Wednesday, May 20, 2020

Rabobank Analyst's Outlook on the Post-COVID Seafood Economy

I don't know much but I do know this: counting on the restaurant channel to revive is not the way for fishmongers to survive.
From The Fish Site, May 14:
The COVID-19 pandemic is likely to act as a catalyst for a number of key changes in the global seafood sector, according to Rabobank’s Gorjan Nikolik

Speaking to The Fish Site today, the senior seafood analyst outlined how the pandemic is likely to be hugely influential in terms of the species of seafood consumed, the means of sourcing it and the way it is processed. It will also have a considerable impact on investment in the sector

Seafood channels
In terms of market share, food service is likely to be the big loser – even after lockdowns are eased in many countries.

“In the US food service sales have fallen by 60 percent, and fine dining down by as much as 80 percent, while in Europe this decline has been even sharper. Even in China, food service sales are only back to 60 percent of their 2019 levels and many restaurants aren’t yet reopening due to the social distancing protocols – needing to ensure that customers remain a certain distance apart means that it won’t make financial sense for many restaurants to open, even when they are allowed to,” Nikolik notes.

And – regardless of restrictions – he sees there being a considerable lag time before consumers’ appetites to eat out return.

“Consumer confidence has taken a battering – 41 percent of those taking part in a survey in the US in mid-April said they’d take 1-5 months to return to restaurants after restrictions were lifted, while 20 percent said they’d wait six months or more,” he points out.
Meanwhile online seafood sales are booming at the expense of wet markets, which is in turn having an impact on the type of seafood that is selling well.

“Wet markets have closed all over Asia, with consumers having to turn to online delivery, and even when these markets are allowed to reopen I think online will maintain a much larger share of the seafood market than pre-COVID – with both online seafood retail and online restaurant deliveries likely to experience long terms gains.

“In fact, I think the pandemic has moved the online sector forward by about 10 years – many people who had never bought online, in particular the older generation, are now doing so with impunity,” he explains.

However, as Nikolik notes, not all products fare equally well in the online market.
“Species and brands that people trust – for example Norwegian salmon – are likely to do well in a system where – unlike in wet markets – it’s not possible to see or touch the product that you’re buying,” he reflects.

Movement restrictions have also favoured the sale of products with shorter supply chains.
“The food service sector tends to have a longer supply chain, which makes it harder for them to source ingredients. Retailers, on the other hand are looking to source larger commodities – such as salmon and shrimp – rather than niche species,” explains Nikolik.
There is, however, a possibility for fast-thinking processors to find a market for high end niche species.

“Some consumers are reluctantly turning to online and retail in the absence of food service opportunities and there’s an opportunity for processors to create new, luxury seafood products that allow this demographic to recreate the restaurant experience in their own homes. It’s likely they have until at least early 2021 to make these products,” Nikolik reflects, alluding to the earliest that the food service sector is likely to return to 2019 levels.

See May 8's "The U.S. Seafood Industry Is Looking for a $3 Billion Bailout" :
...The letter to McConnell and Schumer is pretty interesting for a couple reasons.
First off it rightly ascribes blame for the situation to the mitigation efforts rather than, as some sloppy (or deceitful) writers are doing, blaming the virus itself, and secondly it points up the failure of the retail grocery market to make up for the loss of the restaurant and catering channel, something we've seen in other countries as well....
And frpm May 5's Aquaculture: "The outlook for salmon producers post-COVID-19":
....The pickup in supermarket sales has not come anywhere near offsetting the losses in the restaurant channel. As noted in April 16's "Seafood Market Craters After Restaurants Shuttered Worldwide":
This could be a wake-up call for the industry that they may have sold the consumer on the "specialness" of seafood, to the point people don't prepare it at home.
Or folks may be substituting pasta for everything.