SUPA Study - Chapter V: Market analysis of trends and key stakeholder sourcing policies in the UK

Seafood Consumption:

UK based Sea Fish Industry Authority (Seafish) states, “Seafood is a multi-billion pound industry in the UK. Four out of five households consume seafood at least once a month and total purchases of seafood in the UK were worth £5.6 billion in 2011.” FAO figures from 2010, placed per capita consumption at 24 kg in the UK. A staggering 80% of seafood consumed in the UK, as a Department for Environment, Food and Rural Affairs (defra) study from December of 2011 revealed, was from imports. When this 2010 UK consumption figure is extrapolated with an estimated population of 63,256,141 in 20124, the country wide consumption of seafood in the UK is an estimated 1,518,147 metric tonnes. This ranks the UK as the 4th largest consumer of fish and seafood in Europe.

A June 2013 joint Seafish/Nielsen presentation shows, in the retail sector, the top five fish species sold in the UK were (in descending order by volume) tuna, salmon, cod, pollock and haddock. Overall, Pangasius was ranked 19th in value (£16,618,000) and 18th in volume (2,099,000 kg) a growth over year prior of 26.8% and 23.9% respectively. In the chilled category, Pangasius ranked 20th in value and 18^th in volume an increase over year prior of 51.3% and 68.4% respectively. In the frozen category Pangasius ranked 8th in value and volume with a growth of 16.8% and 8.4% respectively. In 2011, consumer spending was almost equally split between foodservice and retail with approximately 48 % of seafood consumed in the foodservice sector (strong fish and chips sales) and 52% consumed in the retail sector. Furthermore, in contrast to German consumers who heavily favor discount retailers (greater than 50% of the market share), UK consumers overwhelmingly prefer to purchase seafood from supermarkets (87%).

Sustainability trends:

In a sense the seafood sustainability movement can trace its roots back to 1997 when WWF and Unilever co-founded the Marine Stewardship Council or the “MSC” for short. The MSC is a voluntary 3^rd party certification scheme with a consumer-facing eco-label. The success of the MSC can be attributed not only to the content of the standards, but the standard creation process and governance model of the MSC. The MSC is a multi-stakeholder, open and transparent organization with standards based on science. Audits of fisheries are carried out by independent accredited certification bodies (CBs). In May of 2013, the MSC celebrated the 20,000 MSC labeled product in the market place.

The MSC certification scheme credibility has become a model for aquaculture certification schemes to emulate. This model has been codified by another UK-based organization, the International Social and Environmental Accreditation and Labelling Alliance (ISEAL). “The ISEAL Alliance is the global association for social and environmental standards. Working with established and emerging voluntary standard systems ISEAL develops guidance and helps strengthen the effectiveness and impact of these standards.”17  ISEAL members include the Forestry Stewardship Council, the MSC, and Fairtrade among others. The ASC is an associate member and GlobalG.A.P. is a subscriber. The self-proclaimed mission of ISEAL is: “To create a world where ecological sustainability and social justice are the normal conditions of business.”

ISEAL publishes a monthly newsletter with updates on voluntary certification schemes and standard setting. Here an excerpt from an article featuring an interview with Johann Zueblin, Deputy Head of Sustainability at Migros, a supermarket chain in Switzerland in which Herr Zueblin describes his expectations for certification schemes and eco-labelling including seafood:

“The standard needs to be accredited and there also needs to be recognition of the standard by important stakeholders such as NGOs, government etc. This is important because you need stakeholder involvement at all levels including in the management and set up of the program, its description and content, and, of course, in the decision making process. My next point is to do with the verification of the system and how it works. There needs to be third-party verification but at the same time you need an internal quality system that monitors and accurately documents the decision making process and any related activities. …Soon, Aquaculture Stewardship Council certified fish will be available and where we can, step by step, we are switching to MSC certified fish. The point though, is that at the beginning we had all of these internal programs which were internally controlled but we’ve now switched them to third party auditing and certification. This boosts credibility. You can have the best program in the world and you can have fantastic results but if you control it yourself, then credibility will be very low. We don’t control our own programs by ourselves anymore; it’s always third party or we apply international standards like Global Gap, UTZ, MSC etc.”

