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The economic and social impact

of Sydney Fish Market


2016
Limitation of our work
General use restriction
This report is prepared solely for the use of Sydney Fish Market Pty Ltd.
This report is not intended to and should not be used or relied upon by anyone
else and we accept no duty of care to any other person or entity. The report has
been prepared for the purpose of informing ongoing redevelopment processes and
key stakeholders on the impact of Sydney Fish Market from an economic and social
perspective to Australian residents and visitors. You should not refer to or use our
name or the advice for any other purpose.

2
Contents

Executive summary 4

Glossary 9

1. Introduction 10
1.1 Sydney Fish Market 12
1.2 Purpose and scope 12

2. What are the economic and social impacts of SFM? 14


2.1 SFM’s role in the NSW fishing industry 16
2.2 Economic contribution study 17
2.3 Wider economic and social impacts framework 20
2.4 Data collection 22
2.5 Key assumptions 22

3. Tourism 24
3.1 Understanding the impact 26
3.2 Quantifying the tourism impact 26

4. Consumer choice benefits 30


4.1 Understanding the impact 32
4.2 Quantifying the impact 33

5. Benefits of colocation 36
5.1 Colocation benefits for consumers 38
5.2 Colocation benefits for industry 41

6. Existence value 44
6.1 Understanding the impact 46
6.2 Quantifying SFM’s existence value 46

7. Education 48

8. The economic and social contribution of brand 52


8.1 Overview of brand 54
8.2 Consideration of brand strength and stature 55
8.3 Contribution of the SFM brand 56

References 58

The economic and social impact of Sydney Fish Market 3


Executive summary

Sydney Fish Market (SFM) is the largest of its kind in the An economic contribution study considers the financial
southern hemisphere – an icon of Australia’s seafood and activity data of SFM. SFM’s economic contribution
industry that incorporates both retail and wholesale is the sum of the direct and indirect economic activity
trading and a working fishing fleet. It attracts around attributed to the operation of SFM. This represents its
three million visits a year and is a major attraction ‘footprint’ on the economy and is measured in
for tourism, including Sydneysiders, interstate and terms of:
international visitors. More than 500 fish and seafood
species are traded through the site and supply • Value added, which is the contribution to gross
thousands of fish shops and restaurants across Sydney. state product (GSP), and includes wages paid to
SFM contributes to choice and variety for consumers employees and the gross operating surplus
in Sydney and across NSW. A central market place that generated (including taxes)
brings together wholesalers and retailers, SFM provides
a unique market experience for customers and supports • Employment, which is measured by full-time
increased productivity for the seafood industry. SFM equivalent (FTE) jobs.
also acts as a strong industry advocate, and supports
education and training within the industry. These figures, while important, will not capture
important features of SFM – its contribution to tourism,
SFM has commissioned Deloitte Access Economics to the value customers receive from choice and variety, and
conduct an economic contribution study and analyse a unique market experience, and the role of the market
its wider economic and social impact. We explore these in facilitating an efficient industry.
impacts through data provided by SFM, a dedicated
consumer survey, and consultations with wholesale A measure of SFM’s wider economic and social
and retail tenants at SFM and the catching industry. impact captures the benefits to SFM visitors as well
as those to the broader community (see Figure i).
Framework for analysis
SFM is an integral part of the state and national
fishing industry and plays a pivotal role in bringing
together the catching industry, wholesalers and
retailers in a central market. However, its size as
measured by direct expenditure and employment
does not accurately reflect SFM’s real value and its
contribution to the NSW economy.

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Figure i: Elements of wider economic and social impacts

Tourism Existence value

Choice and variety Industry productivity

Wider economic
and social impacts

Consumer experience Education

Source: Deloitte Access Economics


Note: These elements are not all additive as they may double count some impacts.

SFM is an iconic harbourside destination and plays a One of the most distinctive aspects of SFM is that
role in attracting domestic and international tourists to visitors are able to experience an authentic working
the city. By drawing these tourists (and their spending), market at a central location. This unique experience
SFM generates wider tourism benefits for the is not available anywhere else in Australia and has a
state economy. wider economic and social impact.

Academic research has found that businesses that SFM facilitates large amounts of trade and brings
offer a greater variety of product can provide consumers together the catching industry, wholesale and retail
with more choice, and can make consumers better activity in a central market place. SFM supports industry
off even if prices remain unchanged (Lancaster, 1990). to be more productive and efficient due to transport
That is, consumers place a value on having greater savings, increased competition and cost savings from
choice and this value may not be captured in the price sharing infrastructure and facilities. Without the
paid for a good or service. More than 500 species and colocation of wholesale and retail tenants, it is likely
13,400 tonnes of seafood are traded through the SFM that there would be more frozen (as opposed to fresh
wholesale market every year. Consumers have greater produce), and less variety of seafood across NSW.
choice and variety as they are able to access unique
and uncommon seafood species from thousands of local
fish shops and restaurants throughout Sydney and NSW.

The economic and social impact of Sydney Fish Market 5


SFM plays an important role in facilitating a range of SFM also facilitates wholesale trade worth $128
educational opportunities for employees of wholesale million (SFM 2015 Annual Report) as well as $195
and retail tenants (through the Seafood Industry Training million of on-site retail trade (SFM advice). The value
Package). It also educates the wider community through add of the facilitated trade cannot be precisely
school and tertiary programs and the Sydney Seafood estimated but it is clearly significant.
School, which educates visitors on the safe preparation
and consumption of fish and seafood. Wider economic and social impact
Measuring wider economic and social impacts is more
SFM is also a significant cultural icon – this is an difficult than a direct and indirect economic contribution
important intangible value too. People regularly place study because less data is available and the techniques
a value on things they may not use or visit, such as for measuring benefits are less precise. Where data
beaches or city landmarks. SFM’s existence value permits, Deloitte Access Economics has quantified the
reflects the value people place on the market, even wider economic and social benefits. Deloitte Access
though they may not visit yet have the option to. Economics developed a consumer survey to assist in
quantifying these benefits.
SFM has a brand that is well recognised by industry
and consumers. It is associated with fresh seafood One of the more straightforward findings is the
and a unique harbourside setting. The SFM brand is tourism impact. Through additional tourist spending,
a significant factor for wholesale and retail tenant SFM is estimated to contribute $72 million in value
operations on-site. This report considers the contribution added and 775 FTE jobs per year to the NSW economy.
of the SFM brand to retail spending at SFM, as well as These benefits are statewide and are more than three
the authentic market experience and its existence value. times the size of SFM’s total economic contribution.

SFM also contributes to Sydney’s brand and reputation More than 500 species of fish and seafood are traded
of being one of the world’s great dining destinations; through SFM and are made available to thousands of
known for its fresh food and wine, an outdoor and local fish shops and restaurants throughout Sydney
urban lifestyle, and cultural experiences. SFM is an and NSW. Consumer benefits from choice and variety
integral part of this image by providing fresh produce, of seafood are estimated to be worth the equivalent
a vibrant outdoor dining experience and harbour views. of between $62 million and $87 million per year.

Economic contribution Locals and tourists enjoy visiting SFM for its fresh
Over the 2014-15 year, SFM directly contributed $10 seafood and market experience. Consumer benefits
million value added and 56.5 full-time equivalent (FTE) from a unique market experience are estimated to be
jobs to the NSW economy (SFM Annual Report, 2015). worth the equivalent of between $109 million to
Applying an input-output (IO) model, this expenditure $153 million per year.
on finance, property operation expenses and wholesale
trade costs has flow-on impacts to the economy, SFM has an existence value, which encompasses
creating an indirect contribution of $11 million to the value of SFM to non-users in NSW for the option
the state economy and 81 FTE jobs. to visit, of around $25 million per year.

The total economic contribution of SFM is about In total, the wider economic and social impact of
$21 million in value added to NSW GSP, and around SFM is estimated to be around $300 million per
137 FTE jobs in 2014-15. This represents the ‘footprint’ year, which is derived from tourism, choice and variety
of the SFM entity on the NSW economy. benefits; consumer benefits from a unique market
experience; and the existence value of SFM
(see Figure ii).

