Economic uncertainty continues to affect many of the United Kingdom’s most robust businesses, but the seafood industry is being particularly hard hit, thanks in no small part to a record drop in consumers’ disposable income.
Confirming the very difficult trading environment, for July 2011 the Office of National Statistics recorded the first ever drop in UK food sales when 4 percent less was sold. And as the most expensive protein (and getting more expensive), it’s not inconceivable that seafood is in the most precarious position of all retail categories.
Speaking at the Agra Events-organized Value-Added Seafood 2011 conference in London last week, Mike Mitchell, quality and CSR director for Young’s Seafood Ltd., offered another sobering statistic: the Office of National Statistics Retail Price Index found for the 12 months through June 2011 seafood inflation had grown to 11.55 percent, nearly double that of the previous year (6.3 percent).
“It appears that despite efforts to the contrary in the retail sector of trying to hold prices down, some inflation is being passed on to the consumer and the result has been a slowing of demand,” said Mitchell. “In the year ending July 2011, by volume the market had dropped by 7 percent. That is still delivering a very small year-on-year growth in value but that growth is being driven by inflation so it’s clear we’re in a difficult place. Households are actually moving away from seafood and choosing less-expensive proteins. We’ve always been the most expensive protein in the marketplace, and now the gap is getting greater.”
To compound the problem, for the July 2010 to July 2011 period, buying fish became on average 15 percent more expensive, with some important market commodities recording much higher price hikes. For example, the inflation for frozen-at-sea, H&G cod was 33.5 percent.
Mitchell added that from an industry perspective, 2011 has been a year of “conflicting forces.”
“We’ve seen the economic downturn affecting everyone from major banks to high street retailers, but it’s probably been harder on the seafood businesses than others,” he said. “And at the same time, this industry has seen an escalation of sustainability and NGOs raising the bar. I think that this year, more than any other, there’s been a classic conflict between value and values.”
But Mitchell explained that Young’s contends that value and values are not mutually exclusive concepts. “Indeed, when the economy is difficult and times are hard we must remember that values are a key, important component to value,” he told delegates. “Values mean doing the right things for consumers like giving them responsibly-sourced products. Value is about giving them the right products.”
David Mainon, senior technical manager with Asda Walmart, the UK’s second largest retailer, said more so today than ever before adding value and maintaining consumer interest is absolutely critical to holding on to a share of the industry. “Everyone is struggling for money and inflation is at the heart of the problem,” said Mainon, who highlighted that today the average British consumer is GBP 14 (EUR 16.30/USD 21.87) worse off per week that he or she was on the same day last year.
Melissa Spiro, fish and shellfish buyer for Waitrose, agreed that consumer confidence is at an all time low. “People now have the same disposable income that they had just after the Second World War,” she said. “But people are still looking for value for money.”
Waitrose, at the higher end of the retail scale, was one of few supermarket chains to experience growth amid the recession, but Spiro confessed the company is not offering enough inspiration within the seafood category. Its successful and relatively new “Essentials” value range accounts for about 16 percent of Waitrose’s total sales, and, according to Spiro, the retailer plans to launch fish products within this category, targeting “everyday cooks with pre-packed fish.”
“Consumers want to eat more prawns and seafood because it’s tasty and healthy. The problem is that they just don’t know what to do with them,” she explained. “We need to put the consumer at the heart of these products, look at more convenience, and that’s how we will sell more. We need to attract new customers into seafood. We need to look at younger families.”
According to the conference presentations and data supplied by Mitchell, Mainon, Spiro and others, it’s abundantly clear that while price has always been UK consumers’ No. 1 reason to purchase seafood, it’s value that they want. Looking ahead, it seems success will very much depend on how quickly seafood processors, retailers and brands can meet these expectations.
Click here to read Holland’s story on the Faroe Island’s plan to maximize its farmed salmon production, which he also reported on from the Value-Added Seafood 2011 conference.
