European shrimp processors have begun their orders for the Christmas and New Years' holidays early this year, according to Sophia Balod, a consultant from the Seafood Trade Intelligence Portal.
The implementation of social distancing measures at processing plants has slowed preparations for the Christmas period, which is why processors are looking for a head start. Fewer people can occupy each processing room, Balod said, suggesting the early start could represent an opportunity for exporters. It could also, however, mean a decrease in demand later in the year, she said.
Lockdown impact on EU shrimp markets
Talking during an online event organized by the Ecuadorian Camara Nacional de Acuacultura (CNA), which took place on Aug. 26 and 27, Balod first summarized the impact of the coronavirus outbreak on the European shrimp market.
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In mid-March, Europe was declared as one of the centers of the pandemic. The virus outbreak shifted from China on to Europe, starting in Italy and Spain, which went into full lockdown. Different lockdown measures were also implemented in other parts of Northern and Central Europe between weeks 13 and 25, with different responses in Europe in terms of how to address the COVID-19 impact.
Balod noted that the lockdown implementation caused a huge drop in demand from the foodservice sector as restaurants closed down.
Moreover, all large gatherings of people such as weddings, canteens, schools, and many more were suspended, Balod noted.
"So there was just a big drop in demand in the foodservice sector, while in the online retail sector there was a spike in sales," Balod said, pointing also to a sharp rise in "bricks and mortar" retail sales.
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Following the lockdown period in Europe, demand for shrimp from Ecuador has started to recover, partially driven by food processors "already preparing for the end of year holiday", she said.
Processors in Spain or in France are aware their holiday preparations will take longer than normal, so they began purchasing early, she noted.
Balod noted that an increase in demand from larger processing plants should not be confused with an increase in market demand.
Second wave?
Balod warned there is also a real threat from a second wave of coronavirus outbreak, which could lead to more regional lockdowns across Europe. Shrimp producers need to take into consideration the possibility of a second wave, she said:
In Europe, the food sector is slowly reviving, Balod noted. "You can see now restaurants are opening and already catering to some people, but a lot of restaurants ask to be booked in advance. Only 30% of the capacity is usually filled. So [the sector] is recovering, but [demand] is not so much at the normal rate during the summer period," she said, adding that tourism was also recovering, especially in coastal areas, but was still lower than usual due to travel restrictions.
Balod also suggested some of Europe's importers anticipate lower retail demand than normal for the holiday period, because families are not going to be able to join big celebrations inside homes.
The processing sector is trying to do some purchases "here and there in the hope they can sell it for a better price", according to Balod.
Shrimp output from India and Indonesia is expected to recover from September onwards, with a partial harvest expected in September and October causing a surge in raw material, a factor that could affect prices in the short-term, Balod also noted.
Chinese shrimp market
The first COVID-19 outbreak started in January/ February in China, and an ensuing strict lockdown completely shut the foodservice sector in the Asian nation.
As a result, shrimp import prices there also dropped, to later recover somewhat in April and May.
After a recovery in orders in April/ May, however, demand slowed again in June and July, as a second wave of coronavirus outbreak hit in China and the government implemented lockdown measures and strict custom controls, Balod said.
With cases of COVID-19 rising, there is also a great distrust of seafood among Chinese consumers now, she noted. This has been spurred by media reports that one second-wave outbreak was linked to a chopping board for salmon in a market, as well as various moves to ban the import or sale of shrimp from Ecuador.
Balod forecasts a slow recovery in the Chinese foodservice industry. "While some restaurants have already reopened, some of them are still actually closed and they're very hesitant to serve seafood," she noted.
Alicia Gallardo, head of Chile's Servicio Nacional de Pesca y Acuicultura (Sernapesca), confirmed that Chinese consumers were wary of imported seafood now, while discussing the current market situation for Chilean salmon farmers.
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Balod pointed out many Chinese buyers are sitting on large shrimp inventories, but some online retailers, like JD.com, are showing shrimp products as sold out on their platforms. "There is zero demand for a lot of seafood products," she said, adding that stricter customs checks were making imports more difficult too.
"They are actually monitoring whether there are traces of the RNA, the COVID-19 virus. So they are really strict, both in customs control as well as inspection," Balod said.
Factors to consider
Balod suggested that, depending on the country, shrimp sellers should focus on convenience products, such as peeled, value-added, and ready-to-cook goods, as well as promoting the health benefits of shrimp to try and stimulate demand, Balod said.
"For exporters, it is very important to build a community, especially digitally, because a lot of people are now online in their homes in quarantine. So it's also the time to reach out to them, marketing-wise, online. It's very important to focus on traceability and the story behind your product," she advised.
"These are stories that you can tell your consumers and invest in and therefore help you boost your sales," she said.
September 04, 2020 at 02:48PM
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European shrimp processors in early for Christmas orders - Undercurrent News
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