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Figure ii: Wider economic and social impact of SFM

Wider economic and social impacts

$303m per year

Tourism Existence value

$72m per year $25m per year

Choice and variety Unique experience

$75m per year $131m per year

* Due to rounding, total value does not equal to sum of components


Source: Deloitte Access Economics

The economic and social impact of Sydney Fish Market 7


The consumer benefits of choice and variety and The SFM brand is a significant factor for both the
those from unique experience are conceptually wholesale and retail tenant operations on-site; however,
different and are considered to be additive. The benefits these businesses operate separately but in association
of choice and variety reflect the benefits for consumers with SFM. As such, traditional methodologies of brand
across NSW who, as a result of SFM, are able to access valuation may not be appropriate. In this report, we
a wider variety of fish. In contrast, the benefits from have undertaken a brand contribution study to more
a unique experience are specific to visitors to SFM appropriately reflect its significance.
who value seeing its authentic working market. There
potentially could be some overlap between the two The contribution of brand to on-site retail spending
types of benefits in the case where a visitor is drawn is estimated to be around $32 million per year. Brand
to SFM for the unique experience, and purchases a could also be considered to contribute more broadly
rare species of fish on-site, which was traded wholesale to apply to the consumer benefits of a unique market
through SFM. This overlap is difficult to estimate and experience ($21 million per year), and to the existence
likely to be small, but overall the magnitudes will value of SFM ($4 million per year). Taken together, these
be additive. figures give an indication of the importance of brand in
understanding the value of the SFM. The estimate of the
Another important consideration is the industry economic and social contribution of the brand is greater
productivity benefits generated by SFM. These benefits in magnitude to the estimate of the institution’s role in
include transport savings, sharing of infrastructure/ lifting industry productivity and its direct and indirect
facilities, and reduced overheads, and are estimated value add. Brand is an important part of
be about $18 million per year. Without the colocation the overall SFM story.
of wholesale and retail tenants at SFM, it is likely that
there would be more frozen (as opposed to fresh The benefits of SFM outlined are not surprising.
produce), and less variety of seafood. However, the The consumer survey conducted for this report found
industry productivity benefits are likely to overlap with very favourable perceptions of SFM. More than three
other components already captured in our analysis -quarters of visitors prefer SFM relative to other
(i.e. tourism and consumer benefits). As such, they places to buy fish in terms of quality and freshness,
have been excluded from the calculation of the total and the enjoyable experience of visiting an authentic
economic and social impact of SFM to avoid market. Further, 83% of respondents agreed or strongly
double counting. agreed that SFM reflects the cultural diversity of Sydney
and 91% believed that SFM was accessible to people
SFM is a well-recognised brand in Sydney and is of all walks of life.
closely linked to Australia’s brand proposition as a
unique holiday destination offering fresh food,
water and outdoor experiences.

8
Glossary

ABS Australian Bureau of Statistics

BAV Brand Asset Valuator

CGE Computable General Equilibrium

CV Compensating Variation

DAE Deloitte Access Economics

EBITDA Earnings before Interest, Taxes, Depreciation and Amortisation

FTE Full-Time Equivalent

FY Financial Year

GOS Gross Operating Surplus

GSP Gross State Product

IO Input-Output

SFM Sydney Fish Market

SITP Seafood Industry Training Package

SSS Sydney Seafood School

TRA Tourism Research Australia

The economic and social impact of Sydney Fish Market 9


1 Introduction

SFM is the largest seafood market


in the southern hemisphere.

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SFM in terms of variety is
the third largest in the world.

The economic and social impact of Sydney Fish Market 11


1.1 Sydney Fish Market 1.2 Purpose and scope
Sydney Fish Market (SFM) is one of Sydney’s major SFM Pty Ltd has commissioned Deloitte Access
tourist destinations, attracting three million visits a Economics to conduct an economic contribution study
year from local, domestic and international visitors. and assess the economic and social impact of SFM.
This report assesses the economic and social impact
While there are many fish markets located in Australia of SFM on a yearly basis.
and internationally, SFM is the largest seafood market
in the southern hemisphere and, in terms of variety, The report is structured as follows:
the third largest in the world. The uniqueness of SFM’s
offerings allows it to distinguish itself, including: • Chapter 2 frames SFM’s role in the NSW fishing
industry, assess its economic contribution, and
• Being a major drawcard for tourism, including provides a framework to analyse its wider
Sydneysiders, interstate and international visitors economic and social impacts

• Offering more choice and variety to consumers • Chapter 3 provides the tourism impacts of SFM
across NSW, providing an authentic and unique for the NSW economy
market experience for visitors
• Chapter 4 explores the consumer choice benefits
• Combining both retail and wholesale trade allowing associated with choice and variety
for industry productivity benefits as well as being
• Chapter 5 discusses benefits of integrated wholesale
home to the state’s fishing industry
and retail precinct, including unique consumer
• Educational opportunities for employees, through experience of colocation and industry productivity
the Seafood Industry Training Package, school
• Chapter 6 explores the existence value of SFM
students and the wider community, including
Sydney Seafood School (SSS) and cooking classes. • Chapter 7 provides a qualitative assessment of the
education opportunities available through SFM for
SFM is considered an industry leader and is proactive employees, industry and wider community
in adopting new systems and grading methods to
• Chapter 8 discusses the contribution of SFM’s brand.
ensure quality and value for both wholesale and
retail customers, including its contribution to the
development of the National Live Mud Crab Grading
Scheme in 2012. SFM’s prices and quality standards
are referenced around Australia and are used as a
benchmark by suppliers, buyers, wholesale distributors
within the fish and seafood industry. This has allowed
for improvements in buyer confidence and higher price
averages realised for suppliers and their local market
(Calogeras et al, 2012).

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The economic and social impact of Sydney Fish Market 13
What are the economic
2 and social impacts of SFM?

SFM contributes
about

$21
million to the
state economy

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SFM also facilitates wholesale trade

worth $128 million through


its auction and other wholesale trade
operations. It also supports the business
activity of wholesale and retail tenants,
with on-site retail spending estimated

to be $195 million

The economic and social impact of Sydney Fish Market 15


SFM contributes to the NSW economy, both directly The seafood retailing industry in Australia consists
and indirectly in terms of value added and employment. of specialised retailers that sell a variety of fish and
An economic contribution study provides a benchmark other seafood products, either in a natural chilled
estimate of SFM’s total impact; it provides a dollar value state, filleted, smoked, salted, curried or ‘ready-to-eat’
size of its commercial operation. However, SFM plays uncooked meal. This industry excludes the sale of
a pivotal strategic role for the seafood industry and, as seafood by large retailers, such as supermarkets.
such; the dollar value size of its commercial operation Much like seafood wholesaling, the industry is
is not an accurate representation of SFM’s real value highly fragmented and consists of 798 businesses. It
and total contribution to the NSW economy. Therefore, contributes almost $510 million in revenue, more than
the majority of impacts relating to SFM would not be $147 million in added value, and more than 2,500 jobs
captured in an economic contribution study, but rather in 2014-15 to Australia. Almost 30% of seafood retail
be considered as wider economic and social impacts businesses are located in NSW and are estimated to
for the NSW economy. contribute approximately $148 million in revenue, $43
million in added value, and around 750 jobs to the
The quantification of SFM’s impacts begins with an NSW economy in 2014-15 (IBISWorld, 2015b).
economic contribution study, which lays the foundations
of the analysis (section 2.2). Subsequently, the analysis SFM is an integral part of the state fishing industry.
applies a wider economic framework to better reflect On its own, SFM accounts for a small part of
SFM’s true impact, discussed further in section 2.3. the industry in relation to direct expenditure and
However, it is important to begin with framing SFM’s employment. It operates across the seafood wholesale
role in the NSW fishing industry. and retail industries, employing 56 full-time workers
and one part-time worker in 2014-15.
2.1 SFM’s role in the NSW fishing industry
The seafood market in Australia is large and comprises The standard economic contribution approach may
many different industries, including primary fishing, under-represent SFM’s economic and social impacts
processing, aquaculture, wholesaling, and retailing. on NSW. SFM plays a pivotal strategic role by bringing
together buyers and sellers; the catching, wholesale,
The seafood wholesaling industry consists of and retail seafood industries to a central market. This
specialised wholesalers that sell a variety of fish and facilitates the trade of large quantities of seafood, most
other seafood products, including crustaceans and of which is not captured in SFM’s employment figures.
molluscs, which are sold in a fresh, frozen or processed
state. It is highly fragmented and consists of 860 SFM has wider economic and social impacts on
businesses, with the majority of operators employing the NSW economy, which should also be considered.
fewer than 20 people. It contributes more than $4.1 The framework for considering these impacts is
billion in revenue, $418 million in added value, and discussed further in section 2.3, however, an economic
almost 5,300 jobs over 2014-15 to Australia. More than contribution study will form the foundation for this
30% of seafood wholesaling businesses are located in analysis (section 2.2).
NSW and are estimated to contribute approximately
$1.3 billion in revenue, $41 million in added value,
and around 1,500 jobs to the NSW economy over
2014-15 (IBISWorld, 2015a).

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2.2 Economic contribution study This is combined with a selection of the Australian
To understand the size of SFM’s impact on the NSW Bureau of Statistics’ (ABS) input-output economic
economy, an economic contribution study provides a multipliers to determine the indirect or flow-on
key starting point for the analysis and is the sum of the contribution to the economy. The indirect contribution
direct and indirect economic impacts attributed to the is a measure of the demand for goods and services
operation of SFM as a standalone entity. This represents produced in other sectors of the economy as a result
its total ‘footprint’ on the NSW economy. of the direct economic activity of SFM. The size of the
flow-on activity is determined by the extent of the
The economic contribution of SFM to the NSW linkages with other sectors of the economy.
economy is measured in terms of:
In this analysis, the contribution is estimated for the
• Value added, which is the contribution to gross Sydney Fish Market Pty Ltd entity. The data used in this
state product (GSP), and includes wages paid to analysis is from the SFM 2015 Annual Report.
employees and the gross operating surplus
generated (including taxes) 2.2.2 Direct economic contribution
The direct economic contribution comprises the value
• Employment, which is measured by full-time added and the FTE jobs generated by SFM. Table 2.1
equivalent (FTE) jobs. outlines the direct economic contribution of SFM to the
NSW economy in 2014-15. It is assumed that casual
2.2.1 Methodology employment is equivalent to 0.5 FTE jobs.
The basis for estimating the economic contribution is
the direct value added and employment contributed by
capital and labour inputs used directly by SFM in the
provision of its services.

