Through what channels can I get frozen fish and seafood onto the European market?
The two main segments in the European market are retail and food service. In most cases, your trading partner will be an agent or a European importer. The length of supply chains is expected to become shorter in the future. This is because of increasing efficiency, quality requirements and sustainability issues. Owing to this development, it will become easier for you to do business directly with retailers and food service operators.
Which market segments to target?
This document focuses on the retail segment in Europe. The food-service segment (this segment covers the supply to restaurants, canteens, etcetera) represents a considerable share (between 55-60%) of seafood consumption in Europe. However, the food-service segment in Europe is relatively fragmented. Only a few food-service players operate on a multinational level, and the extent of food-service market segmentation differs considerably across countries.
Figure 1 below represents the three main categories of companies active in the retail segment. The retail segment is defined as all food retail and other shops that sell products directly to consumers for the use of those products at home. The trends discussed here apply generally to all seafood products. However, there may be differences in the case of specific products.
As revealed in Figure 1, supermarkets are the largest market segment within the retail channel in Europe. In Europe in total, hypermarkets and supermarkets account for more than 90% of all seafood sales. Note that, in Central and Eastern Europe, the number of specialized fish vendors is quite small.
Figure 1: Main categories of companies in the retail segment in Europe
The retail segment in Europe is dominated by a small number of large retail groups that own several supermarket chains. These retail groups have concentrated buyer organizations. It is estimated that Europe has approximately 600 different supermarket chains. Retailers such as Rewe in Germany operate different brands with different consumer target groups: Billa, BIPA, Merkur, and Penny. Other examples of large European food retailers are:
- Carrefour (hypermarket/supermarket based in France, > €100 billion turnover)
- Metro AG (Germany, > €100 billion turnover)
- Tesco (UK, ~€100 billion turnover)
- Schwarz Group and Aldi GMBH (discount supermarkets, Germany)
- Koninklijke Ahold N.V. (supermarket, the Netherlands).
The various subsegments within the supermarket segment are listed in Table 1.
Table 1: Different market divisions for supermarkets within the retail segment in Europe
Exclusive supermarkets and organic supermarket chains
Market share: small, but increasing
Quality: BRC, IFS
Sustainability: organic, MSC, ASC, GlobalG.A.P.
Quantity: low and medium volumes
Presentation: small portion exclusive brands / designs, frozen and defrosted
Purchase: processing importers, importers/wholesalers, increasing co-creation, which means that supermarkets work together with their suppliers on product development.
Large supermarkets / hypermarkets
Market share: large and rather stable
Quality: BRC, IFS
Sustainability: GlobalG.A.P. (ASC, MSC)
Quantity: high volumes
Presentation: small portions, house brands, brands, frozen and defrosted
Purchase: processing importers, increasingly direct
Market share: medium and increasing
Quality: Legal requirements. Focus on quality requirements such as BRC, IFS.
Sustainability: becoming important in countries like Germany, United Kingdom, Switzerland and the Netherlands. Focus on ASC and MSC.
Quantity: high volumes
Presentation: Medium-sized portions defrosted and frozen, recently also small portions and house brands.
Purchase: importers/wholesalers, increasingly direct
Fishmongers and specialty shops
Fishmongers are occupying a growing niche within the European market. Their market share ranges from 30-50% in Spain to 10-20% in the United Kingdom. Fishmongers mostly position themselves as speciality shops and offer a wide range of products to their customers. In general, their range of products is more diverse than the range of products seen in large supermarkets.
Fishmongers primarily sell fresh products from European origin. The share of frozen tropical seafood products is relatively low. Fishmongers mostly purchase their tropical seafood products from specialist importers.
Street markets only have a small market share in Europe. Their market share remains significant only in some parts of Greece and Spain. In general, vendors at street markets sell locally caught fresh seafood products. In some cases, they also offer defrosted imported seafood products, which are imported in order to complement their product range.
Trends in the retail segment
Increasing domination of supermarkets
Large supermarket chains and discount supermarkets dominate the retail channel segment. They represent a market share for seafood products of up to 80% in Northern and Western Europe. Specialist stores and street markets have somewhat higher market shares (50%) in Southern Europe (especially in Spain, Italy, and Greece). However, large retail chains in these countries are increasing their market share at the expense of fishmongers owing to the trend of one-stop shopping.
