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Brexit series part V: Will higher prices nudge seafood off the menu?

Or will extended fishing grounds open new avenues for the UK market? The final part in the series looks at the consumer angle.

If there is one defining quality of the Brexit movement, it is a chaotic uncertainty. 

Made on the back of guesswork and propaganda, the referendum result has, since day one, brought with it a sense of unease that in all likelihood won’t be relieved for years to come.

In an attempt to navigate the many possibilities of the UK’s new reality as an island set adrift from its European trading partners, our series this week has uncovered two sides of the same coin: an optimism in much of the fisheries sector around the possibility of extended fishing grounds pitted against the less cheerful prospects of labor shortages and import taxes.

But what about the UK market and the consumer it serves? Price sensitivity is “alive and well” with UK shoppers according to UK Retail Consultant Jonathan Banks, and with the British pound having fallen 16 percent since the Brexit vote almost a year ago the majority of the UK’s imported seafood is destined to see price rises.

Cheap protein does well on the UK market. This is the reason poultry grew its share of the protein market in the UK some 235 percent between 1974 and 2015 and why salmon has grown a whopping 650 percent over the last 30 years to reach 15 grams per person per week, Banks told IntraFish, quoting figures from Defra.

This huge consumption boost in salmon has grown alongside aquaculture production, which made the product more available and affordable for British consumers. 

However, as a product that has already seen price hikes of 18 percent over the last 24 weeks, any further impact from a change in UK trading status with Norway, or a further drop in the pound (a likely scenario according to economists) may see buyers shift from imported to domestic product, becoming more reliant on Scottish producers than traditional Norwegian supply, suggested Nathan Ward, business unit director at Kantar Worldpanel.

But Ward also made the point that as far as consumer prices go, it is very difficult to pass on large price changes and a more likely scenario if bad trade deals come to pass and prices rise will be substitution to cheaper cuts and smaller pack sizes, something we have already seen happening with fish fingers and other non-seafood products.

According to Banks these price hikes are destined to come. “UK shoppers have moved into a more inflationary scenario now -- with worse to come -- as the pound will continue to lose value against other currencies,” he said. 

“Last week saw a three year high for food reported at 1.4%, with processed food inflation up 1.8 percent,” said Banks, quoting the British Retail Consortium.

But even if end prices do rise, Ward thinks it unlikely consumers will shift away from seafood. “What we’ve seen is no matter what inflation happens, people still eat,” he told IntraFish

And as fish has become a larger part of the UK consumer’s meal repertoire in recent years, he deemed it unlikely they will move away from that in any significant way. “They might trade down, but they won’t shift out of the category,” he said.

More fish than they know what to do with?

But a new issue raises its head when you consider the extension the UK will likely see to its fishing grounds upon exiting the EU. 

“The issue retail will have is how to encourage more consumption if we are able to retain more of our increased catches coming from extended fishing grounds,” Mike Berthet, former fish and seafood director with leading UK foodservice company M&J Seafood, told IntraFish

The foodservice sector has seen gains in recent years, with fish n’chips and promotional campaigns pushing people to eat out mid-week, despite tighter finances. So, the potential for increased domestic supply could potentially be soaked up with the right preparation by foodservice buyers and suppliers.

And preparation is the key, according to Berthet, who said lack of planning for the potential effects of Brexit could be the downfall of several companies. 

“If companies are relying on a little bit of luck coming from the negotiations then they would do well to remember that 'luck is for the ill prepared',” he said.

“There are already expectations that unless a free trade agreement of sorts is in place then there will be increased costs associated with border delays and an increase in administration. Companies who are already struggling will not be able to survive.”

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