Value added is the most appropriate measure of the


economic contribution to GSP. It is the sum of the
returns to the primary factors of production – labour
and capital – and can be calculated by adding the gross
operating surplus and wages paid to employees.

The economic and social impact of Sydney Fish Market 17


Table 2.1: Direct economic contribution of SFM

Direct contribution Value

Wages paid to employees ($m) 6.6

Gross operating surplus ($m) 3.2

Direct economic contribution ($m) 9.7

Direct employment (FTE jobs) 56.5

Source: Deloitte Access Economics, based on SFM 2015 Annual Report

2.2.3 Indirect economic contribution


The expenditure of SFM has a flow-on impact on other sectors, creating an indirect contribution to the state
economy. In 2014-15, the expenditure of SFM on the goods and services of other organisations amounted to
$15.1 million, primarily from wholesale trade costs and property operation expenses.

This expenditure creates jobs across other industries. The flow of this expenditure into other sectors of the
economy is represented in Figure 2.1. It demonstrates the breadth of the sectors to which SFM contributes.
The multiplier for each sector is applied to calculate the extent of the indirect contribution.

Figure 2.1: SFM’s indirect contribution flow

Indirect gross value added


Wholesale trade and
Sydney Fish Market
direct expenditure
property operations $11.2 million
Indirect employment
$15.1 million Other
business services
81 FTE jobs
Source: Deloitte Access Economics, based on SFM 2015 Annual Report
NB: sum may not equal to total due to rounding.

Taking into account the flow-on impacts, SFM contributes an additional $11.2 million in indirect value added
to GSP and generates around 81 FTE jobs (Table 2.2).

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Table 2.2: Indirect economic contribution of SFM

Direct contribution Value

Wages paid to employees ($m) 6.2

Gross operating surplus ($m) 5.1

Indirect economic contribution ($m) 11.2

Indirect employment (FTE jobs) 80.9

Source: Deloitte Access Economics, based on SFM 2014-15 financial statements


NB: sum may not equal to total due to rounding.

2.2.4 Total economic contribution


Table 2.3 presents the total economic contribution of SFM – the sum of the direct and indirect contributions.
SFM entity contributes about $21 million to the state economy and supports approximately 137 FTE jobs.

SFM also facilitates wholesale trade worth $128 million (SFM 2015 Annual Report) through its auction and other
wholesale trade operations. It also supports the business activity of wholesale and retail tenants, with on-site retail
spending estimated to be $195 million (SFM advice). Due to lack of financial information from wholesale and retail
tenants, the contribution of the facilitated trade cannot be calculated.

Table 2.3: Total economic contribution of SFM

Direct contribution Value

Wages paid to employees ($m) 12.7

Gross operating surplus ($m) 8.3

Total economic contribution ($m) 21.0

Total employment (FTE jobs) 137.4

Source: Deloitte Access Economics, based on SFM 2015 Annual Report.


NB: sum may not equal to total due to rounding.

The economic and social impact of Sydney Fish Market 19


2.3 Wider economic and social Tourism benefits are based on the spending of
impacts framework tourists whose visit to Sydney was induced by visiting
By itself SFM is a small commercial operation in terms SFM. In combination with Sydney’s other tourist
of economic contribution. It contributes $21 million in offerings, SFM may draw tourists to Sydney, induce
direct and indirect value added to the NSW economy them to stay longer and/or spend more. Tourism
and helps create 137 FTE jobs, as well as facilitating spending will not only include tourist spending at SFM,
wholesale seafood trade and supporting on-site retail but their total expenditure for their trip in Sydney. This
sales. However, SFM is much more than that. It also expenditure can then be translated into an economic
contributes to Sydney’s image as a harbour city with an contribution figure, which provides an estimate of the
outdoor lifestyle, providing high quality fresh food. SFM value added to the economy as well as the
also plays a pivotal strategic role for the wider seafood employment generated.
industry and brings together buyers and sellers from the
catching, wholesale, and retail seafood industries in a Consumer choice and variety benefits are those
central market place. derived through the benefit consumers receive, above
what is captured in a transaction, for goods and service
To measure the economic and social value of offerings which are considered uncommon or unique.
SFM, Deloitte Access Economics developed a wider Superiority of greater variety of product can make
economic benefits framework and applied it to the consumers better off through increased choice,
analysis within the report. There are six identified even if prices remain unchanged (Lancaster, 1990).
benefits of SFM, which accrue to SFM, the seafood
industry, as well as the wider NSW community including:
tourism; consumer choice and variety; consumer
benefits from a unique experience; industry productivity
benefits from the colocation of wholesale and retail
trade; the existence value of SFM; and education.

Figure i: Elements of wider economic and social impacts

Tourism Existence value

Choice and variety Industry productivity

Wider economic
and social impacts

Consumer experience Education

Source: Deloitte Access Economics


Note: These elements are not all additive as they may double count some impacts.

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Applying these concepts to SFM, benefits to consumers People regularly place a value on things even if they do
are derived not only from fish and seafood purchased not use them, for example, people may like to know
on the SFM site, but more importantly, the variety of fish that there are beaches nearby, even if they do not visit,
that are traded wholesale through SFM but purchased or value the Sydney Opera House as an icon, even if
by consumers elsewhere, such as at local fish shops they never attend performances. This may be described
and restaurants. According to the SFM Business Case as a place’s existence value, which accounts for SFM’s
(December Update, 2015), more than 500 different status as a unique tourist destination within Sydney,
types of seafood species are traded at SFM. In particular, and that NSW residents, even though they may not visit,
consumers throughout NSW receive a benefit from SFM value the fact that SFM exists and they have the option
for the access to the unique species of fish and seafood to visit.
at other places to buy fish, which would not otherwise
be readily available. There are benefits also associated with educational
programs, both at an individual and economy-wide
Through the colocation of wholesale and retail trade, level (Australian Workforce and Productivity Agency,
SFM also provides both consumer welfare benefits 2013). Various studies have suggested that an additional
through a unique experience, and industry benefits year of learning increases an individual’s wage between
through productivity gains. 5% and 16%. SFM provides educational benefits
to employees and the seafood industry through the
Additional consumer welfare benefits refer to the Seafood Industry Training Package and participants
value consumers receive for service offerings above of the Sydney Seafood School.
what is captured in revenue and reflect customer
preferences for an authentic market experience that The concepts of brand equity or brand value are
is not available elsewhere. These benefits are estimated well established, since firms began to acknowledge
by considering visitors’ strong preferences for SFM in the influence of brands on financial performance
comparison to other comparable local offerings. in a period that Interbrand calls the ‘Age of Value’
(Interbrand, 2016). While the SFM brand is a significant
Industry productivity benefits refer to the productivity factor for both wholesale and retail operations,
benefits derived by industry participants (wholesale and a single corporate entity brand valuation may not be
retail) of having a centralised marketplace. SFM is an an appropriate measure of the SFM brand. This report
important part of the supply chain, bringing together considers a brand contribution study to better reflect the
buyers and sellers in a central location for which there importance and impact of the SFM brand. It separately
are several productivity benefits including: improved considers a brand’s influence on retail spending and
quality of produce; agglomeration benefits through some wider economic and social impacts.
transport savings, sharing of infrastructure/facilities,
preference matching, and knowledge spillovers;
and auction benefits of efficient pricing.

The economic and social impact of Sydney Fish Market 21


2.4 Data collection For visitor cohorts (excluding non-users), visitation
To estimate the broader economic and social impact, weightings were estimated based on Sydney Fish
Deloitte Access Economics developed a consumer Market visitor count data (2016), the SFM Business
survey to assist in estimating the six benefits of SFM Case (December Update, 2015) and Woolcott (2015)2,
listed above. Stancombe Research & Planning assisted which suggests:
with survey fielding. The survey received more than
500 responses from both domestic and international • 57% or 1.7 million are local visitors
consumers, and included retail visitors to the precinct as
• 22% or 660,000 are domestic day visitors
well as domestic and international visitors to Sydney.1
• 1% or 30,000 are domestic night visitors
The survey covered a range of areas including:
• 20% or 600,000 are international visitors.

• Screening and demographics questions


For further clarification of the productivity benefits asso-
• Attitudinal questions about people’s visiting ciated with colocation of wholesale and retail, as well as
habits and user perceptions of SFM educational opportunities through SFM, Deloitte Access
Economics consulted with tenants at SFM including
• Value questions of experiences and spending
Poulos Bros, a seafood wholesaler, Nicholas Seafood
habits at SFM
and Peter’s Fish Market; as well as the catching
• Questions around perceptions of SFM’s broader industry (Catchers Trust and the NSW Professional
value as an Australian icon Fishermen’s Association).

