EXPORT OF SEAFOODS FROM INDIA TO EU

ABSTRACT

The aim of the project was to enhance product quality approach was employed to learn export

performance dynamics of Indian seafood (shrimps and cephalopods) in the major export

destinations (EU, USA and select Asian countries), which accounts for a sizeable market for

Indian seafood. The Constant Market Share model was used to disintegrate the growth in exports

of seafood into market size effect, market composition effect and competitiveness effect. The

analysis was performed for the seafood exports for a span of 12 years from the year 2009 to the

year 2013, the period during which India had to face severe challenges from evolving in the EU

and USA. The analysis was extended to account for the competitiveness at disaggregated

commodity level. In the present study we observed enhanced competitiveness in the case of

cephalopods while shrimp exports were less competitive. To a certain extent it shows

that trade facilitating as well as trade restricting effects can coexist as an impact of strict food

safety regulations.

INDEX

1. INTRODUCTIONImportant abbreviationsObjective of studyResearch methodologyScope of studyLimitation of study

2. INTRODUCTION TO SEAFOOD INDUSTRYAn overview of Indian seafood export sectorEuropean regulationsSWOT Analysis of seafood industry

3. OVERVIEW OF EU SEAFOOD INDUSTRY

Seafood industry in EU

4. DISTRIBUTION SYSTEM OF SEAFOOD INDUSTRY

5. SUPPLY CHAIN ANALYSIS OF SEAFOOD INDUSTRY

6. CONCLUSION

IMPORTANT ABBREVIATIONS

ACRONYM EXPLANATION

AH — Animal Health ARMP — Aquaculture Residue Monitoring Programme BIP — Border Inspection Post CA — Competent Authority CCA — Central Competent Authority EC — European Commission EU — European Union FAO — Food and Agriculture Organization of the United Nations FP — Fish and fishery products FVO — Food and Veterinary Office HACCP — Hazard Analysis and Critical Control Point (System) ITC — International Trade Centre NPC — National Control Plan

PH — Public Health RASFF — Rapid Alert System for Food and Feed SPS — Sanitary and Phytosanitary (measures) TRTA — Trade-Related Technical Assistance UNCTAD — United Nations Conference on Trade and Development WTO — World Trade Organization

OBJECTIVE OF STUDY:

To study the Sea Food supply and exports to EU market.

To identify the scope and future of Indian Sea Food products in EU market.

To explore and suggest required initiatives for evolving new business

opportunities in EU market for Indian seafood products in a wide range.

To know about the export process of seafood industry.

RESEARCH METHODOLOGY:

The data for this project, which was about Exports of SEAFOODS from India to

EU, is only a secondary data.

Primary data collection:

E-mail Telephone

Secondary data collection:

Internet Websites Department of Fisheries and Aquaculture (DFA)

SCOPE OF STUDY:

The scope of the study is limited to EU only.

LIMITATION OF STUDY:

Duration of the study was limited; therefore the time is limited so not able to make a

more detailed survey.

Data is collected only for the years of 2011-2012, in particular exports to EU.

Introduction to Indian Sea Food Industry:

Capture fisheries is intended for catching fishes, prawns, lobsters, crabs, mollusks etc. India is endowed with vast and varied aquatic resources (Marine and Inland) amenable for capture fisheries. India is the third largest producer of fish and second largest producer of inland fish in the world. The fisheries sector provides employment to over 11 million people engaged fully, partially or in subsidiary activities pertaining to the sector, with an equally impressive segment of the population engaged in ancillary activities. Potential of fish production from marine and inland sources has been estimated at 3.9 million tones and 4.5 million tones, respectively.

Inland Capture Fisheries

Inland resources comprises of rivers and canals, estuaries, floodplains, wetlands, lagoons and reservoirs. While the marine water bodies are used mainly for capture fisheries resources, the inland water bodies are widely used both for culture and capture fisheries. Inland capture fisheries of India have an important place; it contributes to about 30% of the total fish production. The large network of inland water masses provides great potential for economic capture fishery.

Marine Capture Fisheries

The capture marine fishery resource of India comprises of a long coastline (8118 kms.) and Exclusive Economic Zone (EEZ) (2.025 sq. kms). Marine capture fisheries play a vital role in India’s economy, providing employment and income to nearly two million people. The marine fishing fleet is estimated to be 280491 nos., consisting of traditional crafts (181284 nos.), motorized traditional craft (44578 nos.) and mechanized boats (53684 nos.). In the total marine fish production, the share of traditional, motorized and mechanized sector is estimated at 9%, 26% and 65% respectively. Coastal resources up to 100 m depth are subject to intensive fishing pressure and is exploited at levels close to or exceeding optimum sustainable limit. While the inshore waters have been almost exploited to the Maximum Sustainable Yield (MSY) levels, the contribution from the deep sea has been insignificant, hitherto directed at shrimps only. Having almost reached a plateau in production from the coastal waters, the scope for increasing fish production from marine sources now lies in the deep sea. Of the many options to harness deep-sea fishery resources, diversification of the existing deep sea fishing fleet and introduction of resource specific vessels for long lining, purse seining and squid jigging is catching more attention.

Capture Fisheries in Kerala

Kerala has a coastline of 590 kms, EEZ of 147740 sq. kms and continental shelf of 39139 kms. The fishermen population

An Overview of Indian Seafood Export Sector

India is the second largest producer of fish in the world with a share of 50.43% of total world fish production.

Marine exports from India reached 6.12 lakhs MT in quantity and Rs. 8,363 cores in value during 20012-13. Frozen shrimp accounted for 22% of the total quantity and 54% of total value of exported marine products.

The European Union (EU), United States (US) and Japan import a major proportion of India's exports in terms of value, at a level of 33%, 16% and 16% respectively. Frozen shrimp continued to be the largest item exported in terms of value with 54% of the total value of export.

The modernization of Indian seafood industry is inextricably linked to the growth of shrimp export trade, which in turn is closely related to trade liberalization.

Subsidies and other assistance play a crucial catalytic role in the development of the export sector, although the quantum of assistance declined subsequently as private sector took over the activities.

Promoting the sea as an open access resource has been an important subsidy in the modernization period and other direct subsidies encouraged entry of outsiders and private.

Exports have come to account for a quarter of the contribution of fisheries to the Gross Domestic Product (GDP).Culture shrimp contributes four-fifths of the total shrimp exports, which is mainly because of the decline in marine catches than from increased production from culture sources.

The emphasis on production is not supplemented by developing adequate infrastructure facilities to support them; the availability and quality of infrastructure remains insufficient.

