Across Western Europe, governments have either recommended or ordered that restaurants be shut down to avoid spreading the coronavirus.
The mass closure of restaurants is having major repercussions on the market for shrimp in Europe, which is likely to have a resulting effect on shrimp producers in Asia and South America, according to Willem van der Pijl, a senior shrimp industry analyst formerly with the Seafood Trade Intelligence Portal.
Van der Pijl said sales of shrimp at retail have spiked as Europeans rushed to buy food before any potential lockdown on movement or limit on shopping could be put in place.
“Although retail sales may slow down once people start to get used to the new situation and stop panic-shopping, it is likely that shrimp sales in retail will remain at a higher level than normal due to the restaurant closures,” he wrote in a LinkedIn post. “The question is whether increased retail sales will compensate for overall sales entirely. My expectation is that they will not.”
Since most Europeans primarily eat shrimp out-of-home, increased retail sales will likely not make up for the reduced volume being taken up by the foodservice sector, van der Pjil said.
“Although some people will increase their at-home consumption of shrimp, I do not expect that they will eat as much shrimp at home as they would eat out-of-home. Therefore, overall European shrimp consumption, in my opinion, will decline [until] summer with potentially as much as 20 percent,” he said.
Van der Pjil predicted shrimp sales, which normally spike during Easter and the spring holidays in early April,
If a restaurant closure continues through April, shrimp producers currently growing for the next buying season will suffer, van der Pjil predicted.
“Reduced sales in March and April will result in high inventories of unsold stocks for many of Europe’s shrimp importers. As a result, they will be unable to buy into the new buying season of 2020 which would normally spike in April and May,” he said. “Although retailers may compensate for the decline of restaurant consumption partly, this will only benefit a small number of importers and their suppliers. The number of importers and suppliers that depend on the restaurant sector is much larger than those that supply retail. Although governments have announced support to those businesses to prevent bankruptcy, it is likely that many of them will face difficult financial times ahead.”
Wholesale suppliers face an especially difficult path forward, van der Pjil said.
“Even for the part that retailers may compensate for reduces sales in restaurants, this might not make a difference for a big part of the suppliers to wholesale. Retailers in Europe sell a much smaller product range than wholesalers who sell to restaurants. Especially in Northwestern Europe, the retail sector is almost entirely dominated by Pacific whiteleg shrimp. The vast majority of products sold in retail consists of Pacific whiteleg shrimp. This means that retail may compensate for imports of Pacific white shrimp to a much larger extent than for other species such as Argentine red shrimp, black tiger shrimp, and other wild-caught shrimp species,” he said.
As a result of this, on the supply side, countries that specialize in production of species other than Pacific whiteleg shrimp will be especially vulnerable, according to van der Pjil.
“Bangladesh is likely to suffer as one of the worst, while Vietnam may actually benefit from the situation,” he said. “A country like Bangladesh will face major problems if the closure lasts long. Bangladesh sells its black tiger shrimp almost entirely (about 70 percent) into the restaurant sector in Northwestern Europe and is likely to need to find new buyers for its 2020 crop. Also, suppliers from India, who often do not supply the retail but wholesale market in Europe, will face a difficult situation and may see their sales to Europe decline further in the coming months.”
Ecuador and Vietnam, which sell more to Europe’s retail sector, will face fewer problems, van der Pjil predicted – with a caveat.
“Within those countries, only the suppliers who have access to the retail channel and can meet the applicable quality and sustainability standards will benefit from increased retail sales,” he said. “For Vietnam, the situation may even be a bit better than for others who increase sales to retail. Vietnam is about to get reduced import tariffs due to the E.U.-Vietnam free trade agreement. If Europe’s importers of Vietnamese shrimp can clear their inventories and import new products with reduced rates in a couple of months, this may benefit both importers and their suppliers.”
Photo courtesy of Kiev Victor/Shutterstock
