NSC Update as of 26th March 2020:
The Norwegian seafood industry is proving very adaptable in this situation. The most pressing challenges at present relate to the more or less complete loss of restaurant trade globally, something which is severely affecting some producers. It is also difficult to say how this crisis will affect future demand and logistics in this segment.
“Norwegian seafood exports have over several years been helped by a weak Norwegian currency. Nonetheless, the past weeks’ fall in oil prices and currency depreciation is extraordinary. Average currency rates for US dollar and Euro is down 27 and 22 percent respectively, compared to the same time last year. Even if we see a price increase for several products in NOK, there is a considerate fall in prices for most seafood products measured in US dollar and Euro,” says Paul T. Aandahl, seafood analyst at the Norwegian Seafood Council.
“There is increased uncertainty in consumers’ future purchasing power in several markets. We do not know exactly what consequences this will have, but it is likely to impact demand for Norwegian seafood. For example, during the global financial crisis the demand for salmon for home consumption increased, as less people dined out but rather wanted to enjoy good home cooked meals,” says Aandahl.
“In several of our most important export markets we have been told of episodes of supermarket hoarding and thus growth in retail sales. This growth is expected to slow as people eat the produce they have purchased. As the situation stands now, we can nonetheless expect that retail will remain strong, as people are eating at home rather in restaurants,” says Aandahl.
Salmon exports pivot to prepacked and processed products
In absolute volumes, there was a 3,6 percent decline in salmon exports in week 12. For fresh whole salmon the reduction was 8 percent, whilst fresh fillet exports increased by 28 percent. Frozen salmon fillet exports increased by 17 percent compared to the same week in 2019.
“The Norwegian seafood industry has proven itself agile and adaptable in the face of the current challenges and has turned their production towards more processed products. Whilst the export of fresh whole salmon to the EU has fallen by 6 percent in week 12, we see growth of 16 and 63 percent respectively to Poland and Lithuania. These are markets where Norwegian salmon are processed and smoked before being sold to European markets,” says Aandahl.
“Despite a sharp decline in the sales of Norwegian salmon to the restaurant segment in Asia, the total volumes of fresh whole salmon to Asia were almost the same as last year. This is primarily because of strong growth in the take-away segment and increased sales in retail. China had a decline of 17 percent compared with last year, however in South Korea exports have grown by 53 percent,” says Aandahl.
“To the US market, where transport capacity for fresh salmon was severely affected in week 12, fresh Norwegian salmon exports fell by 89 percent, whilst fresh fillet exports remained at the same level,” says Aandahl.
Cod exports: Fresh cod is down, increase for saltfish and clipfish
“As expected, we saw another week of lower fresh cod exports and fresh whole Skrei in week 12. The fall was 29 and 15 percent respectively compared to the same week in 2019. At the same time, there is significant growth in frozen whole cod and clipfish exports. Several markets report increased demand for products with longer sell-by dates, such as frozen products and clipfish. To Portugal we see large volume growth, particularly for saltfish and clipfish of cod. China is the largest buyer of frozen whole cod,” says Ingrid Kristine Pettersen, seafood analyst at the Norwegian Seafood Council.
"There is still a price growth in Norwegian kroner for all cod products, but both in Euro and US dollar there is a significant price drop, especially for fresh whole cod and Skrei," Pettersen says.
"We are now in a period of low exports of stockfish, so sales are less affected. At the same time, it is now the season to hang the fish for sale in the autumn and Norwegian stockfish producers are very dependent on exports to Italy and Nigeria. The current situation in Italy and Nigeria creates uncertainty around future demand. Nigeria has an oil-dependent economy, which will also affect the local currency and thus the purchasing power going forward. At the same time, there are reports of increased demand for products that can be stored, such as stockfish and clipfish," says Pettersen.
UK: retail growth but Fish & Chips struggles
"We have so far not received any feedback on logistical challenges into the UK or a decline in exports. In the grocery store where the majority of Norwegian fish are sold, we see seafood flying off the shelves and the producers locally report that they have had significant increases in sales, but that they are struggling to keep up with the increased demand. Cod, haddock and salmon sell well," says Hans Frode Kielland Asmyhr, the NSC’s UK director.
