Sales of chilled fish products have overcome fiercely tough grocery trading conditions to lift the overall performance of seafood in British retail this year.
For the 12 months ending 21 June 2014, U.K. seafood sales totaled GBP 3.17 billion (EUR 4 billion/USD 5.1 billion), an increase of 2.6 percent year-on-year, according to the latest Nielsen Scantrack data published by Seafish. This value was achieved in spite of sales volumes falling 3.8 percent to 344,000 metric tons (MT), which means the average price of seafood sold in retail increased by 6.7 percent to GBP 9.22 (EUR 11.72/USD 14.74) per kilogram during that period.
Of the three categories — chilled, frozen and ambient — only chilled increased in value, achieving total sales of GBP 1.94 billion (EUR 2.5 billion/USD 3.1 billion), up 6.1 percent year-on-year. Chilled sales volumes dipped slightly to 154,000 MT, contributing to an average per kilogram price of GBP 12.63 (EUR 16.05/USD 20.20), a 6.5 percent spike.
Nielsen Scantrack found total frozen and ambient seafood sales fell to GBP 715 million (EUR 908.8 million/USD 1.1 billion) and GBP 520 million (EUR 660.9 million/USD 831.7), respectively.
Salmon, cod and seabass were the big winners within the chilled category. Salmon sales grew 12.3 percent in value and 2.1 percent in volume year-on-year, while cod sales increased 10.8 percent in value and 7.1 percent in volume and the value and volume of seabass sales achieved increases of 12.1 percent and 9.3 percent, respectively.
The strength of the country’s chilled category has also been extolled by leading retail supplier and brand Young’s Seafood, which last week reported that it had grown its chilled sales by 21 percent over the past year. The current value of its chilled offering is GBP 50 million (EUR 63.5 million/USD 80 million) and the company plans to further increase this business in 2015.
While the general signs are positive for seafood in retail, consumer confidence remains modest. This has led to another difficult year for some of the bigger supermarket chains. In fact, the overall health of U.K. retail unexpectedly declined in the third-quarter of this year – the first time it has fallen since Q4 2012 – largely due to another disappointing trading period by the groceries sector, which has registered a negative performance in every month of 2014.
In its latest findings, the KPMG/Ipsos Retail Think Tank’s (RTT’s) Retail Health Index for Q3 dropped back one point to 80, putting it back to the same level it held in Q1. However, RTT expects retail health to bounce back again in the final quarter, reflecting “continued growth in employment and sustained consumer confidence nurturing demand.”
RTT believes that strong employment, improving job security and consumer confidence will drive U.K. demand through to Christmas. It added that there are also “nascent signals” that wage rises will increase toward the year end, and with inflation remaining low, higher disposable incomes could come at a fortunate time for retailers. It also reckons that decisions made by Tesco’s new CEO, Dave Lewis, could impact heavily on the other major food retailers in Q4, if the United Kingdom’s biggest supermarket chain decides to go on the offensive before the year end. While RTT acknowledged it could not predict what Tesco would do, it “considers it unlikely that an aggressive price war was imminent,” particularly this side of the holiday season.
Tesco has had a torrid year to date, mostly due to a severe slowdown in trading. It has also continued to lose market share in terms of seafood sales while Morrisons, Waitrose, Lidl and Aldi have made gains.
Should a major price war ensue, consumers would be the biggest beneficiaries and they are already saving on many everyday items as some supermarkets wage low key battles on price.
The latest grocery share figures from Kantar Worldpanel, published for the 12 weeks ending 12 October 2014 found that like-for-like prices have declined by 0.2 percent, pushing the U.K. grocery market into deflation. The consumer research group said this trend reflected the impact of the discounters Aldi and Lidl and the market’s competitive response, as well as deflation in some major categories including vegetables and milk.
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, confirmed there is a “clear polarization” of the market with both the premium and discount ends gaining share, while the mainstream grocers continue to be squeezed in the middle.
