No Catch... Just Sea Trout to follow its No Catch... Just Halibut.

In the chilled sector, growth has come from a range of new products in the added value and breaded categories, while in the frozen sector it has come from the natural and battered categories.

Britain's biggest seafood supplier Young's has been hard at it developing new Scottish fish products. It has embarked on some major brand initiatives to underline and develop the provenance of its Scottish operations, by focusing its marketing activity on its smokehouses, for instance. It has introduced three new Young's Smokehouse brands - Spey Valley, Inverness and Fraserburgh - in a bid to appeal to consumers wanting locally branded, traditionally produced fish.

"Each of our Scottish production sites has its own character and individuality and this provides opportunities to produce a variety of high-quality branded products, each of which have been given an innovative touch," says Jason Manley, marketing manager.

Young's is also seeking to develop the added-value potential of langoustine and is working on a number of new chilled products using peeled tails and whole shell-on langoustine.

Young's isn't the only seafood company to have raised its game in a bid to meet the many environmental and sustainability challenges. But this is just the tip of the iceberg of what needs to be done to maintain sales growth.n

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