Covid-19 impacts on markets from July to September

Review of the impacts of the Covid-19 pandemic on seafood markets from July to September 2020.

Key points

  • Foodservice markets in UK and Europe reopened in the summer.
  • Consumption of meals out of home increased with seafood proving popular, particularly in coastal areas and big cities.
  • Retail sales dropped back on previous months, but remained above 2019 levels.
  • Demersal and shellfish export value was higher than in previous months, though below the same period in 2019.
  • As previous supply chains reopened some businesses moved out of direct sales, while others expanded or rebalanced operations to keep this new channel open.

Retail  

With the gradual easing of restrictions in July, consumers had the option and inclination to eat out more. As consumers opted to eat more meals out of home, retail sales decreased from record highs seen earlier in the year. Despite this reduction, larger multiple retailers continued to see seafood sales above last year’s levels, particularly in frozen and chilled fish categories through this period.

Chilled Jul-Sep +12%, Jan-Sep +7% / Frozen Jul-Sep +12%, Jan-Sep +14% / Ambient Jul-Sep +3%, Jan-Sep +11% / Overall Jul-Sep +10%, Jan-Sep +10%
Table showing UK retail volume compared to 2019

Salmon retail sales also remained above 2019 levels through the summer, continuing to prove popular with consumers. Salmon retail sales volume was 16% higher than the same period in 2019, largely driven by chilled sales.

Online shopping (which consumers had shifted to in the first half of the year) remained popular throughout the summer. Shoppers tend to be less adventurous when making online purchases and more likely to stick to their shopping list and brands they know. An increased interest in health, value for money and family meals was noted. Retailers are likely to factor these considerations into their strategies going forward.

Graph with lines showing weekly sales peaks and dips for chilled, frozen, ambient and overall retail sales from week ending 28.03.2020 to 03.10.2020
Graph showing Weekly UK seafood retail sales volume 2019 vs 2020

Many independent fishmongers reprioritised their offering as restrictions eased. This meant reducing deliveries and encouraging customers to come to the shop and meet the fishmonger.

Some businesses reported that they retained new customers they obtained during lockdown. Businesses that increased or improved their online marketing through websites and social media particularly benefitted. Others reported a decrease in sales during the summer compared to the height of lockdown. This was attributed to the return of the foodservice market and associated reduction in meals cooked at home.

GCH Fishmongers, a family run business in Bedford, launched an online platform and local home delivery service during lockdown. Their new customer base meant they continued to thrive through the summer. Owner Gary Hooper said:

We saw new customers coming into the shop over the summer who found us during lockdown. We suspect many of these new customers used to get their fresh fish from the multiple retailers and it’s been great to see the increased interest in local independent businesses like ours.
Gary Hooper, Owner GCH Fishmongers

Foodservice

The reopening of the sector meant total visits to foodservice were up considerably compared to earlier in 2020. However, they were 42% lower than in July - September 2019.

Decline against last year was seen across all foodservice channels:

  • The biggest declines were seen in workplaces – including offices and schools - and pub settings due to closures, restrictions and more working from home.
  • Visits to foodservice for seafood specifically performed better than total foodservice, but there were still 32% fewer visits than the same period last year.
  • Visits to fish and chip shops were less impacted than total foodservice.
Total dining: Jan-Mar -10%, Apr-Jun -77%, Jul-Sep -42% / Fish and chips sector: Jan-Mar -2%, Apr-Jun -73%, Jul-Sep -22%
Graph showing % change in Foodservice visits 2019 vs 2020

Fish and chip takeaway trade remained strong throughout this period as businesses made changes in response to the challenges. Some operated a reduced menu focussed on a smaller number of core items, and many businesses kept shorter operating hours. Others adapted their offerings to sell more locally sourced seafood which previously would have been exported and consumed abroad. Andrew Crook, President of trade body the National Federation of Fish Friers (NFFF), said:

The fish and chip sector has been largely successful in innovating and adapting to meet the new operating environment, embracing timed ‘click&collect’ ordering, contactless payments and utilising social media platforms and local press to promote business through the summer.
Andrew Crook, President of the National Federation of Fish Friers

Businesses offering takeaway and delivery options also faced an increase in hidden operating costs.  These included delivery vehicle insurance, card payment fees and delivery service fees from platforms such as Just Eat, Deliveroo and Uber Eats.