• Behavioural questions of tourists visiting Sydney


Other key sources of information include secondary
and SFM
sources provided by SFM, such as SFM Business Case
• The value placed on SFM’s brand and importance (December Update, 2015), as well as any publicly
of brand available information from various sources, including
TRA and Destination NSW, and recent Deloitte Access
• Demographic questions.
Economics estimates and reports on the economy
and tourism activity.
Respondents were categorised into five different
cohorts, depending on the frequency of their visits
2.5 Key assumptions
to SFM. Cohorts included local visitors (classified as
The estimates in this report are based on publicly
frequent shoppers if they visit at least once every two
available data as well as data provided by SFM for the
months), domestic day visitors who had visited at least
purpose of this analysis. This includes the SFM Business
once in the past two years (further distinguished as
Case prepared by the Stafford Group and estimates of
either intrastate or interstate), international visitors
wholesale revenue, retail revenue and employment on-
(including those who had and had not visited SFM)
site by SFM and its tenants. These inputs have not been
and domestic non-users from NSW.
independently verified by Deloitte Access Economics.

1. Participants surveyed and counted in benefits of colocation included NSW residents, interstate and international visitors to Sydney
(from New Zealand, the UK, the US, and China) who had visited SFM.
2. Destination NSW (2016) visitation data was considered but ultimately not incorporated due to limitations in the data that excluded
locals (those who live within 25 km radius of SFM) and day trippers (domestic and international).

22
The economic and social impact of Sydney Fish Market 23
3 Tourism

3 million visits per year to SFM

24
57%
or 1.7 million
are local visitors

22%
or 660,000
are domestic
day visitors

1%
or 30,000
are domestic
night visitors

20%
or 600,000
are international
visitors

The economic and social impact of Sydney Fish Market 25


In addition to the economic contribution to GSP and 3.2 Quantifying the tourism impact
employment in NSW, SFM also supports economic To analyse the current benefits from tourism we
activity through its role in attracting tourists to Sydney. need to first identify the additional tourism spending
This chapter considers the direct and indirect tourism associated with SFM. This expenditure is calculated
impacts of SFM on the NSW economy. by identifying the number of visitors that came to
Sydney due to SFM and the associated additional
3.1 Understanding the impact tourist spending.
SFM is a recognised Sydney brand and tourist
destination, both internationally and domestically, This expenditure can then be translated into an
and is the home of the state’s fishing industry. It is economic contribution figure, which provides an
part of the package of Sydney tourist offerings and estimate of the value added to the economy as well
adds to Sydney’s appeal as a destination for as the employment. The two figures will provide
outdoor waterfront experiences and fresh food. an indication of the importance of SFM as a tourist
destination.
Food and wine are a critical part of developing
Australia’s brand, as demonstrated by Tourism Australia’s According to SFM data and Destination NSW’s survey
recent ‘Restaurant Australia’ campaign, which focuses results, three million people visited SFM, of which:
on seven categories: wine, seafood, people, produce,
restaurants, experiences and festivals (Tourism • 57% or 1.7 million are local visitors
Australia, 2015). Survey responses from domestic and
• 22% or 660,000 are domestic day visitors
international visitors to SFM revealed that more than
three-quarters of visitors prefer SFM to other fish shop • 1% or 30,000 are domestic night visitors
outlets on factors including quality and freshness, and
• 20% or 600,000 are international visitors.
experience, demonstrating that SFM upholds Australia’s
tourism image. For this analysis, local visitors have been excluded since
their expenditure is more likely to be redistributed away
In combination with Sydney’s other tourist offerings,
from other local fish stores and is unlikely to be tourism
SFM may draw tourists to Sydney, induce them to
‘gain’. The only cohorts of interest are domestic day and
stay longer and/or spend more. The wider economic
overnight visitors as well as international visitors. Based
and social tourism benefits of SFM are based on the
on the survey results:
additional spending of tourists whose visit to Sydney
was induced by visiting SFM. The spending of locals
is not included in this analysis as it is likely that their
spending at SFM is a substitution away from other
spending within the state, and therefore is not
counted as additional economic activity.

26
• 33% of interstate tourists said that SFM was a Using these ratios, we can estimate the number of
factor for their decision to visit Sydney. tourists that visited Sydney whose trip was induced
by SFM.
-- Of the 33%, 49% said that it was the main factor
for their decision to visit Sydney. This suggests
The TRA national visitor survey and international
that around 16% of all interstate tourists visit
visitor survey were used to estimate the average tourism
Sydney due to SFM.
expenditure for each type of visitor, i.e. domestic day
and overnight as well as international visitors, for
• 68% of international tourists said that SFM was
their entire length of stay in Sydney. Combining this
a factor for their decision to visit Sydney.
TRA expenditure data with the visitation data we can
-- International tourists were presented with a list estimate the expenditure and the tourism contribution
of destinations in Sydney. On average they visited of the tourists attributable to SFM.
around 4.9 places of the list presented. Given
that the list is not exhaustive, it is estimated that Overall, we estimate that around $110.8 million of
visitation may instead be around 10 places. This additional tourist expenditure is directly associated
suggests that around 7% of international tourists with SFM. A summary of calculations is presented
visited Sydney because of SFM. in Table 3.1.

Table 3.1: Tourism expenditure due to Sydney Fish Market

Proportion Total
Tourist Current Number of Expenditure
attributable to Expenditure
type visitation tourists per visit
SFM (000s)

Locals* 1,710,000 0% - $104.09 -

Domestic day 660,000 16% 106,722 $104.09 $11,109

Domestic
30,000 16% 4,851 $712.19 $3,455
overnight

International 600,000 7% 41,903 $2,295.98 $96,208

Total 3,000,000 153,476 $110,771

Source: Deloitte Access Economics calculations.


* Note: expenditure of locals is excluded from the analysis because they are unlikely to be tourists, and because any
expenditure is likely to be redistributed away from other local expenditure, rather than being a tourism ‘gain’.

The economic and social impact of Sydney Fish Market 27


To estimate the economic contribution of the visitors, However, the restaurant also sources other
the expenditure needs to be converted into wages, intermediate inputs and expenses to run the business.
gross operating surplus (GOS) and employment of The expenditure by the restaurant on fresh produce
the businesses that are affected. from markets, alcohol and liquor, electricity, gas, and
water also creates economic activity. This economic
To assist the interpretation of the tourist contribution, activity is the indirect tourist contribution.
consider the following example. A tourist at SFM
may have a meal at a restaurant. The restaurant ABS input-output tables provide information on how
would employ people and capital to serve the tourist, to allocate the estimated total expenditure by different
the wages paid to the waiter is the return to labour types of tourists to wages, GOS and employment.
and the owner’s profit or earnings before interest, These elements can then be combined to estimate
taxes, depreciation and amortisation (EBITDA) the economic contribution.
reflects the return on capital. This is the direct
tourist contribution. Additional visitor expenditure generated by SFM is
estimated to contribute $72.5 million in value added
to the NSW economy and support 775 FTE jobs
(see Table 3.2).

Table 3.2: Tourism contribution of SFM

Total contribution Direct contribution Indirect contribution

Spend ($m) $110.8

Gross output ($m) $142.3 $100.4 $41.9

Labour income ($m) $45.8 $35.6 $10.3

Gross operating surplus ($m) $26.7 $17.1 $9.5

Value added ($m) $72.5 $52.7 $19.8

Employment (FTE) 775 632 143

Source: Deloitte Access Economics

The $110.8 million spent by tourists directly contributes $53 million in value added (including $36 million in wages
and $17 million in GOS) and supports 632 FTE jobs. Indirectly, this contributes $20 million in indirect value added
(including $10 million in wages and $9.5 million in GOS) and supports 143 FTE jobs.

28
The economic and social impact of Sydney Fish Market 29
4 Consumer choice benefits

500
fish and seafood species
are traded through SFM

30
this increased choice results in
consumer welfare benefits of around

$75 million per year

The economic and social impact of Sydney Fish Market 31


In this chapter we examine the additional consumer SFM provides consumers with access to a variety
welfare benefits generated by SFM that are not of fish and seafood produce (including uncommon
captured in revenue, such as those associated species) across the state, which would otherwise
with greater choice and variety. not be available.

4.1 Understanding the impact SFM Business Case (December Update, 2015) notes that
Consumer choice benefits refer to the additional there are 500 fish and seafood species traded through
value, above what is captured in transactional value SFM. These different fish and seafood species are then
(i.e. the monetary amount actually paid), that made available to the almost 1,500 fish and chip shops
consumers receive for goods or service offerings that and more than 3,100 restaurants (IBISWorld, 2015c and
are uncommon or unique. Academic research has found 2015d) around NSW. It is likely that, in the absence of
that businesses that offer a greater variety of product SFM, retail outlets would be required to source the
can provide consumers with more choice, and can fish directly or sell the produce frozen.
make consumers better off even if prices remain
unchanged (Lancaster, 1990).