The growth of shrimp trade brought a number of new intermediaries into the market chain along with a complex range of trade relationships. It also necessitated entry of private capital and informal credit into the fisheries sector in a big way and led to overcapitalization of fishing activities in due course.

Since 1990s, three issues dominated Indian export scene: decline in overall catches, particularly shrimp; fluctuations in international markets depressing prices and profitability; and overcapitalization of the production and marketing activities increasing risk.

Sanitary and Phytosanitary Measures and Technical Barriers to Trade of Fish and Fish products:

International trade in fish and fishery products has grown rapidly over the last two decades. The share of developing countries' has risen from 40% to 50%, and their net receipts increased from under US$4 billion to almost US$18 billion.

Increasingly complex requirements for food safety assurance and traceability set by major markets, particularly in the EU and North America, represent a threat to existing exporters and a ‘barrier' to new entrants. Increasingly stringent quality standards create a bias in favor of countries with a highly developed infrastructure and larger suppliers with greater resources.

The EU food industry has created standards on grounds of food safety assurance, environmental management and social welfare issues. Major importing countries are tightening their food safety legislation and demanding the adoption by exporting countries of agreed inspection, examination and certification procedures. These various measures can be viewed as non-tariff barriers (NTB) to trade and are becoming more restrictive.

As tariffs are reduced, alternative forms of protection might be utilized, including arbitrary technical barriers and sanitary and phytosanitary measures.

The Uruguay Round Agreement on the Application of Sanitary and Phytosanitary Measures (the SPS Agreement) and the Agreement on Technical Barriers to Trade (TBT) adopted by WTO members in 1995 have given a new direction to the international food trade. These agreements are intended to ensure that requirements such as quality, labeling and methods of analysis applied to internationally traded goods are not misleading to the consumer or discriminate in favor of domestic producers or goods of different origin.

The SPS agreement was set up to avoid sanitary standards being used as an unjustified barrier to trade by importing countries. The agreement stresses that SPS measures should be scientifically based as well as the importance of risk assessment in determining the appropriate levels of SPS measures.

Of crucial importance are transparency in the development and implementation of measures and the adoption of international standards. The SPS agreement gives status and legal force to the standards set by the Codex Alimentarius Commission. The Codex Alimentarius – or food code – was created in 1963 by FAO and WHO to develop food standards and guidelines and has become a global reference point for consumers, food producers and processors, national food control agencies and the international food trade.

The SPS Agreement applies only to measures covering food safety, animal and plant life and human health. Other technical measures outside this area come within the scope of the TBT Agreement. The SPS and TBT Agreements are thus complementary and mutually reinforcing.

The TBT agreement tries to balance the trade facilitating aspects of standards against their trade-distorting potential by obligating countries to ensure that technical regulations and standards,

including packaging, marking and labeling requirements and procedures for assessment of conformity with technical regulations and standards, do not create unnecessary obstacles to international trade or discriminate in favor of domestic producers or goods of different Origins.

European Regulations:

European Union standards are enforced and regulated at the country level and thus a restriction of exports to the EU under the regulations affects all members of the export community.

A country has to be licensed to export to the EU, and then each individual exporting company has to apply to the ‘competent authority' within the exporting country for permission to do so. The main directive was published in 1991 (91/493/EEC – ‘Laying down the health conditions for the production and the placing on the market of fishery products').

EU legislation for all food products is being brought under one directive and the scope is being extended to all aspects of the supply chain from ‘farm to fork'. All the steps in the chain from primary producers (fishermen and aquaculture units) will need to take on board, in a more structured manner, the principles of Hazard Analysis Critical Control Point (HACCP) systems and other quality assurance needs thus broadening the scope of the competent authority in regulating the industry.

The EU is the only one of the three principal importers to use safeguard measures on fishery products. The EU uses two types of measures:

Safeguard clause, i.e. quota tariffs to support the fish-processing sector.

Reference price system to stop imports undermining domestic prices.

SWOT ANALYSIS OF INDIAN SEAFOOD INDUSTRY:

Strengths

• Vast Fisheries resources in India • Second largest fish producer in the

world• Ranks second in aquaculture

Production• 3.41% of marine and 9.42 % of inland

world fish production • Source of livelihood for 14.48 million• Contribution of nearly 0.8% of GDP

and 4.4% of Agriculture GDP• Potential Source of Food and

nutritional Security.• Tool for Poverty alleviation and

women empowerment.• About 11 fold increase in fish

production (0.752 mt in 1950-51 to 8.67 mt in 2011-12)

• Seafood exports reached a record high of Rs.18, 856 crore ($3.5 billion) in fiscal year 2012-13.

• Contributing about 17% of national agriculture export.

Weakness

• Post harvest losses are estimated worth over Rs.15,000 Crores (both Marine and Inland) which is about 25% of the total Indian marine and Inland Industry which is worth of over Rs.61,000Crore

• Low value addition and fish processing. There are no organized and coherent efforts in the country to formulate and implement policies for the processed fish/fishery products for domestic markets.

• Yield gap in fisheries resources particularly in reservoir fisheries. Average yields reduced to 1,000 kg/ ha where as potential is 3-4 thousand kgs / hectare

• Fish stocks in India's territorial deep-sea waters also remain untapped owing to the dearth of suitable fishing vessels

Threat• The marine fish catch is stagnating

due to uncontrolled fishing and over exploitation of coastal resources.

• Climate change and other factors are leading to decrease in marine fish catches and the climate change is also having impact on inland fisheries

• The Indian retail departmental stores is already having ready to eat imported processed fishery products such as canned Tuna, Salmon etc. If India is not geared to meet the international competition there is increased threat from such products flooding the Indian markets.

Opportunities• The potential yield of the Indian

Exclusive Economic Zone (EEZ) has been revalidated as 4.41 million tonnes

• Fisheries and aqua-culture provide for diversification as well as value addition in farming practices. Due to value addition, fish farmers and fishermen across the country will receive remunerative prices for their produce.

