Chilled, frozen seafood gains prop up UK market in 2014

Published on
January 12, 2015

Seafood outperformed the general trading conditions in the U.K. grocery market last year thanks to the higher prices paid in the chilled category.

For the 12 months ending 6 December 2014, U.K. seafood sales totaled GBP 3.15 billion (EUR 4 billion, USD 4.8 billion), an increase of just 0.2 percent year-on-year, according to the latest Nielsen Scantrack data published by Seafish. However, if it wasn’t for the chilled fish category increasing the value of its sales by 3.5 percent to GBP 1.95 billion (EUR 2.5 billion, USD 2.9 billion) as a result of a 5.4 percent increase in average prices — to GBP 12.87 (EUR 16.47, USD 19.45) — then seafood would have posted a downturn in trade value.

In value terms, the species in the chilled category showing the biggest growth last year were hake, lobster and cockles with year-on-year sales increases of 67.5 percent, 54.4 percent and 50.2 percent, respectively. However, sales were dominated by salmon with GBP 743.7 million (EUR 952.7 million, USD 1.1 billion), cod with GBP 177.8 million (EUR 227.8 million, USD 269.2 million) and coldwater prawns with GBP 152.3 million (EUR 195.1 million, USD 230.6 million). These species achieved sales growth rates of 9.8 percent, 3.8 percent and 2.3 percent, respectively.

Nielsen Scantrack also found the average price paid in the frozen category increased by 3 percent to GBP 6.27 (EUR 8.02, USD 9.48) per kg but had dropped in the ambient category by 1.4 percent to GBP 6.78 (EUR 8.68, USD 10.25) per kg.

Frozen and ambient achieved sales values of GBP 699.5 million (EUR 895.2 million, USD 1.1 billion) and GBP 503.4 million (EUR 644.2 million/USD 760.6 million), respectively. These totals were down 5.3 percent and 4.2 percent year-on-year.

In volume terms, sales are on a downward trend across the board, falling 4.2 percent to 337,030 metric tons (MT) for the 12-month period, which means the average price of seafood sold in U.K. retail increased by 4.5 percent to GBP 9.34 (EUR 11.95, USD 14.11) per kg.

While the general signs show seafood did modestly well in retail last year, the same cannot be said of the broader grocery sector and there’s little indication that 2015 will be any different.

The KPMG/Ipsos Retail Think Tank (RTT) believes that food sales will remain in negative territory in 2015, caused by price deflation and changes in shopping practices by consumers.

Mike Watkins, head of retailer and business insight at Nielsen UK and RTT member, said: “The food sector remains embattled with fierce competition, so sales are likely to be flat at best and may even fall by up to 1 percent in value terms. Food retail is no longer immune from the vagaries of discretionary spend.”

Deflation will be a big concern for at least the first part of the year and will keep many CEOs awake at night, he said.

“Private label will once more be a safe haven for shoppers and a suitable disruption for some retailers, as it accounts for over 50 percent of all food and drink spend in the U.K. and continues to grow ahead of brands in premium food.”

Nick Bubb, retail consultant, added that the food retailers were easily the worst performing sector in the stock market last year.

“Profound structural changes in the market sent volume into decline in 2014 and a combination of intense discount competition and good harvests also reduced food prices; things will not get any better in 2015. The beleaguered Tesco is expected to launch a major new price campaign early in the New Year, as it battles with its surplus hypermarket space and the threat of another credit rating downgrade,” said Bubb.

Just last week, Tesco, the United Kingdom’s biggest supermarket chain, announced that within a new package of cost-saving measures it would be closing 43 unprofitable stores across the country, consolidating its head office locations and shelving plans to open a further 49 new stores. CEO Dave Lewis said the company was “facing the reality of the situation” and had “begun the task of reinvigorating” the business.

RTT believes that in order to take back market share, grocers must re-examine and promote their own brand values to win consumers’ custom, rather than engaging in an all-out price war.

Offering personalized, relevant services will help to set them apart from the competition, it said.

According to the latest grocery share figures from Kantar Worldpanel, published for the 12 weeks ending 7 December 2014, the grocery market returned to marginal growth of 0.1 percent after recording its first ever decline in the previous period. It said the upturn was thanks to shoppers putting slightly more in their baskets compared with the same time last year and more than made up for the current trend of falling prices.


Contributing Editor reporting from London, UK

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