This retailer “credibility” referred to by Herr Zueblin came under intense scrutiny in the UK when in January of 2011, the UK based environmental law NGO ClientEarth published a report entitiled, “Environmental claims on supermarket seafood - Improving product labelling & consumer protection”. In the executive summary it states and makes the following suggestions:

 “Certainly the consumer faces a confusing landscape of environmental claims on fish products. Largely this stems from the lack of harmonised, detailed and mandatory standards for “green” claims made on these products. A wide array of labeling schemes and criteria are applied to “sustainable” or “responsible” fish sourcing. These lack overarching principles or common definitions. Much could be done by governments to increase quality, consistency and certainty in this area.”

Client Earth created the Sustainable Seafood Coalition (SSC) to create codes of conduct for labeling, sourcing and alternative species. The SSC is comprised of: leading retailers and restaurants; name -brands, processors, retail and food service suppliers; associations and other organizations.

The SSC has created a draft of a voluntary “Code of Conduct on Environmental Labelling and Self-Declared Environmental Claims of Fish and Seafood” which draws heavily from FAO guidelines (see Sustainable Seafood Coalition draft voluntary Codes of Conduct: http://sustainableseafoodcoalition.org/ssc/codes-of-conduct/)

It was also in 2011 that the UK television media became quite active in promoting sustainability through UK chefs, most notably Hugh Fearnley-Whittingstall. His program “Fish Fight”, which was launched in 201123, continues to bring attention to discards and European fisheries issues.

In February of 2013, though Fearnley-Whittingstall turned his attention to shrimp aquaculture in Thailand. This article from the Mail Online written by Fearnley-Whittingstall details his concerns.

As a result, 7 UK retailers through the British Retail Consortium have publically joined forces to address this issue.

The Marine Conservation Society (MCS) an environmental NGO is also active in helping UK consumers choose sustainable fish and seafood. The MCS has a “Sustainable Fish Farming” document and publishes a “Pocket Good Fish Guide” at http://www.mcsuk.org/downloads/fisheries/PocketGoodFishGuide14thFebruary2012.pdf

Finally, as in other European countries the organic movement in the UK is well established. The Soil Association, founded in 1973, is the leading organic scheme certifying over 70% of all organic products sold in the UK. A WWF benchmarking study (2007) ranked the Soil Association aquaculture standards as the most rigorous and robust with a score of 90 out of 100. In June of 2011, the Soil Association released version 16.4 of the organic aquaculture standards which cover Atlantic Salmon, trout and arctic char, shrimp, bivalves and carp.

Key retail and foodservice players:

In 2011, 3 UK food retailers were among the top 25 in the world, ASDA as an operating division of Walmart (3rd largest in the UK), along with Tesco and Sainsburys ranked 3rd and 23rd respectively according to Supermarket News.

Figure 6 shows a pie chart summarizing market share of the top UK retailers from Nielsen data (the pie chart can be read clockwise beginning with Tesco).

Tesco PLC:

“Today, our brand must be about more than simply function. It’s about the way we work, the values we live by, the legacy we leave.” Located in Cheshunt, England, Tesco PLC was ranked number 3 globally by Supermarket News in 2012. Group revenue was £64,826 million in 2013 up from £63,916 million in 2012, however profits declined from £2,814 to £120 million in 2013 (2013 Annual CSR report). Tesco is employing a new strategy which includes “Using our Scale for Good” (Tesco and Society Report 2013) and “Operating responsibly”. Tesco has a “Sourcing Responsibly” UK position statement for seafood updated 29/5/2013.

“Farmed Fish : Ensuring the sustainability of farmed fish is equally important to that of our wild fisheries. We have a strict code of practice for our aquaculture suppliers covering feed, welfare, environment and other critical issues. All fish farms are independently audited to ensure compliance.