Catchers Trust
Catchers Trust is a unit trust for NSW commercial fishermen and aquaculturists. The Trust owns 50% of SFM
(the remaining half is owned by SFM Tenants and Merchants Pty Ltd).

David Saul, Secretary for the Catchers Trust, noted that SFM facilitates the trade of a wide variety of species to
consumers across NSW. “It’s not just the retailers on-site that buy the fish from the auction floor, but suburban
retailers from across Sydney, as well as businesses from intrastate.”

He also noted the important strategic role of SFM to the NSW catching industry. “Whole livelihoods are
dependent upon it. SFM provides a central place where fishermen can sell their product. Commercial fishermen
deliver their produce to the SFM auction from across NSW on a daily basis.” SFM also plays a critical role as an
industry representative and advocate to government.

The value of having greater choice is estimated by considering the uniqueness of the fish and seafood offering.
The ‘uniqueness’ factor of fish and seafood species on offer, which are facilitated by SFM, provides an estimate of
the consumer choice benefits. It is based on the attitudes of consumers as well as the proportion of seafood sales
revenue attributed to seafood species that are not widely available.

Unlike the economic contribution outlined in section 2.2, these values are not revealed through a transaction
and should be interpreted as indicative figures of value.

32
Non-seafood offerings at SFM
Following the opening of Vic’s Meat Market in September 2014 (which includes a butcher, takeaway counter
and a Wagyu and Grange bar) SFM is able to market itself as a ‘one-stop-shop’ for shoppers seeking fresh
produce. Other offerings include fruit and vegetable, bakery, deli, café, florist, fishing equipment, and
souvenir shops.

While SFM provides a range of non-seafood offerings, these are considered to be significantly different from
those at local fish shops or supermarkets, which are in general also located close to a bakery, deli or grocer.
Therefore, these benefits are not counted as additional.

4.2 Quantifying the impact To understand the proportion of SFM produce that is
To understand the magnitude of SFM produce that uniquely offered and not widely available, we estimate
is offered across the state that would otherwise not a ‘uniqueness factor’. SFM provided a list of all seafood
be available, we estimate the total sales that are species sold by value and weight in 2014-15. Through
associated with SFM retail customers, both on desktop research of seafood produce available at other
and off-site. SFM’s Annual Report (2015) reported shopping outlets, it is estimated that the ‘uniqueness’
that the wholesale SFM revenue was $128 million factor of fish and seafood variety through SFM is 38% of
and approximately 13,400 tonnes of seafood was seafood sales revenue. It is possible that in the absence
traded over the year (SFM advice). Based on this, on of a SFM auction, a certain proportion of unique fish
average, one kilogram of wholesale seafood trades for would be available through other supply options, such
approximately $9.54 per kilogram.3 We conservatively as direct sales to seafood retailers and restaurants. If
estimate that retail customers, both on and off-site, are half of the value of unique seafood was not available
likely to pay at least twice this price, suggesting retail through these channels, this would reduce the value of
value of this fish of approximately $255.7 million. unique seafood sales revenue by $48.8 million.

3. It is acknowledged that this is a very rough estimate, and that SFM provides a large variety of seafood species, varying in quality,
uniqueness and price.

The economic and social impact of Sydney Fish Market 33


How is the value of choice measured?
Brynjolfsson et al. (2003) provides an in-depth example of the increase in consumer welfare and choice value
from the introduction of Amazon.com, providing greater access and increased book variety in comparison to
traditional and ‘popular’ bookstores. We consider this to be similar to the situation for seafood – the demand
for specific books is similar to the demand for specific seafood species, and these demands cannot be easily
substituted for alternatives. That is, to a discerning consumer, two types of fish are not directly substitutable,
just as two novels; one romance and one crime fiction are not equivalent.

The study measures the choice value through the compensating variation (CV), that is; the amount required to
reimburse consumers to ensure they are as well off as they would be under the new product offering scenario.

The CV is calculated by considering the amount of new sales generated post-introduction of new variety and
choice (pn1 x1 where pn1 represents price and x1 represents quantity) and the cross-price elasticity of demand (α,
which is the consumer’s willingness to switch between products).

pn1 x1
CV = –
1+α

The cross-price elasticity of relatively unique offerings, Brynjolfsson et al. (2003) estimated the cross-price
such as the fish and seafood species varieties offered elasticity of books to be between -1.56 and 1.79.
through SFM, are likely to be associated with a lower Here we assume that the difference and taste
cross-price elasticity of demand. Unique seafood species preference between different seafood varieties
are unlikely to have a close substitute and require a among consumers is comparable to book selections.
form of ‘compensation’ to ensure they are just as well
off. The impacts of choice are measured by considering By applying this price elasticity to the portion of total
an alternative scenario in which uncommon and unique sales revenue associated with choice and variety
fish species are not easily accessible to consumers. available through SFM, these impacts are estimated
These impacts are measured by applying the to be worth between $62 million and $87 million
compensating variation (CV) and cross-price elasticity annually. Taking the average, the consumer welfare
of demand, as explored in Brynjolfsson et al. (2003) benefits associated with choice are indicatively
methodology (see information box above). estimated to be worth approximately $75 million
per year.

34
The economic and social impact of Sydney Fish Market 35
5 Benefits of colocation

83% 91%
of survey respondents believed that SFM was
agreed or strongly accessible to all types
agreed that SFM and classes of people.
reflects the cultural
diversity of Sydney

36
76%
of visitors surveyed
prefer SFM’s offerings
relative to purchasing
fish and seafood
elsewhere

SFM

The economic and social impact of Sydney Fish Market 37


Consumer preferences for fresh, sustainable and quality 5.1 Colocation benefits for consumers
produce have placed pressure on domestic industries 5.1.1 Understanding the impact
to deliver on consumer expectations, including added SFM is an integrated wholesale and retail precinct
strain on cost, transportation and logistics (Future that provides a unique customer experience. Through
Directions International, 2015). colocation, customers have access to an authentic
market experience that they would not otherwise
Through colocation and efficient markets, SFM encounter elsewhere, such as at their local fish and
provides benefits for both industry and consumers to chip shop. This generates consumer welfare benefits
ensure expectations of freshness, quality and sustainably and, as revealed in the consumer survey, is measured
produced food are met, while solving logistical issues by considering visitors’ strong preference for the SFM
that arise from consumer demand preferences. experience in comparison to other places to buy fish.

SFM visitor preference for SFM’s authentic market experience


The survey revealed the attitudes towards SFM and provides an understanding on how different the offerings
at SFM are in comparison to other local fish and seafood shops, based on a range of considerations. Table 5.1
provides a summary of attitudinal survey results, and reveals that more than three-quarters of visitors prefer the
SFM experience and offerings relative to their local fish shop. The factors of quality and freshness, and variety
are rated highest in distinguishing SFM from competitors.

The survey also considered visitors’ perceptions of SFM as a reflection of Sydney’s cultural diversity, as well
as openness and accessibility to people ‘from all walks of life’. An estimated 83% of respondents agreed or
strongly agreed that SFM reflects the cultural diversity of Sydney and 91% believed that SFM was accessible
to all types and classes of people.

Table 5.1: SFM uniqueness

Characteristics Visitors who prefer/strongly prefer


SFM’s characteristics relative to
local fish shop

Quality and freshness 86%

Cost 47%

Variety 89%

Enjoyable experience 80%

Authentic market experience 81%

Weighted average 76%

Source: Deloitte Access Economics

These values are not revealed through a transaction and therefore are not measured under an economic contribution.
Although analysis of these impacts provides a monetary estimate of value, it is an indicative measure of its impact.

38
5.1.2 Quantifying the consumer welfare benefits Brynjolfsson et al. (2003) estimated the cross-price
at SFM elasticity of books to be between -1.56 and 1.79.
The consumer survey of SFM visitors, developed by The elasticity could be higher or lower than these
Deloitte Access Economics, revealed a stated preference ranges. Divisekera (2007) estimated the demand
for the SFM experience, considering the colocation elasticities associated with domestic and international
wholesale and retail outlets, in comparison to the tourist demands for food and entertainment in
experience offered by their local fish and seafood shops. Australia. The domestic elasticity for food was -0.91
More than three-quarters of visitors surveyed preferred and entertainment was -0.45. The international
SFM’s offerings to other places to buy fish, including elasticity for food was -0.84 and entertainment was
44% of respondents that said the SFM experience -1.72. To be conservative, we have based our estimates
was very different in terms of an enjoyable experience on the ranges from Brynjolfsson et al. (2003).
compared to purchasing fish elsewhere.
Based on the consumer survey responses of
Estimates provided by SFM suggest total retail revenue how enjoyable the SFM experience is compared to
at the site is around $195 million a year. Consumer purchasing fish elsewhere (44%), approximately $86
perceptions on its market experience were drawn million of the total retail revenue is associated with
from the DAE consumer survey of SFM’s domestic the unique colocation and authentic market
and international visitors. consumer experience.

