Price hikes to hit seafood industry
According to IbisWorld, industry revenue is expected to increase at an annualised 0.6 per cent over the five years through 2014-15, to $4.3 billion, while revenue growth of 4.3 per cent is forecast for 2014-15, due to further seafood price hikes.
The report by IbisWorld found that over the past five years, high seafood prices have inflated industry growth, masking the harsh operating conditions that are threatening operators in the industry.
According to IbisWorld industry analyst, Brooke Tonkin, “seafood prices have risen only slightly over the past five years, but remain at historically high levels”.
Concerns regarding the sustainability of dwindling fish stocks have caused some countries, including Australia, to enforce strict catchment quotas, which had led to a limited supply of fish and other seafood products, such as rock lobster, putting upward pressure on prices.
Consumption of fish has risen on the back of perceived health benefits, placing further upward pressure on prices. Saturation has limited the industry’s benefits from price growth, as a high number of businesses are competing for limited revenue.
Fishmongers have placed downward pressure on wholesale prices to compete with the major supermarkets, which are increasingly bypassing small wholesalers altogether, which IbisWorld states has been “detrimental to profit margins”.
IbisWorld forecasts rising prices will continue to drive revenue growth, rather than increasing activity within the fish and seafood wholesaling industry. Seafood consumption is predicted to stabilise, as rising prices will tend to inhibit consumption growth, with businesses forced to lower already low prices and profit margins to maintain sales volumes.
But it’s not all bad news, the growing popularity of eating out, which is driving growth in food service industries, remains a positive for the industry. Restaurants, cafes, and small takeaway outlets rely on wholesalers for high quality produce, providing a sizeable growing market for fish and seafood wholesalers.