Seafood lagging behind the rest of the freezer case

Published on
August 24, 2015

There’s been a flurry of acquisitions involving European frozen fish product manufacturers in recent months, with much of the activity being driven by the British Virgin Islands-based Nomad Foods Ltd. (formerly Nomad Holdings). Earlier this month, Nomad announced it would be purchasing the European businesses that belonged to the Findus Group for around GBP 500 million (EUR 695.1 million; USD 783.9 million), comprising operations in Sweden, Norway, Finland, Denmark, France, Spain and Belgium. That deal followed on from its EUR 2.6 billion (USD 2.9 billion) anchor acquisition of the Iglo Group in April, and in a statement the company said the latest purchase represented a long-term strategy to extend its business across Europe.

For the time being, though, Nomad’s deals and its strategy have skirted around adding further U.K. seafood operations to its portfolio, including Findus’ market-leading Young’s Seafood brand, which has remained with the group, and new industry performance figures suggest there may be good reason for holding back investment at this time. According to the latest Seafish Frozen Fish Review, the value of the U.K. frozen seafood market has now fallen to GBP 691 million (EUR 960.4 million; USD 1.1 billion), a decline of 3.6 percent on the previous year. The volume of frozen sales, meanwhile, has slumped 5.7 percent in the last 12 months as shoppers increasingly switch to chilled.

Even 210-year-old Young’s, which has continued to perform well in the market – achieving a turnover close to GBP 600 million (EUR 834.2 million; USD 940.7 million) last year – has become increasingly dependent on the growth in its chilled sales.

Because fewer shoppers are buying less frozen seafood less often and spending less money per trip, frozen now accounts for 22 percent of the total value of seafood retail sales and 32.5 percent of the overall volume, representing falls of 0.6 percent and 1.3 percent respectively over the last 12-month period. While there are currently fewer shoppers and smaller baskets across all seafood categories, the declining trends are at their most prominent in the frozen sector.

In contrast, the overall value of frozen food sales in the United Kingdom grew by a respectable 0.9 percent last year. This upturn was led by the fast-growing discounters Aldi and Lidl that traditionally overtrade in frozen.

Now valued at GBP 5.8 billion (EUR 8.1 billion; USD 9.1 billion) by Kantar Worldpanel, the U.K.’s frozen food market is in fact one of the most profitable in Europe, with current growth being stimulated by low prices compared to chilled and a recovery in demand as a result of increased promotional activity and a restoration of public trust following the horsemeat scandal two years ago.

Despite its mediocre market performance, it’s widely accepted that frozen seafood still offers significant development potential as it brings umpteen benefits to the consumer table. It ticks the boxes when it comes to shelf-life and the retention of nutritional contents, as well as reducing food waste. It’s also well-placed to seize upon the growing appetite for convenience. However, frozen’s greatest asset is its affordability; it invariably offers shoppers good value for money. The British Frozen Food Federation (BFFF), for example, estimates that frozen fish and seafood is around 25 percent cheaper than fresh.

At the moment, though, consumers are not warming enough to these advantages and it was quite telling that there were just five new frozen seafood products introduced to U.K. retail in the month of June, compared to 14 in ambient and 31 in chilled. Only time will tell if this spate of fresh investment in the broader frozen industry prompts a shakeup of frozen seafood cabinets and leads to a wave of much-needed new product development and innovation.

Contributing Editor reporting from London, UK

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