Estimates of consumer welfare benefits arising from Applying compensating variation methodology and the
an authentic market experience are based on the Brynjolfsson range of elasticities, to the retail revenue
‘uniqueness’ of the experience and consider how amount associated with unique market experience
superior it is for visitors in comparison to alternatives. provides an estimate of the consumer welfare amount
Impacts are measured by applying Brynjolfsson et al. associated with colocation. This suggests a unique
(2003) methodology on the compensating variation market experience benefit of approximately $109
(CV) and price elasticity of demand (see section 4.2). million to $153 million per year (an average of
If the SFM experience was not an available option around $131 million per year). Although this
for visitors, the compensating variation approach analysis provides a dollar estimate, these values should
estimates the amount required to reimburse be interpreted as indicative. It indicates that the benefits
consumers to ensure they are just as well off. of a unique experience at SFM are roughly 75% higher
than the amount of consumer benefits from choice
and variety.

The economic and social impact of Sydney Fish Market 39


Nicholas Seafood and Peter’s Fish Market – seafood retailers
The integration of wholesale and retail at SFM has significant benefits for retail operators. John Jeffreson, of
Nicholas Seafood and Peter’s Fish Market, highlights ‘consistency, availability and market-driven pricing’ as three
main benefits from wholesale-retail integration.

Around 50% of product for retail sale at Nicholas Seafood and Peter’s Fish Market is purchased off SFM’s
auction floor. These retail operations benefit from a larger range of available produce compared with local
fish shops and supermarkets. Colocation also helps to spread the cost of rent between wholesalers and
retailers, and along with reduced transport costs, allows retailers to offer comparable or lower prices than their
competitors.

The benefits are not limited to retailers located at SFM, however. All buyers receive free loading for purchased
stock, and can reduce overheads by using a single, larger truck rather than requiring a fleet of trucks to travel
to varied markets. Mr Jeffreson believes that many retailers would “go broke” if they had to travel to several
locations to purchase different types of seafood, resulting in “reduced diversity of seafood offerings” at local
fish shops.

Retailers such as Nicholas Seafood and Peter’s Fish Market at SFM also significantly contribute to industry
training. The Seafood Industry Training Package (SITP) was introduced in 2000, and has since provided the
basis for vocational education and training in the Australian seafood industry. Additional training occurs on-site
by retailers and is self-funded. Staff are trained in the proper treatment of seafood, which ‘should be handled
with care and treated like gold’, with ongoing hands-on training in areas such as filleting, opening oysters and
seafood presentation. There are flow-on benefits for the industry as these staff take their skills to local fish
shops and competently maintain the quality of produce.

40
5.2 Colocation benefits for industry • Agglomeration benefits:
SFM provides significant benefits to industry. It is an
-- Transport savings – from reduced need for
important part of the supply chain, bringing together
product to be transported between varying
buyers and sellers in a central location. This chapter
locations, and efficiencies through being able to
considers the benefits to SFM and wholesalers through
use a single larger vehicle rather than requiring
the auction and direct sales that occur at the market.
a fleet of vehicles

5.2.1 Understanding the impact -- Sharing infrastructure – avoided duplication


Colocation benefits for the industry refer to the of equipment such as forklifts and scales, and
productivity impacts felt by industry stakeholders infrastructure such as docks and waste facilities
of having ‘clusters’ or a centralised market place.
-- Matching – the meeting of buyers and sellers
There are several productivity benefits arising from
increases the likelihood of trades being made
a central market such as SFM, including:
-- Knowledge spillovers – information sharing
• Improved quality of produce: between sellers can improve industry standards,
handling and processing.
-- Location efficiencies – having a designated
market supports an efficient supply chain, with all • Auction benefits:
parties meeting in one location rather than buyers
-- Efficient pricing – Dutch (descending price)
and/or sellers inefficiently travelling to purchase/
auctions at SFM seek an efficient market price
sell their products, with freshness a likely dividend
for produce, which serves as a regional
of this efficiency
benchmark price and arises from competition
-- Competition – competition between wholesalers between buyers.
means that high quality of produce will be
A literature review and consultations with industry
provided for sale given the number of alternative
stakeholders (wholesale and retail tenants of SFM
sellers and species options available.
and members of the catching industry) support
these findings.

The economic and social impact of Sydney Fish Market 41


Professional Fishermen’s Association
Professional Fishermen’s Association (PFA) is the peak body for the commercial fishing industry in NSW.

Tricia Beatty, Executive Officer for the PFA, noted that the colocation of retailers and wholesalers at SFM was
important for generating “industry knowledge and expertise of seafood”. “The centralisation of knowledge of
the product gives people re-assurance and confidence in what they are buying.”

She also noted that the location of SFM was important to reduce transportation costs. “It is fairly easy to
transport seafood to SFM, particularly from northern central NSW where a lot of seafood comes from.
Without ease of access, quality and freshness of fish would become an issue.”

5.2.2 Quantifying the industry colocation Increasing the share of frozen produce (in place of fresh
benefits at SFM produce) is likely to reduce benefits. Productivity benefits
There are several measures of industry productivity arise from enhanced storage and handling, resulting in
benefits arising from colocation. First, transport costs for less spoilage, or reduced need for produce to be frozen.
industry are likely to be greater in the absence of SFM. Tollens (1997) found that wholesale markets enhance
Based on the Australian Taxation Office’s performance storage and handling conditions, with reductions in
benchmarks (2015), motor vehicle expenses are around post-harvest losses of around 30%. For SFM, we assume
2% of an organisation’s turnover. Without a central post-harvest losses represent the difference between
market, there would likely be significantly higher fresh and frozen produce.
transport costs to achieve the matching between
buyers and sellers that occurs at the market. Deloitte Access Economics estimates a ‘freshness
premium’ of 47%, based on supermarket price
A greater transport burden would be unlikely to differences for a range of fresh and frozen seafood.
result in practice, with the most likely impact of Taking into account the spoilage and freshness figures,
not having a colocated site being greater use of we calculate a benefit to producers of 14%. Based
direct sales, more frozen produce and less variety on SFM’s seafood sales of $127.9 million in 2014-15,
of seafood. However, we have calculated productivity which is dominantly fresh product, this suggests
benefits based on the premium of fresh versus frozen industry productivity benefits of around $17.9
fish as well as an estimation based on transport cost million per year. It is also important to note that these
savings to compare results. values represent productivity gains, which should be
interpreted as an indicative measure of impacts.
At present, SFM is largely a fresh seafood market,
with 55.6% of product from NSW, 30.2% from This is a conservative estimate as there are
interstate, and the remaining 13.5% imported from other wholesalers on-site, which SFM estimates have
New Zealand in 2014-15. As such, the market underpins revenue of around $214 million per year; however these
the Australian fresh seafood industry. Australia is a net wholesalers sell a mix of fresh and frozen seafood. The
importer of seafood, with 70% of domestic demand inclusion of other wholesale revenue may double count
coming from overseas (National Seafood Industry industry productivity benefits since wholesalers also sell
Alliance 2015). Without SFM, there would likely be to SFM (however consultations suggest this is likely to
more frozen sales and a much greater dominance of be marginal).
imported product (which Australia is less competitive
in, due to relatively higher costs of labour involved in
processing), to the detriment of the domestic industry.

42
This estimate is also comparable with other research; productivity is $16.6 million per year. This is
Deloitte Access Economics’ 2012 analysis for Australian comparable to the earlier estimate of $17.9 million
Food and Agriculture Company Limited found a 10.3% per year, derived from looking at the benefits of
productivity benefit to industry from the freight and fresh produce (as opposed to frozen).
scale benefits of a central market.
There are also industry benefits from an auction-based
There are also likely to be industry benefits from system of selling. These include efficiencies from a
agglomeration. The Victorian Department of Transport market price, reduction of information asymmetries
(2012) conducted a literature review of studies on job between buyers and sellers, and the coordination and
density, productivity and the role of transport, which logistical benefits associated with bringing together
suggests that productivity benefits of up to 13% can market participants at a set time of day. The prices set
be achieved with a doubling of job density. Using this at SFM for seafood are considered to be benchmark
approach based on the benefits of agglomeration prices across Australia and New Zealand.
and job density, an alternative measure of industry

Poulos Bros – seafood wholesaler


Poulos Bros Seafoods Pty Ltd is part of the Poulos Bros Group, one of the largest seafood companies on the
eastern seaboard of Australia, supplying wholesale fresh and frozen seafood.

Headquartered in Pyrmont next to SFM, Poulos Bros’ operations both complement and compete with SFM
auctions; the range of seafood offered for direct sale by Poulos Bros overlaps with, but also extends, the range
available at auction. The seafood sold by Poulos Bros is sourced directly from fishermen
and not through the market.

As well as being a tenanted wholesaler at SFM, Poulos Bros’ operations also include distribution, processing,
importing and exporting seafood. These operations span from Morningside, Queensland through to Hobart,
Tasmania.

Con Liaros, Managing Director, notes a number of benefits of SFM operations. “The market provides a cost-
effective central point for sales, and is an efficient channel to buyers. Buyers also benefit as there is a larger
range of product available in the one place.”