• In case of aqua-culture, scope exists for bringing more fish species with a focus on food fish, ornamental species and those with potentials for sport and tourism

Destination wise exports of seafood:

OVERVIEW OF EU:

The EU has established a single market across the territory of all its members. 17 member states have also joined a monetary union known as the euro zone, which uses the Euro as a single currency. In 2012, the EU had a combined GDP of 16.073 trillion international dollars, a 20% share of the global gross domestic product (in terms of purchasing power parity). According to Credit Suisse Global Wealth Report 2012 (September), the EU owns the largest net wealth in the world; it is estimated to equal 30% of the $223 trillion global wealth.Of the top 500 largest corporations measured by revenue (Fortune Global 500 in 2010), 161 have their headquarters in the EU.  In 2007, unemployment in the EU stood at 7%. while investment was at 21.4% of GDP, inflation at 2.2%, and current account balance at −0.9% of GDP (i.e., slightly more import than export). In 2012, unemployment in the EU stood, per August 2012, at 11.4%.There is a significant variance for GDP (PPP) per capita within individual EU states, these ranges from €11,300 to €69,800 (about US$15,700 to US$97,000). The difference between the richest and poorest regions (271 NUTS-2 regions of the Nomenclature of Territorial Units for Statistics) ranged, in 2009, from 27% of the EU27 average in the region of Severozapaden in Bulgaria, to 332% of the average in Inner London in the United Kingdom. On the high end, Inner London has €78,000 PPP per capita, Luxembourg €62,500, and Bruxelles-Cap €52,500, while the poorest regions, are Severozapaden with €6,400 PPP per capita, Nord-Est. with €6,900 PPP per capita, Severen tsentralen with €6,900 and Yuzhen tsentralen with €7,200. Structural Funds and Cohesion Funds are supporting the development of underdeveloped regions of the EU. Such regions are primarily located in the states of central and southern Europe. Several funds provide emergency aid, support for candidate members to transform their country to conform to the EU's standard (Phare,ISPA, and SAPARD), and support to the former USSR Commonwealth of Independent States (TACIS). TACIS has now become part of the worldwide Europe Aid programme. EU research and technological framework programmes sponsor research conducted by consortia from all EU members to work towards a single European Research Area.

SEAFOOD INDUSTRY IN EU:

France

France is a major market for seafood, with one of the highest levels of per capita seafood consumption in Europe (34 kg per year), a population of more than 65 million, and domestic production well below consumption.  France imported more nearly US$5.3 billion (up 11% over 2010) and 828,339 MT (down 1%) of seafood in 2011.  The United States, with a 4.4% market share and exports of fishery products, up 21% over the prior year, was the seventh largest supplier, and leading extra-EU supplier, during 2011 - after the United Kingdom, Sweden, Denmark, The Netherlands, Belgium, and Spain.  The U.S. ranked as third largest supplier (after the UK and Spain) and was the leading extra-EU supplier of Food Export-Northeast benchmark, same or market-same, seafood products during 2011 with a market share of 8.7% (up 21% over 2010).   French seafood consumption is annually about 22.4 kilos/person for fish products and 11.5 kilos/person for shellfish and crustaceans. About 73% of French seafood consumption takes place at home and about 27% of seafood is consumed through the HRI sector. 

In 2012, U.S. seafood exports to France were US$154.4 million (down 17%) and 28,446 MT (down 22%).  Food Export-Northeast benchmark seafood products accounted for nearly US$83 million and 54% of the total value of U.S. seafood products imported. Scallops (at US$45 million, down 12%) and American lobster (at US$30.4 million, down 3.5%) were the top two leading U.S. seafood products

sold into France.  U.S. exports of dogfish were almost US$3.5 million (down 42%) and sales of squid (up 30%) and monkfish (up 7%) each totaled US$2million.   

According to FAS/Paris, in 2011, the overall retail food sales in France were valued at US$323.6 billion, a 3% increase over 2010, due to price increases. Of this, it is estimated that US$7 billion consisted of fish and seafood products.  According to Euromonitor, the volume of fish and seafood sold declined by 4% in 2011 to total volume of 332,800 tonnes.

High retail prices continue to negatively impact overall consumption of fish and seafood, leading to a further volume sales decline in 2011.  Overall, consumption of fish and seafood was impacted by a growing demand for convenience. Consumers sought fish that was easy to cook and good for health. However, the lack of natural resources, partly driven by a rising consumption of fish and seafood in France, resulted in more imports with an impact on retail prices. As a result, the fragile economic climate led consumers to opt for other products at lower retail prices, which resulted in a total volume decline for fish and seafood in 2011.Volume sales of fresh fish declined by 5%. High retail prices negatively affected consumption of molluscs and cephalopods. Sales of oysters were particularly affected.

The consumer foodservice sector is fragmented, with independent domestic operators dominating outlets and sales. According to trade source estimates obtained by FAS/Paris, in 1960 only 4% of the consumers had meals away from home, the rate grew to 14% in 2000, and the percentage should reach 20% in 2020. Overall sales in the hotel, restaurant and institution (HRI) sector have steadily grown, rising from US$85.8 billion in 2004 to US$119.2 billion in 2009.  In 2009, sales totaled US$23.6 billion with circa 4.8 billion meals served. The import market size for fish and seafood, in 2009, was estimated at US$4.2 billion. The U.K., Norway, Spain, Denmark, Netherlands and the USA were major suppliers.

Product promotions play a big role in both the retail and HRI trade sectors.  Retailers may have their own specialized quality seal and labeling programs.  Both the retail and HRI sectors may require introductory, or periodic, product promotion support from suppliers.  Sustainability of wild fish stocks remained a key growth driver for sales of fish and seafood in 2012. Public awareness of endangered fish species was heightened by publicity campaigns conducted by organizations such as the World Ocean Network.  The foodservice industry, particularly hotels and restaurants, were influenced by these campaigns, which increased their offerings of seasonal fish and seafood on menus. Consumer purchasing patterns are expected to

become increasingly oriented towards sustainably-managed seafood supplies within retail as well as foodservice.

Scallops remain the most consumed shellfish, due in large part to consumer awareness that they are packed with a variety of nutrients such as Vitamin B12, Omega 3 fatty acids and magnesium - which are considered good for cardiovascular health.  France is second only to the U.S. as a consumer of scallops.  Traditionally, scallops were considered festive products in France that were principally consumed in December. However, the increasing availability of frozen products (particularly from the northeastern U.S.) on the French market has substantially contributed to making scallop consumption more regular throughout the year.  In general, the larger the scallop, then the higher the price and only a few species can reach a large size, namely the Pecten maximus scallop (from the Eastern Atlantic) and Placopecten magellanicus (the species fished in the north Atlantic U.S. and Canada).  The market for scallops is segmented into: graded products for processing; frozen products (with, or without, roe) for foodservice and the retail sector; and fresh products for restaurants, street vendors and specialized seafood shops. 

In 2012, the French seafood agency FranceAgriMer launched a nationwide media campaign to encourage French shoppers to support the country’s scallop industry by increasing their consumption of the native scallop species. France annually consumes 25% of the world's scallop production and it is estimated that French demand for scallops is growing at the rate 5% each year.  France is a net importer of scallops, as domestic production is significantly lower than consumption.  The United States has quickly risen to become one of the largest suppliers of scallops to France.  The bulk of U.S. scallop exports to France were originally frozen, but quantities of fresh scallops have steadily increased to now make up about 50% of exports. U.S. scallops compete with Peruvian, Chilean, Argentinean and Canadian products.

