Covid-19 impacts on markets from October to December

Review of the impacts of the Covid-19 pandemic on seafood markets from October to December 2020.

Key points

  • Both multiple retailers and independent fishmongers saw strong sales to the end of the year, benefiting again from foodservice closures.
  • The foodservice sector struggled through this important sales period, with delivery and takeaway options providing a lifeline to many businesses.
  • Seafood exports remained below 2019 levels throughout this period, hampered by both global Covid-19 restrictions and uncertainty around the EU-UK future trade agreement.
  • Direct sales continued to grow for many businesses that established themselves during the first lockdown in spring.

Retail

Retail sales remained strong, benefitting from foodservice closures at the end of the year. Seafood retail sales volume was up 14% compared to October to December 2019. For 2020 overall, total seafood retail sales were up nearly 11% on the previous year, both in terms of value and volume. Chilled and frozen sales growth was strong throughout the year with ambient sales peaking when restrictions were at their highest.

Graph with lines showing weekly sales peaks and dips for chilled, frozen, ambient and total seafood retail sales from July to December 2020. Peaks for total seafood sales are marked at WE 07.11.2020 (22%, national lockdown in England) and WE 26.12.2020 (27%, corresponding Christmas)
Graph showing Weekly UK seafood retail sales volume 2020 vs 2019

Increased restrictions in October to December didn’t see the same degree of stockpiling as the initial lockdown in March. During week ending 21 March 2020, seafood sales volume peaked at +63% compared to the previous year. During October to December, sales peaked in the first week of November (+22%) as England entered a national lockdown and in the week before Christmas (+27%).

Chilled Oct-Dec +13%, Jan-Dec +8% / Frozen Oct-Dec +16%, Jan-Dec +14% / Ambient Oct-Dec +15%, Jan-Dec +12% / Overall Oct-Dec +14%, Jan-Dec +11%
Table showing UK retail volume compared to 2019

Christmas is always an important time for seafood sales in retail but 2020 was an exceptional year. Seafood sales volume was up 27% during the week preceding Christmas, compared to 2019. Frozen products performed extremely well, helping people manage uncertainty around their Christmas plans. Many species performed well, including perennial favourites tuna, cod, salmon and haddock. Anchovies (+110%), hake (+77%) and cockles (+74%) enjoyed the largest sales growth during the festive period.

Anticipating more people eating at home and tighter budgets for many households, some large retail chains decided to cut food prices in the run up to Christmas. Some processors also reported that their retail customers planned to reduce product lines around Christmas, impacting on their non-Christmas lines.

In November, supermarket Sainsbury’s announced plans to close all wet fish counters in their stores. While this raised concerns across the industry, many independent fishmongers saw this as an opportunity to take on this trade.

Anecdotal evidence from independent fishmongers suggests they remained busy through this period. Many increased delivery days, times and areas to meet strong demand for home deliveries.

Foodservice

Foodservice impacts varied regionally depending on the level of restrictions. Southwest England remained under the lowest level of restrictions in October meaning foodservice and hospitality sales continued at reasonable levels. By November, restrictions increased across the UK, including a national lockdown in England. This meant that Christmas trade was effectively cancelled. December is typically the number one month for food eaten out of the home, with sales 15% higher than average. The loss of this key period hit the foodservice sector hard as John Lavery, owner of Fish City in Belfast, explained:

The week between Christmas and New Year is usually one of our busiest of the year. We normally rely on this boost in sales to see us through the quieter months of January and February. Unfortunately, due to lockdown restrictions, we had to close on Christmas Eve after reopening for just over two weeks. As a result, our December sales were down 70% on normal trading.
John Lavery, owner of Fish City in Belfast

In the period October to December, total foodservice visits were down 45% compared to the same period in 2019. Visits across each individual foodservice channel were down on 2019 levels during this period. (Food service channels are defined as: Full-service restaurants; Travel & Leisure; Workplace/college/university; Fish&Chips; QSR excluding Fish&Chips; Casual dining) Fish and chip shops recovered quickest, with total number of visits down only 8% year on year in October to December (compared to 22% in July to September and 73% in April to June). Overall in 2020, total foodservice visits were down 43% compared to 2019. 