We know that reducing reliance on fishmeal is a complex industry-wide issue but we’re actively looking at how best to tackle it. We have worked with the IFFO (International Fishmeal and Fish Oil Organisation) to develop a Global Standard for Responsible Supply of fishmeal in order to ensure the wild fish used as feed for our farmed fish comes from fisheries that are also responsibly managed; this Code is now up and running and helping to drive up standards. We’re now working with our largest prawn supplier in Thailand on developing trials which limit the use of fishmeal and with our partner the Sustainable Fisheries Partnership on emerging fishery management improvement programmes. Through the British Retail Consortium we established a working group on fishmeal involving other major UK supermarkets.”

Sainsburys LLC: 

“Our commitment: By 2020, all the fish we sell will be independently certified as sustainable and we'll strengthen our position as the leading retailer for sustainable seafood.” Source: Sainsburys 20 by 20 Sustainability Plan.

Sainsburys, the 23th largest supermarket in the world,  2012/13 results revealed revenues of £25, 632 million (including VAT) and operating profits of £829 million up 4.6% and 5.1% over year prior respectively. Under the category “Sourcing with integrity”, 2 of Sainsbury’s “non-financial” key performance indicators are sustainable fish and animal welfare.

Recently, Sainsbury’s added to its selection of sustainable aquaculture products with the addition of ASC certified “river cobbler” the UK name for Pangasius.

Sainsbury’s has a well-articulated policy on GM feed ingredients:

“What is Sainsbury’s policy on GM?

Whilst the latest scientific research and current Government advice is that GM ingredients do not present any risks to human health, we acknowledge the concerns of our customers and do not permit the use of GM crops, ingredients, additives or derivatives in any Sainsbury's own label food, drink, pet food, dietary supplements or floral products, this remains the case.”

At the time of this research this policy covered Sainsbury’s SO Organic and a list of “Taste the Difference” products as well as farm-raised salmon, but did not extend to other farm-raised fish and seafood products.

ASDA:

“100% of our fish comes from sustainable sources”. Headquartered in Leeds, ASDA is a member of the greater Walmart network and has the 3rd largest market share in the UK. With sales of £22.8 billion (including petrol) in 2012, ASDA showed a growth of 4.5% year-on-year. ASDA portrays itself as the low cost grocer in the UK.

On the ASDA sustainability webpage, the ASDA Head of Sustainability outlined the ASDA position on sustainability in a video, “Our over-riding mission is to make sustainability affordable and accessible to everybody…you shouldn’t have to be rich in order to be sustainable”.

Towards that end, Walmart corporate is committed to the Global Aquaculture Alliance (GAA) “BAP” aquaculture certification scheme or equivalent. ASDA also works with the eNGO the Sustainable Fisheries Partnership. On the ASDA carries a variety of Pangasius products.

Morrisons:

“Over the last year we have redeveloped our seafood sourcing policy to use a carefully constructed selection process, we now use independent third party data and advice so that we ensure we are taking an active position to minimise our impacts. The policy restructure currently includes wild capture fish, farmed fish and bait fish. We’re committed to working with other key strategic partners to act collaboratively on wider industry matters. We maintained our active membership and participation of the Sustainable Seafood Coalition and became a founding partner (and the first UK food retailer) to join the Global Sustainable Seafood Initiative which has been set up to deliver a three year benchmark of 75 global seafood certification schemes. We’re also working with the Seafish Industry Authority to improve health and safety conditions for fishermen because of the unacceptable level of fatality and injury onboard fishing vessels. We’ve taken the vice-chair of GlobalGAP’s Aquaculture Technical Committee and we’re a member of the Seafish Training Advisory Group.”