American lobster was the second leading U.S. seafood product sold to France in 2012. U.S. exports of American lobster to France were valued at US$30.4 million (down 3.5% in value and up 6% in volume). Increased harvests of American lobster in 2012 resulted in decreased pricing, which accounts for the decrease in overall export value. It is interesting to note that lower prices had the positive effect of spurring an increase in overall purchases.  Lobster is considered a luxury product in France that is primarily consumed through the HRI sector.  It is also considered a festive product with consumer demand highest during the December holidays.  Canadian American lobster and U.S. American lobster compete for

French market share.  North American Homarus lobsters are very price-competitive compared to the European Homarus species harvested in France, the UK and Ireland.  The U.S. is the leading supplier of live lobster and Canada is the leading supplier of frozen lobster (though some Canadian frozen lobster is actually also U.S.-origin lobster).  The U.S. is the leading supplier of lobster to France, competing primarily with the UK, Canada and Ireland.

Italy

Italy is the third-largest economy in the euro-zone and a major consumer of seafood. With a large population of 61 million and per capita seafood consumption of nearly 26 kg, Italy is the world’s fifth largest importer of seafood. In 2011, Italy imported US$4.9 billion (up 15% over 2010) and 736,877 MT of seafood (up 1%). Due to decreases in local production, Italy increasingly relies on imports to meet seafood demand.  EU countries supply the bulk of imported seafood (with Spain as the primary supplier). Leading extra-EU suppliers during 2011 were Thailand, Vietnam, Argentina, Ecuador and India.  The U.S. ranked as 17th largest supplier with a market share of 1.7%.  Sales of U.S. fishery products were up 10%.  The U.S. ranked as seventh largest supplier and fourth largest extra-EU supplier of Food Export-Northeast UES benchmark, same or market-same, seafood products during 2011 with a 4% market share and sales up 11.45% over the year before. 

U.S. seafood exports to Italy were US$80.5 million in 2012 (down 9% from 2011) and 11,709 MT (up 3%); with Food Export-Northeast benchmark seafood products accounting for US$57.4 million, or 71% of the total value.  Lobster (valued at US$53.4 million and down 15% from 2011) and squid (valued at US$2.4 million and down 21%) were leading seafood exports from the northeast U.S.  American lobster competes heavily with prawns and rock/spiny lobster, while main competitors for squid are: other EU countries, South Africa, Thailand, India, Vietnam, Tunisia, the Falkland Islands, Morocco, China, India and Mauritania.

According to FAS/Rome, Italian seafood consumption has increased by more than 50% since 1988 and further growth is expected over the long-term.  Improved logistics and the development of multiple retailers has been a major factor in increasing seafood consumption.  Fresh seafood constitutes 53% of total seafood consumption, canned 20%, frozen portioned 15%, frozen bulk 8% and dried/smoked/salted 4%.

Euromonitor reports that in the short- to medium-term view, the outlook for fish and seafood is mixed.  Fresh fish consumption is expected to decline due to the difficult economic climate and resulting consumer price sensitivity in relation to the relatively high price of fish compared with meat. In the longer term, recovery is expected, as the economy stabilizes and the health trend boosts sales of fresh fish.

Seafood consumption is usually linked to the out-of-home eating experience and is still considered by the majority of consumers as an occasional treat, especially in the case of shellfish. The Italian government has successfully increased at-home seafood consumption through a number of promotional campaigns aimed at increasing consumers’ awareness of the health benefits of seafood. Consumers favor sea bass, cod, sole and salmon for at-home consumption but prefer monkfish, squid, octopus and lobster when dining out.

The HRI sector is the largest outlet for seafood consumption.  According to FAS/Rome, Italy’s HRI industry is lucrative and growing, second only to that of the United States. More than 94 million tourists visit Italy each year, making it the world’s fourth most attractive tourist destination. The HRI sector is diverse and fragmented, dominated by many small establishments. Only 6% of 130,000 facilities belong to foreign investors. Italy is slowly moving toward trends and lifestyles seen in other European countries. The foodservice industry is benefiting from one of these trends: with more workers unable to return home for a midday meal, increasing numbers are eating out for lunch as well for the evening meal.

Most imported food products enter the Italian market through brokers or specialized traders. Price is an increasingly important basis for import purchase decisions, although quality and novelty do move some products. Imported products from North America often enter Italy indirectly from the Netherlands' Port of Rotterdam or directly via air. Wholesalers are the main customers for fish and seafood products, as they purchase and distribute products to consumers through supermarkets, hypermarkets, local fish shops, restaurants, and fishmongers and fish processors. In Italy, there are over 1000 fish wholesalers--100 of which are considered to be importers. FAS/Rome reports that unlike other European nations, the Italian retail sector has been resistant to change, as consolidation remains low and traditional grocery stores (so-called Mom and Pop stores) continue to represent the largest segment of the food retail sector, followed by open-air markets. Nonetheless, consolidation is slowly gaining momentum.

HRI establishments source products independently.  Most of the processed food and raw material sourcing decisions are made directly by the restaurant chef and/or

hotel food purchasing director. High-end restaurants are very receptive to U.S. lobster and squid. Catering demand for U.S. live lobster is strong due to its reasonable price.  The higher-priced spiny lobster is still considered a luxury product with peak consumption limited to upper-class restaurants on special occasions.  Squid has a high level of consumption throughout the country; especially during the summer holiday period. U.S. squid has been facing tough competition in recent years from other countries that have the competitive advantages of lower production costs and duty-free status.

With a resident population of 47 million and normal seafood consumption at about 37.3 kilos per capita, Spain ranks as the world's third largest consumer of seafood products.  Annual total fish harvests continue to decline as a result of decreasing fish stocks and tighter catch quotas in both EU and non-EU waters.  Spain imported nearly 1.4 million MT of seafood at a value of nearly US$6.5 billion in 2011.   Extra-EU countries are substantial suppliers (with much of this being squid). Leading suppliers in 2011 were: Morocco; Argentina; China; France; Portugal; The Netherlands; and the UK. The U.S. ranked as the 18th largest supplier and 11th leading extra-EU supplier. Overall U.S. market share for sales of fishery products was 2%.  With a 4% market share, the U.S. ranked as 10th largest supplier and 6th largest extra-EU supplier of Food Export-Northeast UES benchmark, same or market-same, seafood products during 2011.