The economic and social impact of Sydney Fish Market 43


6 Existence value

People value the fact that SFM


exists and that they have the
option of visiting in the future.

44
Existence value of

$25 million per year

The economic and social impact of Sydney Fish Market 45


6.1 Understanding the impact These respondents were also asked how much they
People regularly place a value on things even if they do valued the option to visit SFM in the future, resulting
not use them. For example, people might like to know in a weighted average value across NSW non-users of
that there are beaches nearby, even if they do not visit, $5.30. Extrapolated across all non-users in NSW, this
or value the Sydney Opera House as an icon, even if they suggests an existence value of approximately $25.2
never attend performances there. This may be described million per year. This figure should be interpreted as an
as the existence value of a service offering, which is not indicative figure of value. It is a conservative estimate,
allocated to consumers of SFM, but to non-users who as it does not estimate an existence value for the rest
may not visit SFM yet but have the option to. of Australia, or international visitors. It is certainly
possible that, however small, people outside NSW
The existence value of SFM is not derived narrowly may place a value on the existence of SFM.
from the company’s commercial operations, but is
attached to the operation of the entire SFM site and the It should also be noted that there are limitations to the
wholesale and retail trade facilitated there. It accounts use of contingent valuation surveys in the estimation
for SFM’s status as a unique tourist destination within of value. There may be differences between the values
Sydney, and that residents of NSW, even though they reported by people in a survey and their true preferences
may not visit, value the fact that SFM exists and they or willingness to pay. The survey responses were limited
have the option to visit it. to a small range of possible contributions, to effectively
apply a budget constraint and prevent respondents from
6.2 Quantifying SFM’s existence value citing over-inflated values.
Contingent valuation surveys are one method of
measuring non-use value. These surveys show the
willingness of a representative sample of individuals
to pay, which can then be extrapolated for a value
across society.

In the survey conducted for this project, non-users were


asked, “Is there any value for you in the fact SFM exists
and having the option to potentially visit in the future?”,
with half of respondents noting that they did value
its existence.

46
The economic and social impact of Sydney Fish Market 47
7 Education

Industry ‘hands-on’
training

Seafood Industry
Training Package

48
Sydney
Seafood School

Fishing and Seafood


Industry Standards

The economic and social impact of Sydney Fish Market 49


SFM provides a variety of education offerings There are benefits associated with positive impacts to
associated with the fish and seafood industry. productivity at an individual and economy-wide level
Educational opportunities are available to employees, (Australian Workforce and Productivity Agency, 2013).
the fish and seafood industry, school students, and the Various studies on the topic have suggested that an
wider community. This chapter provides a discussion additional year of learning increases an individual’s
of the various educational opportunities that exist. wage between 5% and 16%. While learning via formal
education and training programs is cited to generate
The Seafood Industry Training Package (SITP) was higher benefit rates, Green and McIntosh (2006)
introduced in 2000, and has since provided the basis for suggests that participation in informal training is,
vocational education and training for employees in the on average, associated with a 5% to 6% increase in
Australian seafood industry. SITP covers all commercial wages; while Smith (2001) suggests that participation
activities conducted in or from Australia that are related in enterprise-based training is associated with an
to the industry. This includes harvesting, farming, average wage increase of 8% to 9%.
culturing, processing, storing, transporting, marketing,
selling and distributing fish and seafood and/or related SFM adheres to Fishing and Seafood Industry
products. Due to the diversity of skills required within Standards, and holds certification to the Food Safety
different sectors of the seafood industry, a range of Management System. SFM has implemented a risk
qualifications are offered by the SITP across the four management framework that has been externally
sectors of the seafood industry; the specific skills relating audited to international standards. This includes
to fishing operations, aquaculture, seafood processing, monitoring compliance legislation, assessing and
and seafood sales and distribution are explored across improving operations and encouraging employees to
29 competency standards. participate in management programs, such as food
safety, work health and safety and environment
One of the competency standards, as part of the issues management.
Training Package, is to provide corporate leadership.
Sydney Fish Market is recognised as an industry In October 2012, SFM was accredited against the
representative that illustrates the practical application Environmental Management Standard by NCS
of corporate leadership and its relevance in the International (now British Standards Institution) and
workplace (Australian National Training Authority, 2002). has implemented a Waste Management Plan targeting
a 40% diversion into recycling initiatives by 2016.
For SFM employees, additional training occurs on SFM has also outlined its support of responsible fishing
site by retailers and is self-funded. In consultation with practices, environmentally responsible farming practices
current retail and wholesale SFM tenants, it was found and fisheries management to support intergenerational
that training of employees is undertaken in a more equity and sustainable seafood supply.
informal and ‘hands on’ approach on-site. The benefits
of the education offerings are discussed qualitatively
and are expected to be small.

The National Seafood Industry Leadership Program


The Program is designed for those wanting to take on leadership roles within the fish and seafood industry
and provides an understanding of how participants are able to constructively impact the seafood industry.
The Program is funded through the Fisheries Research and Development Corporation, on behalf of the
Australian Government, and sponsored by SFM (Australian Fisheries Management Authority, 2014). SFM
sponsors the program up to $20,000 per annum, which funds two participants per year.

50
Playing a role in standards and quality assurance
SFM is recognised as an industry leader in standards and quality assurance, including the introduction of its
Quality Assurance Program in October 1998, which incorporates the Hazard Analysis Critical Control Point
system, to ensure all products sold on-site and all meals prepared at Sydney Seafood School adhere to this
standard. Reflecting this, SFM became the first Australian company certified in the Australian Seafood
Standard in 2005 and the Australian Fish Names Standard in 2007 (SFM Seafood Handling Guidelines, 2013).

According to SFM, it is also proactive in contributing to the development and adoption of new grading systems
to ensure the quality and value of seafood produce, such as the National Live Mud Crab Grading Scheme. Other
SFM initiatives include the development of the Australian Seafood Quality Index App (ASQI), which is a simple
tool for industry to assess the quality and freshness of seafood.

As part of the safe and nutritious supply and SFM also educates its visitors on the correct preparation
consumption of fish and seafood, SFM has developed and consumption of seafood, through the Sydney
industry-wide accepted management strategies, such Seafood School (SSS) and cooking classes. Each SSS
as the consumption of Spanish mackerel weight rule of class begins with a demonstration by a leading chef or
thumb. The importance of such management strategies seafood educator such as Frank Camorra, Matt Moran,
in the fish and seafood industry supply chain is evident, or Shaun Presland followed by a hands-on cooking
with recent poisonings from the consumption of Spanish session and tasting. In the financial year to June 2015,
mackerel (Scomberomorus commerson) occurring in more than 10,700 guests participated in more than
northern Queensland and the Gold Coast. To minimise 290 classes. Fees for classes begin at $90 per person
the risk of ciguatera, a type of food poisoning, SFM (two-hour class) and range up to $165 per person (four-
implements prohibitions on specific supply regions and hour class). SSS generated $87,000 in revenue over
species types, as well as size limitations for seafood the FY2014-15.
varieties considered high risk.
SSS, via the Sydney Seafood School Cookbook,
SFM also provides educational opportunities for the also provides education on the safe preparation and
wider community. This includes high school students consumption of seafood in printed and digital form.
who have the opportunity to participate in organised The cookbook is currently in its sixth print run and has
school excursions, as part of the Food Technology sold more than 13,000 copies since it was released
curriculum (NSW outcome number H3.1). The excursion in 2012. Over the FY2014-15, sales of the cookbook
allows students to examine aspects and gain a more generated $7,000 in royalties. Digitally, SFM provides
in-depth understanding of the operations at a freely accessible recipes, attracting approximately
seafood market. 10,000 views per month. The combined activities of SSS
generated $1.2 million in revenue over the FY2014-15,
including a profit of $76,500.

The economic and social impact of Sydney Fish Market 51


The economic and social
8 contribution of brand

52
Contribution of brand to on-site retail
spending is estimated to be around

$32 million.

The economic and social impact of Sydney Fish Market 53


SFM has a brand that is well recognised by industry The concepts of brand equity or brand value are
and consumers, which is associated with fresh seafood well established, since firms began to acknowledge
and a unique harbourside setting. The SFM brand is the influence of brands on financial performance in
also a significant factor for wholesale and retail tenant a period that Interbrand calls the ‘Age of Value’
operations on-site. In this chapter, we look at some (Interbrand, 2016). It is now widely accepted that
established approaches (such as the BrandAssetTM differentiation through brand is inherently linked to
Valuator) to consider the value of a brand. However, the price premiums that it can charge in the market,
given the important role of SFM in facilitating wholesale and the strength and sustainability of consumer
and retail trade, these approaches may not be demand for its products, while there are added
appropriate. This chapter uses an economic contribution benefits in terms of employee engagement and talent
approach to better reflect the importance and impact of attraction. In Australia, the aggregate value of the top
SFM’s brand. 100 brands is estimated at $127 billion in 2015
(Brand Finance Australia, 2015).
8.1 Overview of brand
Brand is defined in the international standard for In the changing economy, businesses rely on brand as a
brand valuation as a marketing-related intangible sustainable point of difference from their competitors,
asset that may include names, terms, and logos that are perhaps even more so than the features of their product
intended to identify goods and create distinctive images and service offerings that can be replicated by others.
and associations in the minds of stakeholders, thereby The potential benefits that can be delivered by a strong
creating economic benefits for the owner brand are illustrated in Figure 8.1.
(Brand Finance, 2011).

