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Global Retail: Hope in horsegate?

The European meat crisis could spark growth for the seafood category

By Jason Holland
May 01, 2013

When news broke in January that the Food Safety Authority of Ireland had found traces of horse DNA in batches of beef burgers being sold in Ireland and the United Kingdom, it was thought to be no more than an embarrassing but isolated mistake in a single supply chain. Nobody saw the pan-European scandal that would quickly ensue, dragging in dozens of retailers, manufacturers and foodservice operators. 

In line with the large-scale panic testing now in place, new horse meat-tainted discoveries are being found on an almost daily basis across Europe and beyond, and for the time being it’s impossible for authorities to ascertain exactly how far the fraud goes. 

Nevertheless, many consumers across Europe, Scandinavia and Russia are thinking twice before putting processed meat products and ready-to-eat meals containing meat in their shopping baskets.  

“Horsegate,” as it is now widely referred, has been a welcome boon for fresh meat sales at traditional independent butchers as well as at unaffected retailers like Sainsbury’s, which reports a 3.1 percent rise in same-store sales for the 10 weeks through Mar. 16. 

“I think most customers are quite aware that a good number of retailers have not had horse meat in their food and [those stores] have been rewarded with some extra business,” says Justin King, Sainsbury’s chief executive. 

“There has been a shift toward protein being bought that is unprocessed so there’s more steak and chicken breasts being bought and less ready meals and mince. Clearly frozen products have taken a very significant hit as [that is] where a lot of the horse meat has been found and [so there has been] a shift into fresh. Our fresh business is performing very strongly,” he says.

But what about the seafood category; shouldn’t fish sales also be benefiting from the scandal?

Perhaps so, says Mike Coupe, group commercial director at Sainsbury’s.  

“The initial evidence will support that other non-red meat categories have probably done a little bit better on the back of the horse meat [problem], although the other trend is toward primary protein products in their raw state rather than their processed state,” says Coupe. “Like all these things there is a direction of travel, and I think seafood is an opportunity within our business and in the U.K. as a whole.”

But Coupe also concedes that growing seafood sales remains a challenge because customers don’t always understand what they should be doing with the products. 

“Seafood is difficult; it’s certainly something we work very hard at, training our colleagues on our fish counters to make sure they are able to talk to customers about how they could use and cook the products. We do a lot of work online as well. That’s probably the biggest and most significant challenge,” he says.

Nevertheless, the Scottish Fishermen’s Federation (SFF) believes Horsegate should be used to increase the demand for Scottish seafood. A switch to fish could lift market prices out of their current slump, which has been a growing concern for the entire U.K. fishing industry this year.

“With the horse meat scandal and other food-scare stories being prominent in the media at the moment, now is the time to expend every available effort in promoting Scottish seafood,” says Bertie Armstrong, chief executive of the SFF.

“Scottish fish is an extremely high-quality food product that has a low carbon footprint and is healthy to eat. Our resounding message to consumers is to demand from retailers and restaurants more Scottish fish,” says Armstrong. 

Shifting habits

As one of the first markets to fall foul to Horsegate, the United Kingdom has had time to assess the fallout from the scandal and it is confirmed that shopper confidence has taken a big hit. According to a poll conducted by the consumer group Which?, six in 10 consumers changed their shopping habits after the news broke. It finds consumer trust in the meat industry has fallen by 24 percent, with 30 percent now buying less processed meat and 24 percent buying fewer ready-to-eat meals containing meat.

The survey also shows there’s considerably less confidence in food safety, with seven in 10 people feeling confident buying products in supermarkets (down from nine in 10).

“The horse meat scandal exposed the need for urgent changes to the way food fraud is detected and standards are enforced. These serious failings must be put right if consumers are to feel fully confident in the food they are buying,” says Richard Lloyd, executive director of Which? 

The group is therefore calling on the U.K. government to take five urgent steps; enforce increased and better coordinated food surveillance; tougher enforcement; tighter legislation; improved country-of-origin labeling; and for food-labeling policies to be returned to the Foods Standards Agency (FSA) from the U.K. Department for Environment, Food and Rural Affairs (DEFRA).

As far as the U.K. consumer is concerned, provenance has become a very important motive behind grocery purchases, says David Jago, director of innovation and insight with U.K.-based research company Mintel.

“The current issues really have affirmed the British consumer’s interest in provenance as a concept and their faith in the quality of British-produced food,” says Jago.

“That can only be a good thing. It’s a terrible shame it had to come about for that [horse meat] reason, but every cloud has a silver lining.”

According to Mintel, locally sourced food is now thought to be a £5.5 billion ($8.4 billion/€6.4 billion) retail market and is forecast to grow to at least £6.5 billion ($9.9 billion/€7.6 billion) by 2017. While this is still a small percentage of the country’s £160 billion ($243.7 billion/€187.6 billion) total grocery market, Jago says it’s still “good growth” and it shows the “intent and willingness”
of U.K. consumers.

Seafood ticks many of the provenance boxes, says Jago, adding that there’s a good opportunity for the category, particularly fresh formats, to take some ground from red meat while retailers and food manufacturers rebuild credibility and restore trust. 

But he also believes that for the fish category to really benefit, retailers need to make products a lot more convenient to the typical consumer through more easy-cook formats and ready-to-eat meals. He further warns that another food crisis could be just around the corner.

“The meat category has taken a big knock, but you have to ask how long it will be before another area has a similar story,” says Jago. “Consumer watchdogs and government bodies are now looking much more closely than they were before; there’s so much more scrutiny, so things like the horse meat scandal are likely to happen again.”

Contributing Editor Jason Holland lives in London 

May 2013 - SeaFood Business  

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