Spain

With a resident population of 47 million and normal seafood consumption at about 37.3 kilos per capita, Spain ranks as the world's third largest consumer of seafood products. Annual total fish harvests continue to decline as a result of decreasing fish stocks and tighter catch quotas in both EU and non-EU waters. Spain imported nearly 1.4 million MT of seafood at a value of nearly US$6.5 billion in 2011. Extra-EU countries are substantial suppliers (with much of this being squid). Leading suppliers in 2011 were: Morocco; Argentina; China; France; Portugal; The Netherlands; and the UK. The U.S. ranked as the 18th largest supplier and 11th leading extra-EU supplier. Overall U.S. market share for sales of fishery products was 2%. With a 4% market share, the U.S. ranked as 10th largest supplier and 6th largest extra-EU supplier of Food Export-Northeast UES benchmark, same or market-same, seafood products during 2011

U.S. seafood exports to Spain were US$137 million in 2012 (up 2% in value from 2011) and 32,854 MT (down 12%); with benchmark products accounting for

US$56.6 million and 41% of the total value.  Lobster (at US$48 million and down 11% in value from the year before) was the leading U.S. seafood export. Surimi (at US$23.6 million, up 12%), cod (at US$21 million, up 26%) and hake (at US$9.5 million, up 150%) were other leading U.S. exports. U.S. squid exports were valued at nearly US$4.8 million (down 59%) and scallops were valued at US$3.6 million (up 34%).

American lobster is the leading U.S. seafood export to Spain.  While all varieties of shellfish enjoy seasonal high demand during the Christmas holiday period, lobster leads – traditionally boiled and served with homemade mayonnaise. About 95% is imported with 70% of the supply coming from the U.S. and Canada.  Live (Homarus) lobster is also used as an ingredient in more expensive restaurant paellas and increasingly for special occasions, such as wedding banquets.  U.S. American lobster competes directly with Canadian American lobster for market share, as well as with local and foreign supplies of rock/spiny lobster. Spain continues to offer good possibilities for exports of live U.S. lobsters, especially for affluent, urban consumers. 

Spain will exhibit growing demand for squid.  Imports already account for nearly 90% of Spain’s total supply and the local catch is expected to decline further in coming years.  The main competition to U.S. squid comes from well-established squid suppliers including: other EU countries, India, the Falkland Islands, China, and Morocco.   Most of the trade is handled by frozen food processors, who also organize their own distribution.

According to Spain's Ministry of Agriculture, Food and the Environment, Spanish households spent EUR€9001.4 million on fish products in 2011 compared to EUR€8750.4 million the year before. Spainards purchase 82% of the seafood they consume at retail and 18% through the HRI sector.   According to Euromonitor, about 20% of the Spanish consumer budget is devoted to food compared to 13% in the U.S.   Food has a leading place in Spanish household budgets, and is third highest in Europe for household budgets devoted to food, after Italy and Portugal.    Spain is also second in Europe in terms of percentage of income spent on restaurants and cafés - at 8.4% of the total budget.  

The average consumer profile is a person over 50, who is financially stable and with middle-aged or older children, or rather couples without children, or retired people.  Although they do not consume much fish, young people living away from home have increased their purchasing of this food the most with a rise of 6.6% between October 2011 and 2012.  Fish and seafood consumption also differs

greatly across the country, with coastal regions in northern Spain leading per capita consumption, with special mention to Asturias and Cantabria. Regions with a higher percentage of elderly population such as Castilla y Leon, despite being inland, also rank high in per capita consumption.

Figures released by Spain’s fisheries ministry, in September 2012, reveal something of a dichotomy: while overall household fish consumption levels were down 0.7%, there was a 2.1% increase in spending over the period June 2011 to June 2012.   Fresh seafood, shellfish and crustacean suppliers saw demand grow by 3.2% over the period, while demand for canned seafood was also up 2%.

Spain remains one of the largest per capita fish and seafood consumers among EU member countries. Spaniards eat fish and seafood regularly – often several times a week – and many traditional and celebratory dishes include fish ingredients, for example paella. According to Euromonitor, consumption of fish and seafood products declined by 2% in 2011 to 1.3 million tones. Consumption of molluscs and cephalopods dropped by 6%.  Consumption of crustaceans also declined, but only by 1%. The ongoing economic crisis and high unemployment levels have changed Spaniards’ eating habits, especially harming consumption of pricey products such as seafood.

In 2011, fish outperformed other fish and seafood categories with consumption down by less than 1%. This contrasts with the slump witnessed in meat consumption, which declined by 4% in 2011. Within fresh fish, consumption of fresh items is declining in favor of raw frozen fish products. Raw frozen fish is gaining popularity due to its lower price, but also driven by the Spaniards’ increasing concern about raw-fish-related diseases (and parasities such as the anisakis worm) which can be easily killed or prevented by flash freezing fresh caught fish before sale. Fish landings in coastal regions are declining throughout Spain, being replaced by long-distance fishing, with catches usually cut and frozen on board.  Leading supermarket and hypermarket chains such as Mercadona have played a key role boosting consumption of raw frozen fish in Spain in recent years.

In the retail sector the number of outlets continues to decrease as consolidation increases.  Five distribution groups now dominate more than half of total retail sales.  Traditional fishmongers continue to be the main retail distribution chain for fresh seafood, accounting for nearly half of all sales; supermarkets take 40% and hypermarkets share the rest.  Fresh food products, including seafood, are also distributed through a network of 22 "MERCAs" (public wholesale markets).

3. Distribution system of seafood industry:

Production:

Formally the fisheries sector which comprises 1,410 registered fishers and 1,821 fishing boats while the total fish production is approximately 1,600 Mt. The gross annual revenue generated by the various types of fishing activities(excluding the sport fishery) is estimated at Rs 174 Million on the basis of a mean producer sale price of Rs 109/ kg.It represents an annual income of Rs 123,688 per registered fisher (Rs 10,307 per month). The tendency to err on the side of short term economic needs of fishers instead of long term conservation or sustainability has led to further over exploitation and depletion of the coastal fishery resources. There must be no compromise whatsoever on doing away with open access/and property rights and laissez faire in coastal marine fisheries.

Given that a fishing boat carries 3 to 4 fishing crew, there are potentially 5,823 active fishers (including 330 on-foot fishers mostly fisherwomen) in the sector. Therefore the net annual income of a fisher operating in the lagoon can fall as low as Rs 29,950, meaning that approximately Rs 132 million (75 %) of the gross income does not benefit the registered fishers. An additional production of approximately 3,200 Mt of fresh fish would be necessary to accommodate 5,823 fishers with a mean annual income of Rs 90,000 on the basis of a minimum household income of Rs 7,500 per month.

