The combination of Alaska's massive pink salmon runs and this fish-eating country's continuing seafood shortage could create the perfect market storm for the long-depressed industry segment.

The Alaska Department of Fish and Game is projecting a return of 119 million pinks this summer, more than 60 percent of the expected all-species run of 196 million salmon. Even with the massive annual market subsidy from U.S. Department of Agriculture, purchases, including $15 million worth planned for the coming season, the price of pinks rarely rises above 20 cents per pound and is often less than a dime.

Due to over-harvesting in its coastal fisheries and reduced opportunity in Russia and other neighboring waters, South Korea in the past three years has become a seafood importing country, even as its 48 million residents have challenged the Japanese as the world's largest seafood consumers. Annual per capita consumption here is just under 150 pounds, and low-cost food is a national policy. Breaded, deep-fried squid-on-a-stick is a popular item at the hundreds of street tent restaurants that are ubiquitous in this capital city of 7 million people.

Two companies are planning to capitalize on these conditions and the ongoing healthy eating/fitness fad known by the buzzword "well being." One is the Lotte Group, a huge chaebol, or vertically integrated conglomerate, whose holdings include 10 food and beverage companies among its 34 subsidiaries. The other is Dongwon Industries Co. Ltd., whose sister company, Dongwon Food and Beverage Co. Ltd., controls 75 percent of South Korea's canned tuna market.

Beside its plans for canned pinks, the Lotte Group is preparing sell Trident Seafoods' pink salmon burgers at its 884 "Lotteria" fast food restaurants by the end of this year. South Korea is one of only two countries in the world (the other is the Philippines) where a fast food brand other than McDonald's is the market leader. Lotteria, according to company data, held 44.9 percent of the Korean fast food market in 2003 compared to McDonald's 22.8 percent share and 334 outlets.

Of the two outfits, Lotte Group is more advanced in its program, partly due to the assistance of various state of Alaska officials. Anchorage Sen. John Cowdery, with extensive business ties to South Korea, has been working with expatriate and Anchorage businessman Kenneth Zong, who announced a five-year salmon sales agreement with Lotte Group early this year. Zong, Cowdery and half a dozen state officials took part in a two-day promotion, May 24-25. During the visit Lotte Ham & Milk officials reviewed a three-year marketing plan that is already well into its first year.

Emphasizing the well-being trend, LH&M Planning Director Jong-Ho Lim noted that Korean consumers, who bought 40,041 metric tons of canned tuna last year, are concerned with mercury contamination. In an April survey of 30-something Korean housewives, LH&M found that canned tuna remains popular because of its low price, convenience and because they have no ready alternative.

The survey said "consumers perceive salmon is more high grade than tuna superficially," but also found that buyers would be willing to pay 50 percent more for tinned salmon over tuna.

"It is no wonder that we are interested in the pure and natural seafood of Alaska," Lim said. "We are confident seafood of Alaska will be loved for their nutritional value and safety."

The survey was part of the first year of Lotte Group's marketing strategy, which is concentrating on "recognition" through sales events in its grocery and other outlets, and through cooking demonstrations. Beside its Lotterias, the Lotte Group operates 20 upscale department stores and 32 discount Lotte Marts, all including supermarkets. Lotte Group is also partnered with the 7-11 convenience store chain, where canned tuna can be found on the shelves of all 1,277 units in Korea. It is also a partner in Korea with the TGI Friday restaurant chain.

In year two of the plan, Lim said, "We will focus on ensuring (new customers) to become heavy users" through multi-media branding, including TV commercials. He offered no budget figures for any elements of the campaign.

If the effort is successful, the company will begin introducing a wider range of product forms in the third year.

Satisfying a different taste

In what was otherwise a uniformly positive presentation, Lim noted "just one problem" remained unsolved - which he described as "quality." Lim was not referring to poor handling or product form as the term is normally used in Alaska.

"When I talk about quality, the flavor is good, but we need to cater the flavor to the taste of Koreans," Lim explained. Unlike the single "flavor" of canned salmon, tinned tuna here is available not only in water or oil, but with vegetables, kimchee and various sauces. Lotte and Dongwon officials both indicated plans to expand the range of flavor choices of their canned salmon products.

What may be a difficult search for the perfect taste for the Korean palate was evident at the second night of the May 24-25 "Alaska Seafood Experience" dinner. The first night was an all-adult affair where a menu of four salmon dishes, along with burgers was served. On the second night, some 250 Bang-Bae Middle School students, along with a few parents and teachers, tasted appetizers of salmon tartar on saffron couscous with petit herbs followed by Trident salmon burgers.

Gourmet chef Itsuro Tamaki, owner of the Kumagoro Restaurant in Anchorage, accompanied the state delegation to work with Korean counterparts to tailor the menu to Korean taste, but teacher Hwa-Eum Jung said more work may be necessary.

"Some did, some didn't" like the burgers, Jung said, estimating a 60 percent approval rate. "If you guys change the taste a bit, if you make it more appropriate for the Korean palate ... It's about taste, finding the taste Koreans like, and I guess it's not easy to capture that."

Student Jin Ho, who had lived in America, wasn't sure his classmates would go for salmon burgers, but he said he would buy them at Lotteria, where the shrimp burger, priced at the equivalent of $2.54, is the most expensive item on the menu. Following the business plan briefing, a Lotteria official said that company formulas require production cost to be one-tenth of the final menu price.

But the Lotteria roll-out "is only in its planning stage and nothing is fixed," Lim said during the briefing. Pledging the company's best efforts, Lim added that "We will need support from Alaskans and the government." He noted that Lotte representatives have contacted Trident, Icicle and Copper River Seafoods, Indian Valley Meats and the Port Graham village corporation, where it is considering buying the currently shuttered processing plant.

Dongwon Industries has a five-member "Alaska task force" researching seafood business prospects in preparation for a visit this month by Jae Chul Kim, chairman of the company and the Korean International Trade Association.

"We are now looking at the possibility of introducing salmon to the Korean market," said Jong Koo Lee, managing director of Dongwon Industries' Fisheries Division. Toward that end, the company has plans to buy 500 metric tons of pink salmon this summer to use in its test marketing effort.

Dongwon previously owned a fleet of 37 tuna trawlers, seiners, longliners and freezer transports, including some that fished Alaska waters prior to passage of the then-Magnuson Act. Despite the adamant warning of state officials that Alaska's waters are not open to foreign fishing boats, Lee remained hopeful that a way could be found to allow his company's fleet to fish here, but he was equally open to alternatives.

"If there's no chance (to fish) we will find another way to cooperate with Alaska people," Lee said in a May 28 interview at company headquarters. "We are currently studying any available business opportunities," including investment as well as simple raw material purchase and "all kinds of possibilities, not only salmon."

Producing 80,000 metric tons of tuna products annually, including 60 million cases of 6.5-ounce cans, Dongwon introduced tuna to Koreans starting in 1982. As in most Asian countries, whitefish is the norm, and Lee recalled his countrymen's initial reticence when Dongwon offered them strange-colored pink tuna.

"During the '80s we had a difficult time," Lee recalled, noting that it took "several years" until the canned tuna market was firmly established.

Contrasting with Lotte Group's research, Dongwon sees a need for its canned salmon to match the price of tuna, which is less than $1 a can, but a relatively high price, according to Lee.

He recalled "great concern" when the Korean equivalent of the U.S. Food and Drug Administration first warned of mercury contamination of tuna. At the time, tuna sashimi sales dropped 30 percent but recovered after a couple of months. Canned sales remained strong, which begs the question of why Dongwon is researching a product that will compete directly with its own canned tuna.