Total food service sector: Jan-Mar -10%, Apr-Jun -77%, Jul-Sep -42%, Oct-Dec -45% / Fish and chips sector: Jan-Mar -2%, Apr-Jun -73%, Jul-Sep -22%, Oct-Dec -8%
Graph showing % change in Foodservice visits 2020 vs 2019

Some restrictions eased slightly at the start of December but only for a matter of weeks. Many restaurants anticipated they wouldn’t be open for long and only offered a limited menu when they did reopen.  

Restriction levels changed rapidly at the end of December. This made it difficult for many foodservice businesses to plan for, or justify the cost of, re-opening for indoor dining. In Wales, for example, businesses were initially told that lockdown would begin on 28 December. This was then brought forward to 20 December costing restaurants a full week of planned Christmas trade.  

On-again, off-again operations also came with unexpected costs as irregular use of kitchen equipment led to equipment failures and expensive repairs. 

The challenges facing foodservice and hospitality businesses during this period also impacted on their suppliers.  

Natalie Hudd, Director of Sales for Direct Seafoods, commented:

By October 2020, we were already seeing a downturn in trade. The November lockdown decimated our trade yet again due to the bulk of our customer base sitting in the restaurant, pub, hotel, contract catering and sports and leisure sectors. Hopes of a resurgence in trade at Christmas were dashed by the widespread implementation of the tier system which left much of the country unable to trade and customers simply giving up on the idea of any festive custom.

As we work with short shelf life product, stock management proved a real challenge during this period. Having to freeze product to avoid wastage, and then work to move it once restrictions were lifted was not easy. Additionally, the very small customer base that continued to trade throughout lockdown left us struggling to justify sourcing costs for such low volumes.
Natalie Hudd, Director of Sales for Direct Seafoods

In mid-November, the UK government announced that restaurants, pubs and cafes would be able to provide takeaway services for another year without having to go through the usual planning application process. This extension to April 2022 was intended to provide businesses with more certainty as they planned for economic recovery.

Delivery and takeaway services, including at-home meal kits, have reportedly helped many foodservice businesses stay afloat. Some businesses adapted the exterior of their premises to sell food through hatches and windows to preclude customers from entering premises.

There were also reports of businesses choosing to manage their own deliveries to avoid high fees from delivery services such as Deliveroo, Just Eat and Uber Eats.

Many businesses had established or improved these sales channels during the first lockdown in spring. As restrictions returned in autumn they had an established ‘Plan B’ business model to fall back on.

Seafood delivery orders grew across nearly all foodservice channels in 2020, up 6% overall compared to 2019. Growth was particularly strong for full-service (sit-down) restaurants, seeing an overall increase of 18% for seafood delivery visits in 2020.

Sales via drive through also increased in 2020, with total foodservice visits via drive through up 4% on 2019. Some fish and chip shops were particularly well suited to diversification into drive through sales. In early December Papa’s Fish and Chips, a well-known business in East Yorkshire, opened the first fish and chip ‘Drive-Thru’ in the area. They explained that they had wanted to offer a drive through service for a long time but it took the outbreak of Covid-19 to give them the push they needed.

Further innovations have been seen as many businesses providing takeaway embraced digital communications. Without the benefits of passing trade, businesses had to find new ways to attract customers. Hooked Fish and Chips (@hookedchipshop) in Cheshire saw some of their videos on TikTok achieve in excess of 200,000 views.

Delivery and takeaway services weren’t viable for all businesses. Some remained closed for most of this period while dining-in was suspended. Many of those heavily reliant on tourist trade and only a small local customer base found it unviable to remain open. By shoring up their finances in the short-term these businesses hoped to be in a more robust position to re-open when restrictions start to lift.