Some businesses reported reductions in takeaway fish and chip trade as pubs and restaurants reopened. Many businesses were also impacted by reduced staffing levels due to Covid-19 illness and self-isolation amongst employees.

Pubs, restaurants and hotels across the UK were able to reopen in July. Outdoor hospitality was the first part of the sector permitted to reopen and this stipulation encouraged businesses to invest in outdoor seating areas. Bob McCoubrey, owner of Mourne Seafood Bar said:

Our investment in an outdoor seating area enabled us to help keep numbers of customers up, while accommodating social distancing. Many customers wanted and preferred the option of eating outside.
Bob McCoubrey, owner of Mourne Seafood Bar

Later in the summer, indoor seating was also allowed with added protections in place. To accommodate “one metre plus” social distancing requirements many pubs and restaurants reduced indoor seating capacity and invested in screens to help keep staff and customers safe.

Reopening was not without challenges. Last-minute cancellations and no-show bookings, on top of a reduction in covers, proved problematic for many businesses trying to find their feet again. Businesses also faced higher operating costs as they brought in measures to maintain social distancing. Technological solutions to allow customers to order from their table and the increase in card payments both came with fees attached.

Despite operational challenges, many foodservice establishments saw a considerable boost in trade in August with the launch of the Eat Out to Help Out scheme across the UK. The UK Government reported that over 35 million meals were claimed under the scheme in the first two weeks. Some restaurants reported covering more servings than in August last year. Even those that didn’t participate seemed to benefit from consumers’ increased confidence to eat out. Some like Tesco Café offered their own discounts.

Anecdotal evidence from around the UK suggests that seafood proved particularly popular with those who flocked to the coast for summer staycations. Many restaurants in these areas were fully booked in August and into September. Commenting on this boost in custom Simon Vickers, owner and chef of the Griffin Pub and Restaurant situated on the Pembrokeshire coast said:

We saw a huge demand for fresh fish when we reopened this summer. Customers were clearly eager to try fresh seafood after the restrictions to eating out we experienced in the spring!
Simon Vickers, owner and chef Griffin Pub and Restaurant

This increase in custom was critical for businesses seeking to make up for lockdown losses. However, even fully booked restaurants were, in most cases, serving many fewer diners due to social distancing requirements.

Some businesses continued offering their own version of Eat Out to Help Out discounts into September. However, new restrictions soon knocked business and consumer confidence again. The imposition of a 10pm curfew left businesses unable to offer a second dinner sitting, while the “rule of six” limited the number of people and households allowed to meet. Both of these impacted on foodservice trade.

Some areas like southwest England were still busy with tourists into September and consumers adapted their mealtimes to meet restaurant availability. This allowed businesses to make up for potential losses in dinner covers by staying busy through the usual afternoon lull.

In other areas foodservice businesses struggled as Eat Out to Help Out ended and restrictions returned. Some businesses felt that the scheme had given them a false sense of hope which evaporated overnight once it ended. Others began to question whether their investments in outdoor areas were worthwhile.

Additional financial concerns were raised around September with quarterly rent payments on pubs and restaurants coming due. These fears sat alongside wider concerns that many foodservice and hospitality outlets would not survive another extended period of restrictions. As the end of the Brexit transition period loomed larger it caused further concerns about future uncertainty in the seafood supply chain.

Exports

Summer saw the return of some export markets, in particular foodservice on the continent and elsewhere. July export values improved on the spring and were comparable to summer 2019 levels across some species groups.

Foodservice exports remained highly sensitive to Covid-19 spikes, local lockdowns and other restrictions. Reduced order quantities, uncertainty around continuity of demand, and potential for disruptions in logistics chains left many exporters wary. This was a particular issue for wild caught and farmed fresh shellfish product.