- Supermarkets increasingly dominate the retail segment. Quality and sustainability requirements for supermarkets are high. However, demand is relatively stable. Discuss with your European customer the action you should take to be a supplier for the supermarket segment.
- You should perform market research on specific market access requirements for large supermarkets. You can obtain the bulk of this information from European importers or from purchase managers at European supermarkets. For more information, see our study EU Buyer requirements for fish and seafood for a general overview of requirements.
Consolidation in the number of supermarket chains
There are over 420,000 non-specialist food retail stores in Europe. Nevertheless, this market segment is increasingly dominated by a relatively small number of large retail chains with concentrated buyer organisations. Several of these chains operate in multiple European countries, and the largest ones have turnovers exceeding €100 billion.
The number of retailers is expected to decline further in the future. Large retailers, such as Carrefour or Ahold Delhaize are increasingly importing low and medium value-added products directly, instead of relying on importers.
- If you are able to offer high supply volumes, you should try approaching the buying agencies of large European retailers directly.
- See our 10 tips for doing business with European buyers of fish and seafood and our 10 tips for finding buyers in the fish and seafood sector. These tips also offer more information on which topics are decisive for European buyers when searching for (new) suppliers.
Quality and sustainability focus
Large retail chains use strict quality and sustainability standards. They have strict delivery agreements about service, packaging, health and safety requirements. And they impose significant penalties if agreements are not met. BRC or IFS certificates are a requirement for doing business with at least the premium retailers.
Furthermore, Northern and Western European supermarkets in particular are increasingly committing themselves to selling sustainable seafood. And, as a minimum requirement, are demanding Global G.A.P and Aquaculture Stewardship Council (ASC) for cultured seafood and Marine Stewardship Council (MSC) for captured seafood. In recent years, the discounters have also started to demand the same sustainability requirements as high-end supermarket chains.
In addition, there is a variety of national or multinational certification initiatives throughout Europe that grant access to specific niche markets such as:
- Naturland for organically produced seafood
- Label Rouge in France for organic shrimp and other seafood as well.
- Discuss with potential European customers whether it is worthwhile investing in sustainability certification. Sustainability certification might offer you premium prices and access to several high-end markets in Europe.
- See our factsheet about the organic seafood market in Europe.
Several European discounters, such as Aldi and Lidl, are increasingly employing promotional campaigns for products such as pangasius. Discounters place advance bulk orders for special promotions. Special promotions often require high product volumes at the lowest available price. These types of promotion are expected to continue occurring, especially with regard to low and medium-value aquaculture products.
- If you are able to offer high product volumes at very low prices while maintaining good quality, offer these advantages directly to large European discounters.
Which market channels to target?
Figure 2: European market channels for frozen seafood products, 2016
Agents can represent your company in a particular market or country. They are usually in contact with potential buyers for your products. Agents may also work independently and act as contacts between your company and your buyers. Agents are appropriate if you lack contacts in the market. Sometimes, agents will also work for European buyers seeking to buy directly from suppliers in Developing Countries. Agents can also provide expertise on specific issues, such as requirements for accessing the European market.
- Agents establish contacts with overseas buyers or suppliers
- Agents have a good knowledge of distribution channels, which means that you do not need to have extensive export experience
- Agents can act as a substitute for your own sales force
- Agents should be able to provide you with up-to-date market information, but this has to be stated in the contract
- The commission of agents is generally between 2-3%
- An agent does not buy the product, so this leaves you with the full financial risk. At the same time your margin decreases, because an agent works on the basis of commission. However, you save on your own marketing costs and pay only in the event of success.
- Agents can be very difficult to bypass once engaged, because their position is protected under European Union law.
Importers are intermediaries engaged in importing and/or distributing goods in large volumes. Trading with an importer is of interest if you have no direct contacts with the retail or food service companies. Or if you cannot offer the low order volumes that retail or food service companies wish. Several importers often share containers with seafood products or may import containers with mixed products.
