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What competition do you face on the European frozen white fish market?

Takes about 9 minutes to read

Owing to a large number of buyers and a large number of comparable products, competitiveness in Europe’s white fish market as a whole is at a high level. However, the long-term increasing demand for white fish species in specific markets may result in increasing global competition for white fish products. This may be to the advantage of exporters from Developing Countries.


1 . What are the opportunities and barriers when you try to enter the market?

For new exporters of white fish species, it is difficult to enter the European market, because:

  • Prices are under pressure, as most of the white fish products are positioned in the lowend or middle-range segments (especially species like pangasius, tilapia and Alaska Pollock).  
  • There is a large supply of different white fish products, meaning that the risk of substitution is relatively high.  
  • The quality and sustainability requirements are high among buyers. For cultured white fish these requirements relate to production conditions, while for captured white fish they focus on fishing techniques. 

It is unlikely that many new white fish species will be introduced to the European market in the short term. 

Tips:

  • See our study about Buyer Requirements for Fish and Seafood for more information on European market requirements that you need to comply with
  • ITC’s Market Access Map offers more information on market requirements worldwide
  • Entering the European market for frozen white fish is only doable for exporters that are able to: 
    1. Invest in the development of a market (or to find the right local partners)
    2. Source large volumes at competitive prices 

2 . What are substitute products?

The risk of white fish being substituted by other products is generally low. Occasionally, poultry products can substitute cheap white fish products such as pangasius.  

However, the risk for substitution by other white fish species is high. This is because there are several different species of cheap white fish that have comparable product specifications. Substitution is lower for white fish species in higher-end market segments, e.g. sea bass and sea bream. 

Another development that has increased the risk of substitution is the increase of local European production of white fish. European policymakers and producers have encouraged this. Thus far, the success of local production has made Europe less dependent on imports, and it has suppressed the prices of white fish imports.  

Moreover, stocks of several species of white fish (many with MSC certification) are recovering in North-Western Europe, and this might also increase competition with white fish imports from overseas. A final source of competition involves Alaska Pollock certified wild white fish from outside Europe.

Levels of substitution between different species of cheap white fish are expected to remain high over the short to medium term. This is because the number of suppliers and species of white fish will remain high.  

Tips:

  • Try to find the market segment that matches your product specifications.
  • Given that margins are low, it is important to gather price information about competitive species in order to negotiate prices.

3 . Who are your rivals?

The European market for frozen white fish is competitive and the degree of rivalry is high. The main reason for this is that there are many suppliers of different captured and cultured white fish species, such as pangasius, tilapia, pollock, Alaska Pollock, hake, hoki and cod. This high degree of rivalry is supported by the figures shown below on European imports and suppliers.  

European imports

The import of white fish in Europe has been increasing every year. Most of the white fish imports come from Developing Countries and ‘Rest of world’. In 2015, the imports from ‘Rest of world’ amounted to almost €1.8 billion, which is 15% higher than in 2014. Imports from Developing Countries also grew strongly in 2015. 

The major factor in import value growth is a growing volume in the period under review, although prices have been under pressure.  

As shown in Figure 2, the supply pattern of white fish varies by country. Spain and Germany are the largest markets for white fish suppliers from Developing Countries. Imports of white fish from Developing Countries reached €352 million in Spain and €321 million in Germany. The UK and the Netherlands are large white fish import markets for ‘Rest of World’. France imports a relatively large amount from other European countries.

The level of differentiation within the European market for most of the white fish species is rather low. Most of these products are imported as frozen fillets or fish meat. Processing companies are able to switch between different white fish species at low cost.

Tips:

  • Differentiation in the white fish market is essential. Invest in a marketing plan in order to promote your products.
  • Innovative packaging, additional processing, freezing or product development are possible strategies for adding value to your products. Discuss with your customers which strategies might be beneficial.