Restrictions increased in France, Spain and other key European export markets in August and September. This resulted in demersal and shellfish export values dropping below 2019 levels. International tourism also reduced in August and September as travel corridors that had opened in July closed again.

Bar graph illustrating stats for demersal, pelagic and shellfish exports as outlined in the table below
Graph showing % change in value of seafood exports 2019 vs 2020 by month
 

Demersal

Pelagic

Shellfish

Apr

-23%

28%

-56%

May

-28%

21%

-46%

Jun

-13%

41%

-16%

Jul

7%

-3%

1%

Aug

-16%

-7%

-9%

Sep

-10%

30%

-12%

Ongoing market volatility forced businesses to be more agile and adapt the way they worked with customers and suppliers. Mark Stephen, Director of Jack Taylor Ltd, a fresh fish processor and exporter based in Fraserburgh, commented: 

About 85% of our product is normally sold into European restaurant, hotel and catering outlets, with the remainder supplying retail customers. We started to see a gradual return of business in the late summer after rapidly losing around 60% of our market when Europe entered its first lockdown.

Since then we have been working much more closely with our customers. The constant dialogue has helped us manage the continued volatility in the market and accommodate changes in customer orders with short notice as countries reintroduce stricter restrictions across Europe.
Mark Stephen, Director of Jack Taylor

Some businesses, particularly those specialising in a few select species, faced ongoing challenges through the summer. Paul Leeman, of Seafresh N.I. Ltd, said:

There has continued to be no market over the summer for our live velvet crab. We normally supply live crab throughout the year to the Spanish foodservice sector, which is our only market for this species.
Paul Leeman, of Seafresh N.I. Ltd

UK seafood businesses faced issues in reaching other important markets. Continued restrictions, increased transport costs (particularly air freight) and reduced transport availability to markets further afield, such as Asia, the Middle East and the USA, all had adverse effects.

A perception in China that Covid-19 could be present on food packaging also caused issues. Chinese associations called for an import ban on meat and seafood and the Chinese government advised consumers not to eat raw seafood. This caused particular issues in the shellfish export market. In 2019, nearly 10% of UK shellfish exports by value went to China. Andrew Rooney, owner of Rooney Fish and Millbay Oysters, commented:

The Chinese market for our finished product (oysters) has continued to be very limited due to Covid-19, with further impacts on sales due to the closure of the Beijing wet fish market and seafood scare stories in China affecting business. We have been making less than 10% of the sales we normally do. Significant price drops and increases in flight and packaging costs have all affected our profitability.
Andrew Rooney, owner of Rooney Fish and Millbay Oysters

Overall this period saw better export markets than earlier in the year, but trade was still below normal levels. Many exporters faced a challenging operating environment through the summer as they sought to adapt quickly to rapid changes in demand.

Table showing % change in UK exports for demersal, pelagic, shellfish and overall by value and volume 2020 compared to 2019 split by value and volume
Table showing % change in UK exports 2020 compared to 2019 split by value and volume

Direct sales to consumers

Prior to the lockdown period in early 2020, direct sales to consumers were a relatively small market for UK seafood. Direct sales however remained above pre-lockdown levels into the summer, even as restrictions eased and consumers started eating out of home more.

As traditional markets returned, businesses throughout the seafood supply chain had to decide whether to continue selling directly to consumers or not. Those businesses that only saw direct sales as way to get through the initial shock of lockdown readily shifted back to supplying more commercial markets with better margins.

Businesses that did see direct sales as a viable long-term market began to dominate the space. Home delivery and weekly mail order volumes declined, before settling at a more manageable level. Some businesses hired additional staff to allow them to continue new or expanded direct sales operations alongside returning traditional markets.

Read more about Covid-19 impacts from July to September

Contacts

For further information on our review of Covid-19 impacts on the seafood industry contact:

Ana Witteveen
Economist
t:
0131 524 8659
m:
07815 428 554