An importer is often the recommended trade channel, as importers:
- Know the market and product specifications very well,
- Have different types of customers, which lowers your risks,
- Offer additional services, for example pre-financing.
There are several types of importers:
- Trading importers, who only trade the product without processing it further themselves. This category can be further divided into generalists (importing more than only seafood), and specialists (importing only seafood).
- Processing importers, who reprocess products before delivering to their customers.
Processing importers generally deliver to higher market segments than trading importers. However, there are exceptions and there is an overlap between the two.
The Netherlands plays an important role in seafood trade, as many large seafood traders import their products through the Port of Rotterdam. From this point, imported seafood products are further distributed all over Europe.
Direct sourcing by retail and food service companies
Direct sourcing happens when retailers and food service companies purchase directly from the exporter. The number of exporters bypassing European importers has shown an upward trend.
This option is suitable for you if:
- You can consistently supply high volumes at a competitive price
- You are able to comply with strict quality, food safety and sustainability requirements
- You are already familiar with the European market.
- Various channels are available for market entry such as food processing industry, retailers and food service companies,
- Your margins are generally higher because of a shorter supply chain,
- High up-front investment and on-going support costs,
- High penalties in the event of non-compliance with contracts.
Compared with retailers in Southern and Eastern Europe, retailers in Northern and Western Europe are more likely to buy directly from exporters.
- If you are a small-scale exporter, targeting small-scale specialist retailers instead of large retail companies may represent an opportunity.
Trends and characteristics of market channels
Consumption patterns differ throughout Europe
The market channels through which imported seafood reaches European consumers differ widely between the east, west, north and south of Europe. The market channels depend on:
- The seafood-consumption habits
- The number of supermarkets and smaller outlets (such as fish vendors) in the individual countries.
In Southern Europe, seafood consumption levels are higher. Consumption habits are also more traditional than in Northern and Western Europe. This is because the majority of Southern Europeans know how to prepare fish. Consumers in Northern and Western Europe generally have less experience with fish and prefer portioned and ready-to-eat products.
- Gather market information about developments in the European market, taking into account the diverse preferences throughout the different parts of Europe. You can use sources such as CBI’s market intelligence platform and the market reports of Globefish for more information about the European seafood market.
The role of agents in the supply chain is declining
Increasingly, buyers need to have more control over the quality of the product. Therefore, buyers need to invest in direct relationships with suppliers and thus bypass agents more often. In some cases, depending on the product, agents will continue to keep their role as the facilitators of trading relationships between European buyers and exporters from Developing Countries. This is especially the case when:
- Services involving greater complexity are necessary, such as specific import requirements.
- Buyers need to source low volumes from many small-scale suppliers to consolidate supply. This can be the case with wild warm water shrimp.
- Choose the right type of trading partner for your products. The channels and partners required for value-added products differ from those needed for bulk products.
More direct sourcing by retailers
Large retailers and wholesalers, such as the Metro Group in Germany or Sligro in the Netherlands, are increasingly importing directly from Developing Countries. This is particularly true for large volumes of packaged fish with little added value. For instance pangasius or tilapia. Lower volume products, such as yellowfin tuna or clams, often continue to be sourced through importers.
- Supply chains are getting shorter. Making direct contact with large retailers or wholesalers might provide you with better margins and a more sustainable relationship with your customer. Although better margins may seem attractive, there are also disadvantages: direct trade relationships involve more responsibilities and greater risk. It is important to understand the legal implications of retail contracts.
- If you manage to build trust in direct supplies to large retailers and wholesalers, these customers may then ask you to provide more complex production services for them.
Opportunities for joint ventures
Generally, importers in Southern Europe appear to be more willing to invest in processing and production activities in Developing Countries than importers in Western Europe. At the same time, several importers with overseas production activities are Spanish companies with facilities in Ecuador or other Spanish‑speaking countries in Latin America.
In general, smaller European companies tend not to invest in joint ventures. However, while the European market is increasingly confronted with competition from emerging markets and supply is tight, European companies are increasingly interested in setting up joint ventures.
Please review our market information disclaimer.