"The Fish & Chips industry is now to a large degree shutting up shop after new strict measures were introduced this week. Importers and distributors into this segment are affected by this and we are likely to see a fall in exports to this part of the market. The restaurant market is now also completely gone, which has consequences for Norwegian salmon and Norwegian fresh white fish," says Asmyhr.
"Given the current situation, we expect to see growth in the food delivery segment," says Asmyhr.
Germany: restaurants close and some delays in commodity flow
“Germany introduced stricter measures this week like in many other markets. The restaurant market is completely shut down, whilst take-away and food delivery remains open. Restrictions have also been imposed in grocery stores, with limitations on number of people in store at the same time and maximum number of products per person to avoid stockpiling,” says Gitte Hannemann Mollan, NSC country director in Germany.
"Currently it seems like there are close to normal volumes for fresh and frozen seafood sold in the German market. Much of fresh salmon is sold as pre-packaged products," says Mollan.
“Last week there were reports of long queues via Poland to Germany which caused some delays in the flow of goods. This week, the European Commission proposed guidelines for reducing the declaration time for border crossings," Mollan said.
South Korea: restaurant segment is hit hard and online sales rocket
Norwegian seafood has a strong position in South Korea and in 2019 the market was the second largest salmon market in Asia, the largest single market for live king crab and the second largest consumer market for Norwegian mackerel. Korea is a technologically advanced society, and the use of online solutions is widespread.
"For salmon and mackerel, we see grocery stores taking a far greater share of sales. The restaurant segment has been hit hard in Korea and for Norwegian salmon this is traditionally the market, but we see the demand for salmon for home consumption is increasing. During the first few months of 2020, we saw a strong increase in online sales of fresh salmon products and frozen mackerel," says Gunvar Lenhard Wie, the NSC’s country director for Japan and South Korea.
"The largest grocery chains report that sales of fresh food online have increased fourfold compared to the same period last year. A focus on health and healthy foods means Norwegian seafood has an advantage and sales are increasing, both in physical stores and online," says Wie.
"The biggest challenges are related to the logistics into the market as demand from the grocery trade is high. The logistics situation for Korea was debated in Korean media on Monday, highlighting Norwegian salmon as a sought-after commodity,” Wie said.
Japan: the end of conveyor belt sushi
"Japan was quick to implement restrictions to prevent early spread of the Corona virus. Like in many other markets Japanese consumers have reduced the number of restaurant meals and increased grocery purchases. There is an increase in online food trading and the players do not have the capacity to respond to demand as normal," says Gunvar Lenhard Wie, the NSC country director for Japan and South Korea.
“One of the largest chains of "conveyor belt sushi," has stopped displaying sushi on the conveyor belts and has introduced digital menus instead,” Wie said.
"It is reported that seafood sales are maintained in retail and that processed and prepacked seafood products sell particularly well, for example frozen Norwegian mackerel fillets,” concludes Wie.
NSC status update as of 20th March 2020
The Covid-19 pandemic are causing big changes in consumer behaviour as well as transport and logistics in many markets for Norwegian seafood. The HoReCa (Hotels/Restaurants/Catering) sector is particularly affected, whilst retail and delivery services are reporting growth as a result of many countries’ self-isolation and quarantining measures. A weaker Norwegian krone is counteracting some of the effects of lower market demand at present.
Demand for Norwegian seafood varies between markets, species and where Norwegian seafood is sold.
-Despite increase in retail sales in Europe, we expect lower demand for fish and seafood as a result of lower turnover. The lower demand will first hit species such as king crab, quality labelled skrei and prawns usually sold in restaurants. We have also been given indications that the increased insecurity in Europe means retail buyers look to limit the range of products in-store. This might also affect Norwegian seafood exports. Our country directors in the European markets are reporting several fresh fish counters closing down and prepacked fresh seafood often being out of stock, says Paul Aandahl, seafood analyst at NSC.
Norway exported over 18 000 tons fresh whole salmon in week 11, an increase of 24 percent compared to the same time last year. We see the strongest growth in traditional processing markets for the EU market, such as Poland (+42%), Denmark (+93%) and Lithuania (+141%).
