By Jason Holland, SeafoodSource contributing editor reporting from London
Published on 01 November, 2013
The U.K. seafood industry is on the up — that’s the conclusion from a new study into the country’s largest seafood companies.
A new pricing guide released by business analysts Plimsoll Publishing evaluates the largest 595 seafood companies operating in the U.K. market using their latest available accounts and finds the total sector has grown by 1 percent. However, within that modest growth some 147 firms have seen their value rise by 20 percent, 59 of which have seen their value soar by 50 percent.
Overall the U.K. seafood market has a value of just over GBP 9 billion (USD 14.4 billion, EUR 10.6 billion), David Pattison, senior analyst on the project, told SeafoodSource.
In terms of growth it is a very mixed picture, explained Pattison. Some companies are showing 20 percent growth figures, yet the overall industry average is showing a decline of 0.3 percent with 88 businesses seeing their value fall by as much as one-third. This shows that competition in the market is “intense,” he said.
The larger companies have the best growth figures, currently averaging 3.6 percent. Smaller companies seem to be holding their own but the mid-sized companies seem to be under the most pressure, showing a decline of over 1 percent.
“This shows that the market is drifting toward two types of company — the large-scale manufacturers and suppliers and small niche operators.”
This drift is even more noticeable in profitability, said Pattison. Smaller niche companies are nearly 50 percent more profitable than the larger companies, so although their growth rates are smaller the returns are higher.
Looking at the different sectors operating under the U.K. seafood industry umbrella is complex. Plimsoll’s evaluation model is influenced by the profitability of the company, so often the companies that have the best profitability are near the top of their valuation relative to their size. In addition, companies that are relatively small in turnover can come out as very valuable as their profitability is relatively high.
The two biggest standout performances have come in the Fish Smokers and Curers sector and the Fishmongers sector, which have seen their average values increase by 5.2 percent and 4.2 percent, respectively.
At the other end of the scale, the biggest average value decreases have come in foodservice with Seafood Restaurants declining 4 percent and Fish & Chip Shops falling 6.3 percent.
Pattison said the main challenge for seafood companies is how they get growth and maintain profitability, which in turn will increase their value.
“Currently, 20 percent of seafood companies are returning a loss; this means their value is very hard for an outside investor to determine. Clearly ‘up scaling’ can put a real pressure on profitability. However, in the analysis there are some examples of how companies have achieved this.”
So does Pattison believe seafood makes for a good investment?
If we compare this industry to some of the alternative markets in the food sector, for example the meat industry, the average value there is level, he said. Fresh produce is comparable with the seafood industry with an increase of 1.4 percent, so in a direct comparison the seafood market would seem to be as stable as any other food sector.
However, he believes seafood companies should take inspiration from some of the food sectors where values are increasing at more dynamic rates.
“Markets like Catering Suppliers have increased in value by almost 7 percent, Ready Meals and Organic Foods are up over 5 percent. Seeking out these specialist [sectors] will be important to the profitability and hence value of a seafood company in the future.”