In its latest review of the market, Young’s (the UK’s biggest specialist fish manufacturer) predicts that rising global demand for seafood – coupled with more stringent fisheries management regimes - will put pressure on seafood pricing.

Nevertheless, the higher prices are not expected to dampen the consumer appetite for seafood, with both value and volume sales still showing growth in a UK market now worth £2.2bn.

Jim Cane, commercial director at Young’s, says “Seafood inflation itself is actually losing some of its characteristic volatility as stronger fisheries management regimes kick in and the market starts to diversify across a wider range of species. Some firming of prices is actually to be welcomed as it is demonstrates there is improved control on illegal fishing and the elimination of ‘black fish’ [1] from the marketplace.”

“Overall, we’re predicting average inflation of around 5% - but we don’t expect this to unduly influence consumption. Consumers have really got the message about the natural health benefits of seafood and so far rising prices have had failed to dent their confidence in seafood.”

In a notable shift in underlying inflationary factors however, Young’s highlights the rapid inflation in ingredients and packaging which is starting to overtake the influence of fish raw material on end product pricing.

Dramatic increases in ingredient and packaging costs have been fuelled by strong economic growth in countries like China, and by environmental factors affecting yields of seed, grain and root crops. The changing edible oil market is another issue - palm and rapeseed oil prices are up by +80% compared with this time last year, due both to increased demand and the increasing switch of oil from food to energy use.

“Global factors would seem to suggest that we probably all have to get used to paying more for our food in the future,” says Cane. “In that respect seafood is no different to the wider marketplace – but we do have the benefit that consumers have exceptional confidence in seafood as one of the most valuable elements of the modern diet.”

A summary of the recent market review follows.

Ends…

[1] ‘Black fish’ refers to fish caught and landed illegally ie. Outside legal quota and management regimes.

For more information contact Chris Solloway t. 07974 232015 e. chris@wordbird.net

Young’s Market review

Seafood inflation over the last 2 years is now starting to lose some of its volatility but the upward trend continues and we don’t see this changing whilst seafood continues to be so popular and supplies remain largely static.

The recent Icelandic quota cut of 30% in the cod fishery may well lead to a more precautionary approach in other fisheries. Other notable species under supply pressure include coldwater prawn, with some plant closures in Iceland and Norway.

Nevertheless, the diversification of species in the marketplace – and the growing influence of aquaculture – is helping to ameliorate the overall influence on price of low supply in some of the more traditional species. This is particularly notable with the growth in whitefish alternatives such as pollock and hake.

Indicative of a general trend is that the current inflation is by no means just about the price of fish, with some dramatic increases in ingredient and packaging costs. Some of this is as a result of strong worldwide demand – fuelled by economic growth in countries like China and India. Other increases are a direct result of unusual environmental conditions affecting yields of seed, grain and root crops. The wheat price rose from £85 per tonne in April 2006 to £155 per tonne in July 2007. Dairy products such as butter, cheese and milk powder have been impacted by drought in Australia and declining supply from the US and Latin America – with prices up by as much as 70%. Palm and rapeseed oils are up 80%, due both to increased demand and the switch in production from food to fuel use.

There is nevertheless some UK relief in that the strength of sterling is holding back the pressure on fuel, despite oil prices heading upwards.

Overall, we believe that in terms of inflation seafood is starting to behave more like other proteins, with wider global factors starting to have a bigger influence on price than specific industry pressures.