Fisheries expansion is plausible off-lagoon and high seas around. It is indicated that 70% of highs seas fish resources in the Western Indian Ocean are unknown or unexplored. The FAD fishery can potentially yield 1000Mt of tuna and large pelagic annually on the basis of 60 Mt per FAD. It is proposed to chart out a performance based fisheries development plan with a targeted increase in marine fish production of 5,000 Mt in the short and medium terms. Development initiatives of RGF off-lagoon HL fishing fleet and the IFAD-MARS extended artisanal fishing fleet have to be supported by an enabling environment at all levels.

Fisheries statistics are not reliable due to an out-dated sampling, data collection and processing system in addition to a shortage of human and technical resources at the FRTU. Apparently the actual production is much higher, since the 2005 Annual Fisheries Bulletin has not been published. Administrative records

maintained by the FPS on registered fishers, fishing boats and fishmongers have to be consolidated into a computerized data-base that can be useful for fisheries management purposes.

Marketing

In marketing, raw fish is considered as non-branded fast moving consumer product. Traditional fishing enterprises just sell their catch and do not “market” them. They must be trained in marketing to increase their revenue and to obtain fair share of the value added in the supply chain. The flow of market information is essential to promote a fair and transparent market mechanism. An increase in supply of raw fish may depress prices on the local markets due to the limited purchasing power of consumers. To enhance value chains of fresh/chilled fish it is important to develop export markets. Effective demand for high quality chilled fish in Mauritius arises from local markets for direct consumption and from the seafood hub’s processing for re-export.

Two major hurdles have to be removed in order to link local chilled fish value chains into the Mauritian seafood hub, namely cost effective transportation (sea and air) logistics and compliance to international sanitary and health standards and HACCP alignment. Reunion Island can also be targeted as a prospective market for raw fish and fish products.

Marketing infrastructure is virtually non-existent on the island. Raw fish is sold on the beach (at fish landing stations (FLS)) or on the roadside. There are no sheltered FLS that can be used for handling, sorting and grading of fish prior to sale. Simply by improving the landing facilities (better sorting and grading of raw fish by commercial category) can increase the revenue of a fishing enterprise by 5 to 10%.

Trends of Seafood &Fish:

Despite the economic crisis, European demand for shrimp is expected to remain stable in the near future. Food safety, sustainability and supply chain transparency are increasingly important requirements in the European shrimp market. In order to secure a supply of safe and sustainable shrimp products, European buyers are shortening the length of their supply chains and investing in long-term relationships. There is potential for you in the European market if you are able to meet with its food safety and sustainability requirements.

COMPETITORS OF SEAFOOD INDUSTRY (2012-13):

The competitive position of shrimp suppliers has drastically changed due to the global supply crisis those results from outbreaks of the Early Mortality Syndrome (EMS) among producers of P. Vannamei. As a result of the supply shortage that coincides with a continuing growing demand for shrimp in especially the Chinese market, supplier power is high as prices reach record heights. Prices in the market have doubled compared to the same period in the previous years and European buyers face difficulty to compete with US and Chinese buyers. Suppliers are currently in a very powerful position but the question is how long it will take till EMS is solved, supply recovers and even reaches higher levels than before the disease outbreaks.

FISH AND SEAFOOD INSIDE THE BUYERS:

The world market for fish and seafood products as it exists today is a seller’s market. This salient fact of current – and in all probability, future – economic life does not mean that DC suppliers can dismiss the demands and requirements of European buyers. Nor can they ignore the business, technological and legislative changes that are hitting the European fish market thick and fast. European buyers themselves do not have the luxury of ignoring all this. By and large they will work only with suppliers willing and able to understand their position and help with meeting the challenges they face. On the other side of these coin, most European buyers understand that the fish and seafood business, based as it is on a perishable natural product, is not amenable to a diktat. They are aware of many of the difficulties the European business, social and political environment places on developing countries that may not be in a robust position for dealing with them. The bottom line is that a little trust and reliability will go a long way – and a lot of trust and reliability will go even further.

REQUIREMENT OF SEAFOOD INDUSTY BUYERS:

Managements Buyer requirements can be divided into (1) musts, requirements you must meet in order to enter the market, such as legal requirements, (2) common requirements, which are those most of your competitors have already implemented, in other words, the ones you need to comply with in order to keep up with the market, and (3) niche market requirements for specific segments.Fishery mustsThe EU requirements for fishery products are strict. Food safety is a top priority, and this translates into a whole set of requirements you must meet in order to be allowed to export to the EU. Have your country and establishment been approved to export to the EU? That is the starting point. In order to prove that your health standards are up to par with the EU, your exports must be accompanied with a health certificate. In addition, you need a catch certificate to show that your fishing activities are not illegal.Hygiene requirements are also strict, these are linked with food health and safety, and your fishery products must be tested on e.g. contaminants and microbiological contamination.Common requirementsThe EU fish industry is confronted with the strict requirements set by law, and wants to prevent risks of placing products which do not meet the high standards on the market. To do so, many ask for food safety certification.Niche requirementsFinally, a niche market for eco-labeled fishery products is growing, especially in northern and western EU markets. The growth in these markets is expected to continue in coming years.

Food safety certification as extra guaranteeThe most commonly requested food safety certification schemes in the fishery sector, is IFS and/or BRC. Different market players may prefer one certification scheme above the other, for instance BRC has a larger share in the UK (originally a UK standard), but both schemes are recognized in several European markets and being certified against one of these schemes is important for entering the EU overall. In view of coverage, both schemes are based on HACCP and show several similarities. 

Eco-labeled fishery products are gaining market share in several European markets, mainly western and northern countries, including the Netherlands and Germany. In the southern and eastern markets of Europe, eco-labeling plays no major role. While the importance of eco-labeling is expected to increase in the coming years, this division between the European markets is expected to remain the same. For wild-caught fishery products, MSC is the major certification scheme, whereas the relatively new ASC is expected to become the most important certification scheme for aquaculture, according to industry representatives consulted by the CBI. 

Approved country and establishment: Your country must be on the list of EU-approved countries in order for you to export fish to the EU market. The approval is granted based on equivalence of public health and control systems, in other words, your country must be able to ensure that the fishery products exported meet the strict EU health requirements. If your country has been approved, it also has a competent authority in place which further approves establishments and factory vessels. That is part of the control system: your establishment must be approved in order for you to be able to export to the EU. Approved establishments receive a unique identification code, usually referred to as “EU number”. You can find a list of approved countries and establishments 

EXPORT & IMPORT INTELLIGENCE:

Exporting to Europe, an introductionThis export manual is a co-publication of CBI and SIPPO. It discusses:

Europe and its political structures EU and EFTA, its members, enlargement, its role in world trade and EU and EFTA trade rules and agreements.