-The effects we have seen on export of fresh salmon in some markets as a result of the virus outbreak so far, will continue to spread other markets as the pandemic evolves. The global salmon market will have to manage increased transport costs, changed consumption patterns and unpredictable prices, says Aandahl.
The main cod season (Skrei season) runs from January to April. Between 30 and 40 percent of fresh whole cod volumes are exported during these four months.
-99 percent of Norwegian cod exports goes to fresh consumption of processing in Europe. Large parts of the fresh cod category has fallen away with increased restrictions in several European markets. We are well into the season, so the consequences are not as dramatic as they could have been if the Corona situation had happened earlier in the winter. Nonetheless, large parties of cod will now go to other uses, such as salting and drying, says Ingrid Kristine Pettersen, seafood analyst at NSC.
-Reduced demand will lead to lower prices in the markets. We can already see this in the stats for fresh cod exports in week 11, says Pettersen.
-Frozen products are more suitable for storing. In several markets we now see a shift from fresh to frozen fish, something we also saw in China earlier in the year. Products like clipfish and stockfish also have the advantage that they can be stored for longer periods of time without cooling. This is seen as a positive in a marketplace where people shop more infrequently, Pettersen says.
-Frozen, whole whitefish is primarily sold to processing industry in Eastern Europe and China. In week 11 we saw increased exports of frozen whole cod, says Pettersen.
France imposed strict measures to slow down the spread of the Corona virus this week. People are required to stay at home and as much as possible avoid contact with others, with the exception of people working in sectors of critical importance, such as healthcare and security. Schools, parks, theaters and restaurants are all closed.
-Grocery shops are open, but most fresh food counters are shutting down in a bid to avoid spreading the virus. This leads to an expectation of increased sales of prepacked seafood products. Traditional markets remain open, but people are advised to keep safe distance and physical barriers are in place to ensure people cannot get too close to the foods on offer, says Trine Horne, NSC country director in France.
France is the third largest market for Norwegian seafood and has been the biggest growth market for Norwegian salmon so far this year.
Spanish society more or less closed this week, and only grocery stores and pharmacies are allowed to stay open.
-The total seafood export to Spain is expected to remain relatively stable for some time still. As in many other markets we see growth in sales of prepacked seafood, says Bjørn-Erik Stabell, NSC country director in Spain.
The Spanish government have issued guarantees that households should have access to fresh groceries in the stores. This means sales of frozen foods have not increased significantly and is also linked to most Spanish not having much freezer capacity in their homes.
- Spain primarily being a fresh fish market, we don't wee much growth in the frozen segment. It is expected that prepacked fresh seafood and take-away will perform well in this period, says Stabell.
Norway has exported about 15 500 tons of seafood to Spain in the first two months of 2020, valued at 940 million NOK.
Sweden is the market which in many ways “goes against the current” with regards to restrictions and government measures to prevent spread of the virus. So far, government focus has been on increased hand hygiene, but also in this market there is a marked decline in restaurant trade and many consumers are worried about the future.
-The frozen food sections in stores are being raided by consumers who are buying a few more packs than usual, says Sigmund Bjørgo, NSC country director in Sweden.
The big question remains if retail can compensate for reduced restaurant sales of Norwegian seafood.
Norwegian fresh salmon exports to the US market was down 4 percent in week 11 (379 tons), compared to the same time last year. Export of fresh salmon fillet increased by 4 percent to 426 tons. The US has developed into an important market for Norwegian trout in recent years, and in week 11 178 tons of fresh whole trout was sold to the USA, up 122 percent compared to the same week last year.
Export of fresh whole salmon went from 149 tons in week 10 to 217 tons in week 11. For week 10 that is a decrease of 51 percent on last year, and for week 11 the decrease was 37 percent.
For week 11 fresh whole salmon exports were down 41 percent to 708 tons compared with the same week last year.
NSC Status Update as of 16th March 2020
The EU is the largest and most important region for Norwegian seafood exports. In 2019 Norway exported 1,6 million tons of seafood to the EU, valued at 68 bn NOK. This represents 59 percent of total seafood exports in volume, and 63 percent of the value.