Figure 8.1: Benefits of effective brand management

Ability to command
higher prices
and margins

Generates
advantages in Driving repeat
talent attraction business through
and employee brand loyalty
engagement

Offering internal
focus and clarity

More forgiving
Lending immediate
customers if
credibility to new
business makes
products
mistakes

Embodying a clear
point of difference

Source: Davis (2002)

54
However, as these benefit streams are not always with similar organisations and brands in similar sectors.
immediately realised in financial terms, brand is an While SFM is not currently included on the list of brands
intangible asset. There is an international standard assessed by Young & Rubicam, its framework is used
and methodologies for quantifying brand value (ISO, here to qualitatively discuss its brand attributes.
2010), which are usually used as part of strategic
planning, financial reporting, dispute resolution The BAV measures value on two fronts: strength
and pre-acquisition due diligence. and stature. Brand strength comprises the brand’s
differentiation and relevance. Differentiation considers
The concept of branding has now extended to other the uniqueness of the brand’s offerings. As identified
areas. The Australian Government, led by Austrade, in Chapter 4, SFM is distinctive in its wide range of
has been involved in the Building Brand Australia consumer choice and variety of fish and seafood
initiative. While most associations with Australia are produce, as well as its location, environment and the
about spectacular environments and friendly people, experience it provides. The relevance of a brand to its
the initiative promotes Australia’s strengths as a place target audience is the appropriateness of a brand to the
to do business and invest (Tourism Australia, 2016). values and needs of its perceiver. The consumer survey
conducted by Deloitte Access Economics measured the
Food and wine are a critical part of developing perceived openness and accessibility of SFM to people
Australia’s brand, as demonstrated by Tourism Australia’s ‘from all walks of life’, 91% of respondents agreed that
recent ‘Restaurant Australia’ campaign, which focuses SFM was accessible to all types and classes of people,
on seven categories: wine, seafood, people, produce, of which almost three-quarters strongly agreed. This
restaurants, experiences and festivals. As part of its indicates high degrees of both differentiation and
research, Tourism Australia found that among those relevance, attributes that are vital to a brand’s health.
who had visited Australia, 60% associated Australia
with ‘good food and wine’, second only to France. Brand stature, meanwhile, is measured through a
The research also found that across 15 of Australia’s brand’s esteem and knowledge. Esteem relates to the
key tourism markets, ‘great food, wine and local cuisine’ emotional connection, respect, loyalty and regard its
is now a major factor in holiday destination making, perceivers have for the brand. SFM’s brand esteem was
ranking third (at 38%) ahead of world-class beauty measured through the consumer survey, measuring the
and natural environments (37%). proportion of SFM’s total value that is attributed to the
brand. Across all cohorts, 16% of the total value was
8.2 Consideration of brand strength and stature attributed to the SFM brand. Finally, knowledge of a
SFM has a brand that is well recognised by industry brand – the familiarity of its audience with its values,
and consumers, which is associated with fresh what it delivers and how it behaves – increases a brand’s
seafood and a unique harbourside setting. One way stature. The consumer survey revealed that 97% of
to consider the attributes of the SFM brand is through respondents had heard of SFM, suggesting very
the BrandAssetTM Valuator (BAV) framework. strong brand awareness and knowledge.

In the early 1990s, the BAV was developed by Young This strong showing across all four pillars of brand
& Rubicam to provide a measure of brand value, strength – differentiation, relevance, esteem and
integrating various factors contributing to audience knowledge – indicates a healthy brand with potential
perceptions, and is the basis for the world’s largest for the continual refreshing of perceptions to maintain
database on brands and their relationship with people. public engagement, while maintaining a strong
The value of a brand is a relative measure; that is, an connection between the SFM brand and its audience,
organisation’s brand value is estimated in comparison built on a foundation of loyalty.

The economic and social impact of Sydney Fish Market 55


8.3 Contribution of the SFM brand Brand can also contribute to the benefits consumers
Analysing the contribution of SFM’s brand is receive from the unique market experience that SFM
challenging. SFM leases to retailers and wholesalers provides. In section 5.1, these benefits were estimated
on-site and a major focus is on coordinating wholesale to be between $109 million to $153 million per year (an
trade through the auction. However its brand is average of around $131 million per year). SFM is the
more closely associated with retail spending on-site. largest of its kind in the southern hemisphere and offers
Therefore while the SFM brand is a significant locals and tourists a unique experience to visit a working
factor for both the wholesale and retail operations, fish market. The consumer survey found that more
which occur separately but in association with the than three-quarters of visitors stated they prefer SFM to
SFM entity, a single corporate entity brand valuation other places to buy fish in terms of providing a market
(such using the ISO or BAV methodologies) may experience.
not be appropriate.
Strength and stature of the SFM brand is an intrinsic
Instead, we apply a brand contribution study to better component of existence value, driving the value placed
reflect the importance and impact of SFM’s brand. This on SFM by non-users. For example, if SFM’s reputation
section considers whether brand contributes to retail was to increase, the option for non-users to visit would
expenditure at the SFM site, and SFM’s wider economic also increase and SFM would become a more desirable
and social benefits. It then applies a ratio obtained destination to visit. In Chapter 6, the existence value of
from the consumer survey, which reflects respondents’ SFM was estimated to be about $25 million per year.
attribution of their visit or intention to visit to SFM’s
reputation and brand. Restaurateurs and seafood retailers are also likely to
associate seafood from SFM to be fresh and of a high
Drawing on findings from the consumer survey, it is quality. However, the end-consumer who purchases
reasonable to assume that SFM’s brand contributes fish from these sources is unlikely to be aware that fish
to retail spending at the SFM site. Retail spending came through SFM. Therefore it is difficult to link the
on-site is estimated to be $195 million per year (SFM SFM brand with its wholesale trade. Similarly, consumers
advice). In the consumer survey, visitors to SFM were of seafood retailers outside the SFM site who purchase
asked to apportion their reasons for visiting. They uncommon or rare species of fish are unlikely to be
attributed 16% of their reason for visiting to SFM’s aware that the fish came through SFM. Therefore brand
reputation and brand. Tourism Australia (2010) has is not considered to contribute to consumer benefits of
also identified SFM, its cooking classes and fresh choice and variety.
local produce as ‘uniquely Australian’.

Fresh and cooked fish and seafood purchased from


SFM will, to some degree, carry with it the positive
association of SFM. This is not however an exclusive
association, as a consumer will also associate the
product with it its other attributes, such as where it
was caught, or the retail shop of purchase.

56
While SFM draws visitors to NSW as an iconic These figures indicate the importance of brand in
destination, there is no direct link between SFM’s understanding the value of the SFM. The estimate of
brand and the total spending of these tourists on their the economic and social contribution of the brand is
trip. Therefore, brand is not considered to contribute greater in magnitude to the estimate of the institution’s
to SFM’s tourism benefits. role in lifting industry productivity and its direct and
indirect value add. Brand is an important part of the
The consumer survey assessed the proportion of overall SFM story.
total value that the respondent attributed to SFM’s
reputation and brand. Respondents across all cohorts SFM also contributes to Sydney’s brand. Sydney is
attributed 16% of their total reason to visit or intention Australia’s leading tourism and events destination that
to visit to SFM’s reputation and brand. This ratio can attracts more international visitors than any other state
be applied to revenue generated by retail tenants, who (Destination NSW, 2016). The city has a reputation
derive a benefit from the SFM brand by association of being one of the world’s great dining destinations
(approximately $195 million per year). The contribution and is known for its fresh food and wine, an outdoor
of brand to on-site retail spending is estimated to and urban lifestyle, and cultural experiences. SFM is an
be around $32 million. If the current market only integral part of this image by providing fresh produce,
existed in terms of the operations and logistics, without a vibrant outdoor dining experience and harbour views.
SFM’s brand and reputation which have been built over
many decades, the value of SFM’s retail spend would be
significantly lower.

It is also possible to extend the brand contribution


more widely. By applying the ratio of 16%, brand may
also contribute:

• Around $21 million to the consumer benefits of a


unique market experience

• Around $4 million to the existence value of SFM.

The economic and social impact of Sydney Fish Market 57


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The economic and social impact of Sydney Fish Market 59


Contacts

John O’Mahony Kathleen Chua


Partner Manager
Deloitte Access Economics Deloitte Access Economics
+61 2 9322 7877 +61 2 9322 3212
joomahony@deloitte.com.au katchua@deloitte.com.au

Ric Simes Michelle Mountford


Consultant Manager
Deloitte Access Economics Deloitte Access Economics
+61 2 9322 7772 +61 2 9322 7146
rsimes@deloitte.com.au mmountford@deloitte.com.au

Contact us
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