Demographic, social and cultural developments in Europe and important trends in consumer and business to business markets.

Doing business in European markets; cultural differences, different forms of business etiquette and business practice.

Export Marketing Planner - A manual on how to enter European markets

This export manual provides information on the different steps to take during the export process to the EU market. Attention is paid to:

perception and preparation of a strategy of change research strategy development Operational management.

The Export Marketing Planner is fully integrated in the CBI’s on-line export marketing plan builder, an interactive tool available at the www.cbi.eu. The information contained in this manual is included as instruction text in the export marketing plan builder.Each chapter of this Export Marketing Planner has a ‘Fast Learner’ section. The aim of these sections is to help you quickly refresh your memory or to update your knowledge related to the issues in the chapter you’re working on. Familiarizing yourself with Fast Learners section will help you feel at home with the export

marketing planning work you are about to undertake and enable you to reach a high state of mental concentration on the subject matter.

Your expo coach - BSO editition

CBI's interactive export manual 'Your expo coach - BSO edition' will help you to manage trade fair participations effectively and efficiently. It is aimed at business support organizations involved in organizing collective participations in international trade fairs abroad. The manual contains loads of useful tips and checklists for the preparation, participation and follow-up of an exhibition.

CBI Import Intelligence: Seafood in Myanmar

Myanmar has a large potential as a seafood exporter. As a result of the political situation, in recent years trade has been focused on regional exports. However, the potential to supply other markets such as the EU and US is increasing. This factsheet provides you with import intelligence about seafood in Myanmar.

4. SUPPLY CHAIN ANALYSIS OF SEAFOOD INDUSTRY:

Retail Segment:Supermarkets/hypermarketsThe retail segment is dominated by a small number of large retail groups that own several supermarket chains. These retail groups have concentrated buyer organizations. It is estimated that Europe has approximately 600 different supermarket chains. Retailers such as Rewe in Germany operate different brands with different consumer target groups: Billa, BIPA, Marker and Penny. 

Fishmongers and specialty shops

Fishmongers are occupying an increasing niche within the European market. Their market share ranges from 30-50% in Spain to 10-20% in the UK. Fishmongers mostly position themselves as specialty shops and offer a wide range of products to their customers. In general, their range of products is more diverse than the range of products seen in large supermarkets. Fishmongers’ share of fresh products is greater than that for frozen products and is also greater in terms of European products than it is in terms of tropical seafood products. Fishmongers mostly purchase their tropical seafood products from specialist importers.

Street marketsStreet markets only have a small market share in Europe. Their market share remains significant only in some parts of Greece and Spain. In general, vendors at street markets sell locally caught fresh seafood products; in some cases, however, they also offer defrosted imported seafood products, which are imported in order to complement their product range.

Food Service Segment:

Full-service hotels and restaurantsHotels and restaurants account for a small but diverse part of the food service segment. There are highly exclusive restaurants that source from specialist importers and that have specific and frequently changing preferences. Seasonal availability and whole fresh fish are important to this group of companies. The more mainstream group of hotels and restaurants often has fewer specific preferences, preferring frozen and portioned products in bulk.

Fast food and takeaway chainsFast food and takeaway chains are a major sub-segment within the food service segment. This group of companies is very diverse and can range from small specialist takeaway chains to large fast food chains. Sourcing strategies and product preferences depend on the size of the company and whether it is positioned in the high-end, medium range or low-end division of the food service segment. 

Institutional market: universities, hospitals, etc.The institutional market delivers to universities, hospitals and canteens. Products are often frozen and portioned to make them suitable for quick preparation. The institutional market enjoys a significant share of the European market. They often source their products from the domestic processing industry or from large importers or wholesalers.

Retail Segment

The retail segment is defined as all shops selling products directly to consumers for the use of those products at home. The trends discussed here apply generally to all seafood products. There may be differences in the case of specific products. With regard to trends and market characteristics that are more product-specific, please consult the CBI Products Factsheets or Trend Mapping Reports.

TrendsIncreasing domination of supermarketsLarge supermarket chains dominate the retail channel segment with market shares for seafood products of up to 80% in northern and western Europe. Specialist stores and street markets have somewhat higher market shares in southern Europe (especially in Spain, Italy and Greece where market share is at around 50%). However, large retail chains in these countries are increasing their market share at the expense of fishmongers owing to the trend for one-stop shopping. Fishmongers in particular still play a role in the distribution of fresh products, while the supermarkets have even larger shares for frozen seafood. You should do market research about specific market access requirements for large supermarkets. You can obtain the bulk of this information from European importers or from purchase managers at European supermarkets.

Consolidation in the number of supermarket chainsthere are over 420,000 non-specialist food retail stores in Europe. Nevertheless, this market segment is increasingly dominated by a relatively small number of large retail chains with concentrated buyer organizations. It is estimated that approximately 220 larger supermarket chains are operating in the European market with almost 600 different supermarket stores. The largest retailers have turnovers of over €100 billion. The number of retailers is expected to decline still further in the future. Large retailers, such as Metro, are increasingly importing low and medium-value bulk products directly instead of relying on import companies. If you are able to offer high supply volumes, you should try approaching the buying agencies of large European retailers directly. 

Quality and sustainability focuslarge retail chains use strict quality and sustainability standards. They have strict delivery agreements about service, packaging, health and safety requirements. They impose significant penalties if agreements are not met.BRC or IFS certificates are a prerequisite for doing business with the premium retailers. Furthermore, northern and western European supermarkets in particular are increasingly committing themselves to selling sustainable seafood and, as a minimum requirement, are demanding Global GAP for cultured seafood and MSC for captured seafood. The Aquaculture Stewardship Council (ASC) is expected to be adopted in the near future as a new access requirement for many of the large retail chains with regard to cultured seafood. There is a variety of certification initiatives throughout Europe that grant access to specific niche markets (e.g. Naturland for organically produced seafood). 

Discounters’ promotionsSeveral European discounters, such as Aldi and Lidl, are increasingly employing promotional campaigns for products such as pangasius and tilapia. Discounters place advance bulk orders for special promotions. In general, sustainability requirements will be less than for the large high-end supermarket chains; however, quality standards such as BRC and IFS are still a prerequisite. Special promotions often require high product volumes at the lowest available price. These types of promotion are expected to continue occurring, especially with regard to low and medium-value aquaculture products. If you are able to offer high product volumes at a very low price while still being of good quality, this will present you with the opportunity of offering this directly to large European discounters.    