Despite innovations and adaptations in delivery, online ordering and click&collect, most businesses weren’t able to make up for lost dine-in custom. Ongoing concerns were raised that many foodservice and hospitality businesses wouldn’t survive this further period of restrictions.

During this period pub and hospitality trade bodies reported 76% of businesses were making a loss. Some hospitality groups called for a change in restrictions and additional government support to save jobs and businesses. The fish and chip industry also called for a long-term or permanent cut to VAT after the temporary reduction in VAT was credited with helping buoy businesses through the pandemic.

Exports

Salmon and shellfish exports were down the most in terms of both value and volume in October and November, compared to the same time in 2019. In December, however, shellfish exports improved, while salmon export value further declined. After stabilising in September and October, demersal export value dropped at the end of the year. Pelagic export value remained strong through this period. 

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

UK exports value 2020 vs 2019 by month

  Demersal Pelagic  Shellfish Salmon
July  12% -3% 2% -20%
Aug -13% -6% -6% -19%
Sept 1% 33% -8% -25%
Oct 1% -6% -19% -30%
Nov -19% 18% -21% -32%
Dec -11% 21% 3% -45%

Exports to China remained particularly challenging. Towards the end of October, the Qingdao government claimed Covid-19 could survive in a cold environment and could be transferred from goods to people. This view, that Covid-19 could be transmitted by food packaging, was not taken by other governments or the World Health Organisation. China however increased Covid-19 testing of imports and mandated that frozen seafood packages be fully sanitised before release. These measures were in place through the end of 2020 for frozen food and seafood, leading to increased costs, delays and longer handling times. The Beijing Xinfadi wholesale market also suspended storage and sale of chilled and frozen seafood due to Covid-19 concerns. This further hampered seafood sales to China.

Added trade restrictions with China had knock on effects along the supply chain. For example, Chinese authorities called for Export Health Certificates to be issued by the country of origin. In response, the Netherlands stopped issuing Export Health Certificates for seafood destined for China originating from a third country. This change primarily disrupted the trade of frozen headed and gutted whitefish during this period.

Table showing % change in UK exports for demersal, pelagic, shellfish, salmon 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

UK exports value 2020 compared to 2019

  Demersal Pelagic Shellfish Salmon Overall
Value  (Oct-Dec) -10% 9% -12% -36% -22%
Volume  (Oct-Dec) -2% 10% -8% -24% -7%
Value  (Jan-Dec) -10% 5% -20% -26% -20%
Volume  (Jan-Dec) -3% 13% -16% -22% -7%

Seafood trade with Europe was also increasingly difficult. Exports had begun to flow more readily during the summer, but as restrictions increased at home and abroad during autumn, demand from the continent dropped off once more. UK foodservice wholesalers and their suppliers saw reduced orders from France, Spain, Italy, the Netherlands, Ireland and Belgium. Some exporters supplying into retail on the continent saw an initial increase in demand as European foodservice markets closed down in November. This did not last long however and demand up to Christmas remained poor.

Ever-changing Covid-19 restrictions continued to cause market uncertainty. Meanwhile the end of the Brexit transition period drew nearer causing further uncertainty around the UK’s future trading relationship with the EU. Concerns about potential border delays and additional paperwork worried many businesses exporting live and fresh seafood to Europe.

Businesses also had concerns around seafood trade from Great Britain to Northern Ireland. Specifically, issues were anticipated around Catch and Export Health Certificates required from 1 January 2021. There were already some reports of suppliers refusing to deliver goods to Northern Ireland in December, prior to the end of the transition period.

On 20 December, a new strain of Covid-19 was detected in southeast England. Authorities in France, Germany, Italy, Belgium, the Netherlands, Austria, Ireland, Sweden and Bulgaria closed their borders to passengers and freight traveling to and from the UK. This travel ban impacted all ferry and Eurotunnel ‘accompanied freight’ (the main form of transport for all fresh produce) leaving the UK. UK seafood exporters were hit hard.

