Brexit may hinder seafood’s foodservice growth
Seafood sales have been enjoying a long-awaited upswing in the United Kingdom’s growing foodservice channel, but the Brexit decision may bring that progress to a sudden halt.
There has been a strong resurgence in the U.K. eating-out-of-home (OOH) consumption trend in recent years, which in 2016 began to filter through to seafood, with both spending on seafood and the number of servings growing faster than other center-plate proteins. However, a new report published by business advisory firm Deloitte forecasts that one potential implication of the U.K.’s decision to leave the European Union might be a downturn in the dining-out trend. It’s highly likely that such an outcome would impact seafood sales in the channel.
Deloitte’s study, “Passion for leisure: A view of the U.K. leisure consumer,” finds that the country’s leisure sector has grown five percent annually since 2010 to a current value of GBP 117 billion (USD 156.4 billion, EUR 140.1 billion) and now accounts for 7.4 percent of GDP.
Spend has been boosted by a “confluence of factors,” including low inflation and high employment levels, according to Simon Oaten, partner for hospitality and leisure at Deloitte.
“Our analysis has found that we are witnessing an evolution in the mind-set of the leisure consumer; a behavioral shift from product-consumption to experience-consumption,” he said.
Within the leisure sector, eating out is the most popular activity with 85 percent of consumers spending on this in the first-quarter of this year. It is estimated that total OOH eating spend is more than GBP 52 billion (USD 69.5 billion, EUR 62.3 billion).
While the outlook for the leisure sector at the start of Q2 2016 was positive, and consumers were bullish, the report finds that the result of the E.U. referendum has led to uncertainty, which may impact a leisure sector reliant on discretionary spending.
In the longer term, the impact of leaving the E.U. will largely depend on the terms of the exit and their effect on consumers, employees and investors, it said, but should consumers experience a reduction in disposable income, 39 percent of those surveyed said they would most likely reduce spending on eating out.
Meanwhile, the United Kingdom’s OOH seafood consumption increased in value by one percent last year to GBP 3.2 billion (USD 4.3 billion, EUR 3.8 billion), with the total number of seafood servings up 3.8 percent to 993.6 million, which was largely thanks to increasingly competitively priced offerings on many menus. Growth has largely been driven by the quick-service restaurant (QSR) sector (excluding fish-and-chip shops), which achieved sales of GBP 19.8 billion (USD 26.4 billion, EUR 23.7 million) for the 12 months that ended March 2016, up four percent year-on-year.
Already, though, strong swings seen in the value of the pound sterling exchange rates have affected the competitiveness of product lines coming into and going out of the United Kingdom. With the country heavily dependent on imports for its seafood, which could become increasingly expensive in the future, consumption levels stand to be affected. Indeed, as reported by SeafoodSource.com, there are concerns in the marketplace that even its iconic fish-and-chips will soon become more expensive.
At least with new U.K. Prime Minister Theresa May now in power and preparing to invoke Article 50 of the Lisbon Treaty, the extrication process can get underway. This will include the negotiations for new trading arrangements with the E.U. and beyond, which will start to give the market and all its industries a clearer picture of what lies ahead.