With turnover of £18,116 million in 2012/2013 Wm Morrison Supermarkets PLC is the UK’s 4th largest retailer. Headquartered not far from Leeds in Bradford, while Morrisons’ turnover was up slightly from £17,663 million in 2012 profit declined slightly from £1,127 million to £1,207 in 2013. In the their 2011 CSR Annual Report, Morrisons stated a “concern over sustainability” and its work to “encourage customers to buy different types of fish…and clearer labeling”. Morrison’s Corporate responsibility review 2012/13 details their progress.

The Co-operative:

The Co-operative corporate “Sustainability Report 2012: Building a better society” details the longstanding work of organization to act responsibly and summarizes progress on the Co-operative’s “Ethical Plan” (E.P.). Ethical Plan goals for fish and seafood include: “Continue to pursue higher welfare standards across our meat and fish” and “Maintain our position as one of the UK’s most responsible retailers of fish”. Progress on these issues include: “In March 2012, we converted all our own-brand fresh and frozen salmon products, including smoked salmon, to RSPCA Welfare Freedom Food standard.

The Co-operative Food’s Responsible Fish Sourcing Policy (page 63) requires that all farmed fish are stunned using an approved method prior to slaughter”. Sustainability is an integral part of business at The Co-operative as demonstrated by the £200,000 donation in 2008 to help UK fisheries achieve MSC certification. Headquartered in Manchester, “The Group’s underlying operating profit for 2012 was £54m, a decrease of £472m on 2011.”

The co-operative posted their farmed fish sourcing policy on their website. It specifically addresses slaughter, eco-efficiency of marine feed ingredients, environment, predator control and escapes. The webpage with a link to policy cites the Freedom Food scheme Salmon and the Global Aquaculture Alliance BAP scheme for shrimp.

Marks and Spencer:

In the Marks and Spencer Group plc “Annual report and financial statements 2013”, the “Chief Executive’s overview” stated, “Our Food business delivered a strong performance throughout the year, up 3.9%. Like-for-like sales were consistently ahead of the market, driven by our trusted quality, provenance and ongoing innovation, which saw us refresh 25% of our entire range.”

The M&S group posted an increase in revenues 2012/13 there was also a decline in profits. Headquartered in London, M&S’s corporate strategy is summed up in “Plan A” which addresses issues such as “climate change, waste, natural resources, fair partner and health and well-being”. Plan A objectives include sourcing sustainable farmed fish. Objective 16.2 outlines the M&S approach to farmed fish.  

Waitrose:

“Fish - Waitrose ensures all our wild caught and farmed fish are responsibly sourced. All our fish must comply withour own responsible sourcing policies and we are advocates of third-party certification, whenever available, for example through the Marine Stewardship Council (MSC, www.msc.org) or Global Trust (www.gtcert.com), as evidence of sustainability. We work closely with organisations such as the Marine Conservation Society (MCS, www.mcsuk.org) to ensure we do not stock any endangered or threatened species.

In 2011, Waitrose became one of the first members of the Sustainable Seafood Coalition (SSC, www.clientearth.org), a group of seafood retailers. SSC members have voluntarily decided to sell seafood that is currently underutilised or discarded and to encourage consumers to eat a wider variety of sustainable seafood.

Waitrose is committed to continuing to only stock fish that is responsibly sourced from wild capture fisheries and farmed aquaculture operations and work towards 100 per cent independent third-party accreditation by year end 2016/17. We source from over 160 wild fisheries and farming systems, 53 (32.3 per cent) of which are independently third-party certified. We achieved a silver grading in the Marine Conservation Society’s Supermarket Seafood Survey 2011 (www.mcsuk.org), commended for the ‘Best Wild Caught Fish Policy’ and zero sales of ‘fish to avoid’.”

Headquartered in London, Waitrose is a division of the John Lewis Partnership Plc, reported a sales increase of 8.6% to £5.4 billion, with operating profit decrease of 5.2% in the 2012 annual report.