4 . Supply from Developing Countries

White fish import from Developing Countries accounted for almost €1.6 billion in 2015. The main supplying Developing Countries are China (but this also includes a large volume of double-frozen Chinese fillets marketed under the name ‘Alaska Pollock’), Vietnam and Namibia. Together these countries account for a 75% share of all European imports from Developing Countries. Vietnam is the second largest Developing Country supplier, and is the leading supplier of pangasius to Europe. However, Vietnamese exports to Europe decreased by 22% over four years. The cause for this is pressure on pangasius consumption and prices in Europe. Namibia’s exports to Europe mostly consist of hake.

Growing white fish suppliers are Tanzania and Uganda. Both countries export Nile Perch to Europe.  

Tips:

The European import of white fish from ‘Rest of world’ (Developed Countries outside Europe) amounted to almost €1.8 billion in 2015. The supply of ‘Rest of world’ mainly includes Alaska Pollock. It is dominated by the US, Russia, Iceland and Norway, and together these countries represent 88% of the imports coming from ‘Rest of world’. The white fish supply of ‘Rest of world’ to Europe in 2015 increased compared to 2011, with Iceland and the Faroe Islands showing the highest growth.

Trade within Europe

White fish imports from within Europe totalled €1.4 billion in 2015. The main European suppliers are the Netherlands, Denmark and Germany. Together, these countries account for 58% of the total intraEuropean white fish supply. This trade within Europe includes a great deal of re-exports, particularly in the case of the Netherlands and Germany.

European countries that have performed strongly in terms of white fish exports within Europe are the Netherlands (113% growth in four years’ time), the United Kingdom (+133%) and Belgium (+120%).

Forecast

The degree of rivalry is not expected to decrease in the near future, because both the demand for white fish and the level of competitiveness between the different species are set to remain high. Rivalry is coming not only from outside Europe, but also from countries such as Greece, where the production of cultured white fish has developed rapidly.

In the short term, rivalry is likely to remain weaker for:

  • Certified white fish
  • Added-value white fish
  • White fish that has a transparent and/or traceable supply chain  

In the long term, rivalry will also increase for certified products, because the volume of MSC and ASC certified white fish is increasing rapidly.

The pattern of most imports coming from outside Europe is expected to stay the same in the short to medium term. The same also goes for the species coming from the various countries described above.

Tips:

  • Consider obtaining MSC or ASC certification, as the demand for MSC and ASC certified white fish is increasing rapidly
  • Cooperate with buyers and offer retail packaging. This is only possible in good cooperation and with IFS/BRC certified product

How much power do you have as a supplier, when negotiating with buyers?

Buyer power in the white fish sector depends on:

  • The specific white fish product 
  • The market segment.  

High buyer power:

  • When the supply is high, in cases like pangasius or Alaska Pollock

Low buyer power:

  • Species for the higher-end market, such as red snapper and barramundi. This is due to a shortage of supply.  

In the near future, supermarkets in several European countries are planning to sell only seafood products that have been MSC or ASC-certified. The dominant position of European supermarkets in the supply chain is expected to grow still further.

The implication of this development for exporters from developing countries is that if they do not supply certified products and obtain BRC/IFS certification, they will have to focus on market segments or markets in countries without such requirements. Examples of such markets or market segments are fast-food restaurants in the catering industry segment, or countries in Central and Eastern Europe.

Tips:

  • Work in close collaboration with your buyer to meet the required product specifications
  • Gather information about product specifications within the different market channels and segments

5 . How much power do you have as a buyer, when negotiating with suppliers?  

There is generally a shortage of high-value white fish species. From that point of view, farmed high-value species, such as cobia, could have an interesting market potential. 

For the white fish market in general, the power of suppliers will continue to depend strongly on market developments in the largest and also upcoming markets in the world. Strong demand growth in some specific countries like India and China can cause supply bottlenecks. Eventually this can give suppliers more power and better prices.  

As long as demand for certified white fish exceeds supply, suppliers have a strong position against buyers. This is likely to remain the case in the coming years in Europe, as an increasing number of European supermarkets will be restricting themselves to selling only certified white fish products.

Tips:

  • Given that white fish products are sold in the high-end, middle-range and low-end segments, it is important for you to investigate which market segment has the greatest potential for the white fish that you supply.