Though short-lived, ultimately lasting 48 hours, the ban came at a critical time. As well as serving Christmas markets, many businesses were trying to fulfil winter contracts before 31 December to avoid potential logistical issues at the end of the transition period. These businesses experienced severe fresh seafood trade disruptions as a result of the border closure.

Donna Fordyce, Chief Executive of Seafood Scotland, reported that the Scottish shellfish sector was likely the worst hit. The border closure decimated sales of fresh seafood to the continent during their busiest week of the year.

The shellfish guys have really suffered throughout the whole of Covid. This was a bitter blow on top of an already damaging year. This industry is really worried about the viability of some of the fishing fleet given the nature of the markets over the past months in Europe.
Donna Fordyce, Chief Executive of Seafood Scotland

Seafood Scotland and the Scottish Seafood Association estimated that losses from the border closure totalled as much as £10 million. These financial losses led businesses to call for compensation from the government.

Direct Sales to Consumers

Direct selling continued for many small-scale fishermen. Many businesses with a direct sales arm (for example a shop, van, etc.) seemed to go from strength to strength. Online platforms were improved, new supply routes found, and delivery networks expanded as they worked to fulfil customer orders. Some smaller businesses even went national with their deliveries. Learning from their experiences during the spring lockdown, these businesses were ideally placed to adapt to increased restrictions. While they may not have anticipated it at the start of 2020, many ended the year well established in the direct sales market. 

Martin Yorwarth, owner of Yorwarth’s Fresh Fish in East Sussex, explained how he has grown his business through direct sales:

Pre-Covid we did a mix of exporting and retail sales through our shop. But as the pandemic unfolded we lost our export markets. We developed a new business model centred around direct sales via home deliveries, our retail shop and local markets.

Since changing our business model we have acquired new customers while maintaining our original customer base. Our turnover grew significantly in 2020, with customers recognising our consistent high quality supply of day-caught product.

By the second lockdown in November, we were well prepared to keep the shop trading, with extra safety measures in place, and increase our direct delivery service. Now, our long-term plan is to continue with domestic markets both locally and across the UK, possibly expanding internationally in the future.
Martin Yorwarth, owner of Yorwarth’s Fresh Fish in East Sussex

Not all fishermen that tried direct selling during the first lockdown returned to it during this period of further restrictions. Generally, those who had reverted to their traditional supply chains during summer opted to tie up as these markets closed again. Due to poor weather, the end of the year is traditionally seen as a difficult time for fishing. By utilising government support schemes some fishermen were able to guarantee an income.

Onshore seafood businesses followed a similar pattern. Those well set up for direct selling and online ordering following the first lockdown continued in these markets as restrictions increased. Those who had seen it as a short-term solution in the spring did not necessarily opt to return. Some big names also entered the direct sales market during this period. Leading UK foodservice wholesaler Bidfood launched ‘Bidfood at home’, a UK-wide click&collect and home delivery service. This new service provides access to over 3,000 lines of Bidfood’s extensive range of food, drinks and non-food supplies direct to the public.

When we first went into lockdown, Bidfood quickly pivoted from only providing services to businesses. We extended our offering to the general public struggling to access their usual food shops. Following this initial success, our permanent home delivery platform launched in November 2020. As shopping habits continue to evolve, the new platform will support shoppers around the UK to get the supplies their families need direct to their homes.
Britta Ashu, Head of Digital Marketing at Bidfood UK

The continuation of direct sales by smaller businesses, and the fact that larger players also saw opportunities, suggest growth may continue. Indeed, a survey of recipients of funding from the Rapid Response Grants Programme suggested that business models may have been permanently altered. 82% of respondents said they planned to continue their diversified business models and direct sales beyond the pandemic. What may have begun as a lifeline could well be a lasting legacy of Covid-19 in the UK seafood sector.

Read more about Covid-19 impacts from October to December

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