Trends in seafood market channels

Consumption patterns differ throughout Europethe market channels through which imported seafood reaches European consumers differ widely between the east, west, north and south of Europe. They depend mostly on seafood consumption habits. In southern Europe, seafood consumption levels are higher and consumption habits are more traditional than in northern and Western Europe. While the majority of southern Europeans know how to prepare fish, consumers in northern and Western Europe generally have less experience with fish and prefer portioned and ready-to-eat products. 

The role of agents in the supply chain is declining.Increasingly, buyers need to have more control over the quality of the product and, therefore, need to invest in direct relationships with suppliers and thus bypass agents more often. In some cases, however, depending on the product, agents will continue to keep their role as the facilitators of trading relationships between European buyers and developing country (DC) exporters. This is especially the case when services involving greater complexity are necessary, such as specific import requirements or when buyers need to source low volumes from many small-scale suppliers in order to consolidate supply (e.g. wild warm water shrimp). 

Direct sourcing by retailers and wholesalerslarge retailers and wholesalers (e.g. the Metro Group in Germany or Sligro in the Netherlands) are increasingly importing directly from DC exporters. This is particularly true of bulk products such as pangasius or tilapia. Lower volume products, such as yellow fin tuna or clams, often continue to be sourced through specialist trading importers. Compared with retailers, wholesalers more commonly source directly from DC exporters. One of the reasons for this is that, at present,

seafood products for the retail segment are repacked by importing wholesalers in Europe. However, it is anticipated over the long term that packaging for the retail segment will move towards supplier countries, while repacking activities in Europe will decline. 

Opportunities for joint venturesin general, importers in southern Europe are more willing to invest in processing and production activities in developing countries than importers in Western Europe. Only a few western European companies have factories or production centers outside Europe. Examples of European retailers that have their own factories outside Europe are Pescanova, Marine Harvest and Seafood. Smaller companies tend not to invest in joint ventures. However, while the European market is increasingly confronted with competition from emerging markets and supply is tight, European companies are increasingly interested in setting up joint ventures. 

Trading and processing importers / wholesalers

DefinitionAn intermediary engaged in importing and/or distributing goods in bulk. Trading importers only trade the product without processing it further themselves. Processing importers reprocess products before delivering to their customers. Processing importers generally deliver to higher market segments than trading importers. However, there are exceptions and there is an overlap between the two.

SuitabilityAn importer is often the recommended trade channel, as importers know the market and product specifications very well, have different types of customer – which lowers your risk – and, furthermore, add value (e.g. through pre-financing). There are two types of importer: general food importers and specialist fish importers. Trading with an importer is of interest if you have no direct contacts with the retail or food service segment, or if you can supply only low volumes of product. Several importers often share containers with seafood products or may import containers with mixed products.        Characteristics Familiar with the market and able to provide information, assistance and

guidance They acquire ownership of your products, which reduces your risk They handle import formalities

Able to provide pre-financing, especially larger importers They have an understanding of the product and market specifications Able to assist with sustainability issues and co-product development They often buy extensive product ranges Generally have longstanding relationships with buyers and suppliers; nowadays,

availability and quality are more important than price

Direct sourcing by retail and food service companies

Definitionwhere retailers and food service companies purchase direct from the exporter 

SuitabilityIf you can supply consistently high volumes at a competitive price while remaining able to comply with strict quality, food safety and sustainability requirements and already being familiar with the European market. The number of exporters bypassing European importers is increasing rapidly. 

Characteristics Various channels are available for market entry: food processing industry,

retailers, food service companies Gives you direct control Your margins are generally higher because of a shorter supply chain High up-front investment and on-going support costs High penalties in the event of non-compliance with contracts Compared with retailers in southern and eastern Europe, retailers in northern

and western Europe are more likely to buy directly from exporters If you are a small-scale exporter, targeting small-scale specialist retailers instead

of large retail companies may represent an opportunity. 

Agents:

DefinitionAgents can represent your company in a particular market or country, and they are usually in contact with potential buyers for your products. Agents may also work independently and act as contacts between your company and your buyers.

SuitabilityAgents are appropriate if you lack contacts in the market. Sometimes, agents will also work for European buyers seeking to buy directly from DC exporters. Agents

can also provide expertise on specific issues, such as export requirements for accessing the European market. 

Agent characteristics They establish contacts with overseas buyers They have a good knowledge of distribution channels/network; which means

that you do not need to have a lot of export experience They can act as a substitute for your own sales force They should be able to provide you with up-to-date market information, but this

has to be stated in the contract Their commission is generally between 2-3% An agent does not buy the product, so this leaves you with the full financial risk

while your margin decreases, because an agent works on the basis of commission. However, you save on your own marketing costs and pay only in the event of success.

Agents can be very difficult to bypass once engaged, because their position is protected under EU law.    

5. CONCLUSIONS:

The global seafood industry has been growing at a marginal but constant pace and, according to Global Industry Analysts, Inc., is expected to expand from a $400bn industry to about $430bn by 2018. Comprising companies of varying sizes with different business models, the industry is fragmented and diverse. The industry’s growth prospects are fundamentally strong and are dependent on the following factors:

• steady growth in global seafood consumption due to increasing health consciousness and rising living standards across geographies, alongside a growing population

• regulated wild catch supply, set at a sustainable and stable level of about 85–90 million metric tones per annum for the past 20 years

• Aquaculture to account for the majority of growth in future fish production. This is also driving the increase in demand for fish feed

• change in consumer tastes/preferences influencing the demand for processed fish products

To cater to the growing seafood demand, companies are finding inorganic ways to fuel their large-scale expansion globally and strengthen the supply base. These methods include growth in fish production, especially through aquaculture, extension of processing capabilities to create more value-added products, and improvement of the distribution network.

The integration of fish harvesting, processing and/or distribution activities into a single diversified entity is viewed by the seafood industry as an optimal business model. This is reflected in the ongoing consolidation in the industry across the value chain. The integrated business model is resilient to macroeconomic factors and capitalizes on the growth potential of the seafood industry.

Furthermore, the diverse nature of the sea-food industry is creating opportunities for seafood companies to take new strategic directions, such as:

• specialization in single seafood species/ value chain activities

• regional/global diversification

• adoption of an integrated business model

This diversified business strategy is also tempting financial investors who had previously only invested in aquaculture due to its cyclicality, biological assets and frequent changes in the business environment. Financial investments can act as a catalyst to fuel further consolidation within the seafood industry.