UK seafood consumption to ride economic upswing
The steady upturn in the U.K. economy could provide the necessary platform for increasing seafood consumption in the market and reversing the long-term decline of sales in the grocery channel, according to Seafish.
Much of seafood’s retail decline is attributed to steep increases in the average price of products. In fact, the category has only grown in revenue terms because of this price growth over the last 5-7 years.
Prices have increased so much that people shopping within the seafood channel have gradually traded down and then eventually traded out altogether, said Richard Watson, market analyst at Seafish. However, he believes the improving economic conditions could spark a change in fortunes for the category.
The U.K. economy is in its healthiest position since 2007 and until recently had the fastest growing economy among the G7 countries. Consumers are also buoyed by the falling prices for food and utilities, and crucially, average pay has overtaken inflation for the first time in five years.
The result is a positive effect on consumer confidence, said Watson.
“It’s at an all-time high at the moment, with a record 18 percent [of consumers] thinking they are better off this year. Saying that, families are still worse off now than they were before the recession and so their purchasing power is still low. They don’t plan to spend, spend, spend.”
When it comes to retail shopper trends, savvy shopping is here to stay. What is just as important, though, is that quality is firmly ranked second, behind price, as the reason for making a food purchase and this is particularly the case with seafood, he said.
“Although seafood is expensive, it’s not all about the price and the perception of ‘value for money’ is key. Consumers are willing to pay more for such products.”
Conversely, Seafish’s data finds the demand is much softer for the lowest-priced private label products.
“The question is, what will happen over the next five years? I think that if the economy and wages continue to grow and if production costs don’t increase any further, then there will be a natural increase in seafood consumption volumes,” said Watson.
He also believes that the seafood industry should capitalize on the situation and drive the volume by delivering “inspirational, on trend products” that also offer value for money.
Products should also address some of the traditional barriers to seafood, said Watson, referring to U.K. consumers’ “very unique relationship” with seafood, whereby there is a lot of nervousness around products.
“Out of all the proteins, fish is seen by shoppers to be the most scary. They don’t like choosing it; they don’t like handling it; they don’t like preparing it. Apart from eating it, they don’t like anything about it,” he said.
At the moment, U.K. at-home seafood consumption is still about to hit its second lowest level since records began, said Watson. According to his data, during the course of the last 10 years, it peaked in 2007 – ahead of the global economic crisis – at around 170g per person per week, today it is less than 150g.
This downturn has adhered to a historical trend, whereby U.K. seafood consumption tends to go down in times of economic pressure, said Watson.
“It’s not rocket science; it’s very simple. Seafood is an expensive protein choice,” he said. “Even in this current period of deflation, with food prices becoming cheaper, seafood prices are still falling at a slower rate than other proteins, making them more expensive and widening the gap.”
While beef and chicken currently work out at 0.8 and 0.5 pence per gram respectively, salmon is 1.2 pence and fish in general is 0.9 pence per gram.
In the meantime, there is an improving performance within U.K. foodservice, which is traditionally slightly ahead of retail in reacting to economic conditions, said Watson.
Total U.K. foodservice grew by 1.9 percent for the year through June to GBP 51.3 billion (EUR 70.2 billion; USD 80.2 billion). Within that figure seafood accounted for GBP 3 billion (EUR 4.1 billion; USD 4.7 billion), with servings up 0.8 percent year-on-year, led by the pub and fish and chips channels.
However, he acknowledged that during this period, seafood had the highest average price and the lowest deal rates among all proteins except lamb.