-As many countries in Europe have imposed strict measures to prevent spread of the Covid-19 virus, we’ve seen a large part of the restaurant market disappear. There is a shift towards retail and home consumption of seafood. Several of the Norwegian Seafood Council’s representatives in the markets are reporting on at times empty seafood shelves in the supermarkets, says Paul T Aandahl, seafood analyst at NSC.
-However, the biggest challenge for Norwegian seafood going forward will be a possible reduction in consumption in European markets. We know that 30 percent of European salmon consumption happens in restaurants, hotels and catering. For Norwegian salmon this segment stands for 24 percent of total consumption, Aandahl says.
-In addition, reduction in available air freight routes to overseas markets, could lead to fewer opportunities for sending fresh fish from Europe to Asia and the US. It is hard to predict how much fresh fish will go to these regions, as the fish competes for the limited capacity with other goods, such as machine parts and medical equipment, Aandahl explains.
-On the positive, we do see gradual steps towards normalization of exports to China, Aandahl says.
NSC Status update Friday 13. March
In a bid to halt the spread of the Corona virus The Norwegian Directorate of Health implemented a number of measures coming into effect at 6pm Thursday 12th March.
Information about outbreak in Norway can be found here: https://www.fhi.no/en/id/infectious-diseases/coronavirus/
Of particular relevance to the seafood industry, fishery and aquaculture are considered critical society functions along with the transport sector, and operations are excepted to continue.
NSC Status update Thursday 12.March
The Covid-19 pandemic is causing uncertainty in the global marketplace and consumers are changing their consumption patterns which affects many markets. The HoReCa segment is particularly exposed, and at the same time we are seeing substantial growth in online and home delivery services in many markets.
Since the WHO categorized the virus a pandemic, many governments, including Norway, have imposed some of the most severe restrictions on travel and social interactions known in peace time. One example is the USA stopping all passenger flights from Europe for the next 30 days.
Flight-ban to affect seafood exports from Norway
Despite the current US flight restrictions only affecting passenger travel, it is expected to impact seafood exports.
-The United States depend on imported seafood meet consumer demand, and 90 percent of the seafood consumed is imported. The announced air travel restrictions have caused uncertainty in the US market, as a lot of fresh seafood is transported by passenger aircraft. The situation is unclear and Norwegian exporters, US importers and the freight companies are working to find solutions, says Egil Ove Sundheim, NSC country director in the USA.
NSC seafood analyst Paul T. Aandahl believes one consequence could be smaller volumes of fresh fish from Europe to the USA. For Norway this would probably cause a shift from fresh to frozen seafood products and increased export to European markets.
- Appx. 64% of imported salmon in the US is of Norwegian origin, about 73 000 tonnes.
- The USA was the fourth biggest seafood export market for Norway in 2019, and the second largest growth market
- In 2019 Norway exported 80 000 tons of seafood to the US, of which just over half was air freighted fresh salmon.
Unclear situation in Europe
The rapid spread of the Covid-19 virus and the increasing measures imposed by governments across Europe to contain the spread means the situation is unclear and changing quickly in many markets.
-It is uncertainty linked to how much the pandemic will impact the European production facilities and also local consumption habits, says Aandahl.
Fresh exports particularly affected
So far in 2020 there has been a decline in exports of fresh salmon to markets such as China and Italy, directly related to the outbreak of the Corona virus. Overall, Norwegian seafood exports have not seen significant negative effects in the first two months of the year.
-Salmon is a robust product which adapts well to variations in the market. Norwegian salmon is a sought-after product exported to more than 100 countries around the world. But as the situation is unfolding, it is too early to say how this pandemic will impact salmon exports going forward, says Aandahl.
-In 2019 China was our largest growth market for salmon, measured in value. As a direct result of the Corona virus outbreak, we have seen a sharp decline in exports to China, particularly for fresh salmon. Year to date, export is down 43 percent, and in February it was down by 83 percent. Other markets have had no problem picking up this surplus, says Aandahl.
Italy was Norway’s ninth largest export market for salmon in 2019. A marked decline in salmon exports were registered in week 9 and 10 (34 and 24 percent respectively). Other European markets picked up this surplus.