Other supply chain participants engaged in certification:

Iglo Group:

On July 22, 2010 Iglo Group launched their Forever Food initiative (at the time Iglo Group was called Birds Eye Iglo) and “committed to procuring 100 percent of wild and farmed fish from certified-sustainable sources by 2012”. Forever Food is built upon three core values: “caring for the environment; treating everyone fairly and the working to make sure customers prefer our brand”. Seafood is dealt with under the “caring for the environment” value with “responsible sourcing”. On the Forever Food consumer facing website this is explained using shrimp farming as an example.

In the 2012 Iglo Group annual report Iglo additionally states, “Less than 3% of Iglo Group’s total fish is from farmed sources…Iglo has now also met a key target to certify our current range of farmed fish species to a responsible standard. This is currently the GlobalGAP and GAA standard. As the industry uptake of the ASC increases, we anticipate listing products with this certification in the future.”

The Iglo 2012 Annual Report and Financial Statements reported growth in group revenues (UK and European) up from 1,566.3 €m in 2011 to 1,572.7 €m in 2012 and growth in gross profits from 597.9 €m to 607.1 €m.

Findus Group

“The Findus Group is a multinational food business headquartered in the UK and with operations around Europe. It is the parent Group of Young’s, Findus and The Seafood Company. An estimated 20 million people eat our products on average every week.

We combine our passion for great quality food with an active commitment to good nutrition and sustainability in everything we do.”

Young’s sustainability philosophy is detailed in their “Fish For Life” initiative. Below, the Fish for Life commitment is expressed in general terms. The fish for life ‘quality mark’ ‘endorses’ all Findus Group seafood products.

Young’s states in an onine brochure, “We are set to become the first company to supply Aquaculture Stewardship Council certified sustainable Basa to the UK”. GlobalG.A.P. and GAA are also endorsed. The Findus Group website states a total turnover of £1bn.

Conclusions:

Despite a slight projected increase in per-capita fish and seafood consumption by the FAO, demographic trends such as an increase in population, coupled with campaigns promoting increased fish and seafood consumption will continue to make the UK an important market for fish and seafood products in Europe.

Pangasius sales in the UK (25/5/2013 Seafish report) have shown increases in both the frozen and chilled categories for an overall growth in volume of 23.9%. Pangasius is ranked 8th in volume in the frozen category. Of the top 10 frozen items by volume, only 3 showed growth over the 12 month period: Pangasius; pollock and surimi. In fact the entire frozen category declined 3.5%. Sales in the chilled category conversely increased 5.6% in volume. Pangasius was ranked 18th in volume in the chilled category. The chilled category demonstrated significant growth for Pangasius as the majority of total growth for volume of Pangasius was in the chilled category with a rate of 68.4%.

Two situations point to an emerging trend of collaboration in the UK to promote sustainability. In the first of a series of initiatives the Sustainable Seafood Coalition (SSC) led by the NGO Client Earth is defining what constitutes claims of “sustainability” and “responsibly sourced”. The SSC is made up of a number of the leading UK retailers and their suppliers. The 2nd is the commitment by 7 UK retailers under the auspices of the British Retail Consortium to address the fishmeal situation in Southeast Asia. In a sense, like food safety, sustainability in the UK is evolving into a pre-competitive issue.

The economic climate in the UK is challenging for retailers and consumers. An article by Stephen Doughty in the UK newspaper the Daily Mail on December 5th, 2012 was entitled “Recession slashes family spending power by 10%” and a text box included the heading “Food Prices Rising Faster” and stated “supermarkets were shielding shoppers from the worst effects of these price rises using multi-buy offers and money-off vouchers”.

Retailers are developing comprehensive sustainability goals such as the M&S “Plan A” which includes “Forever Fish”, the Sainsbury’s “20 by 20”, Iglo Food’s Forever Foods and Young’s “Fish for Life”.

Consumers in the UK are paying premiums for attributes associated with quality, as much as 22 percent for “hook and line caught fish” and 5% for fish from ‘Iceland’.

Study on market potential of sustainably produced Pangasius in Europe

Project: Establishing a Sustainable Pangasius Supply Chain in Vietnam

Author: Carson Roper, Independent Consultant

Contracted by: WWF Austria

September 2013