Seabass and Seabream Market Report - June 2009



Oversupply and lower prices

The large rise in supply of bream in 2008 from Greece and Turkey, the two major producing countries, had a significant downward effect on prices. On the other hand, bass prices held up well although the general weakening of demand is now causing lower prices for both species. The outlook for 2009 is not positive: supply is still ample and with consumers hesitant to spend on non-essentials such as restaurants, the outlook is negative in most markets.


Production

As reported by FEAP, the Federation of European Aquaculture Producers, Europeís
production of seabass and seabream rose significantly in 2008 to
105 900 and 137 200 tonnes respectively, or 10.7 and 20.9 % from 2007. What is surprising, though, is that market prices are reflecting this large increase in supply very differently. Seabream prices have been falling drastically whereas bass prices have been quite stable.



Official statistics remain problematic

It must also be said that the official trade statistics for these species are also not considered totally informative as large volumes are reportedly exported in generic categories rather than under the seabass and seabream tariff codes. As a result, most industry analysts believe that the official trade statistics vastly underrate the effective market size of many of the larger markets, especially Italy.

In any case, production has clearly risen the most in the two largest producer countries, namely Greece and Turkey, but also Spain has increased its production in 2008. It is not likely that this trend will continue in 2009, as many producers are facing severe economic difficulties and with demand much weaker than last year, 2009 will be a difficult year for most operators.

In late 2008 several Greek producers decided jointly to limit sales in order to lift prices. This did have an effect during late 2008 and early 2009 but as the producers are not able to finance the carrying cost throughout winter (during which the fish will even lose some weight) these volumes are now coming to market with the inevitable weakening of prices as a result.


Markets

Demand for seabass and seabream is heavily impacted by the ongoing economic crisis since much of the two species is consumed in the restaurant sector, which, of course, is sensitive to changes in consumer confidence and perceptions about future purchasing power. On the other hand, a lack of adequate alternative species in the fresh sector may still enable producers to market their production throughout the year. Farmed salmon prices, for example, are on a rising trend and higher salmon prices should benefit bass and bream sales over the coming months.

In the run-up to Easter, the seabass and seabream market has somewhat stabilised with only moderate downward movements in prices from last month of around 5% on most sizes. Demand is weak but has lately been picking up helped by the lack of salmon in the European market with markedly salmon higher prices. The situation is still serious for most producers with new problems arising from much stricter terms applied on credit-insurance, forcing producers to take on additional exposure.

Of recent news in the market, interest is created by more organic products coming on stream, especially from Greek producers. Quantities are still limited but any diversification and niche market development should be welcome at this stage.



Italy

Official statistics for 2008 show a decline in total import volumes of 6.1% and 11% in value for the two species. When looking at the individual situation of bass and bream, the picture is quite different however. Bass import volumes fell in fact almost 20% to 16 400 tonnes as unit values increased from 4.85 to 5.39 EUR/kg compared with 2007. It is therefore quite evident that it was the rising bass price that caused sales to drop dramatically. For bream on the other hand, the situation is quite the opposite. Prices fell from 4.22 to 3.34 EUR/kg with imports rising almost 9 % to 18 300 tonnes. Prices are therefore of obvious importance when producers try to move significant volumes of product.



Spain

One of the larger import markets, Spain also has a significant domestic production of both bass and bream. Traditionally Spain focused on bream production and chose to cover its need for bass mostly through imports. This situation has changed over the last four years with Spainís
domestic production of seabass almost doubling in four years from 2005 to 2008, reaching 11 800 tonnes. As a result, prices in the domestic market have fallen although production is still profitable.



France

The French market in 2008 was quite good for the two species with the positive import trend continuing from previous years. Both volumes and values were up. Although France is a much smaller market for bass and bream than Spain and Italy, domestic production is limited so any consumption rise has to be covered by imports. For 2009, however, no rise in consumption can be expected despite the very attractive prices of bream in particular.


UK

The UK market has been targeted for years by Greek producers. The successful introduction in many supermarket chains of both whole fish and value added products including fillets is making the UK market a valuable outlet for the growing quantities supplied by Mediterranean producers. Total imports last year reached 8 000 tonnes with bass representing 68% and bream 31% of volumes. The reason for the large share of bass, despite the higher price, is that many consumers are accustomed to wild bass from traditional UK capture fisheries.



Price development

With the large build-up of production in 2008 and the decision by Greek producers to carry inventory (as biomass) into 2009, there are significant quantities that will have to be sold during the coming months. Prices therefore will continue to soften until there is more balance in the market. It is important that this takes place before the summer months when the new generation of fish becomes ready for the market. As can be observed every year, when this happens in June or July, prices start falling.

On the demand side, the most important consuming countries of bass and bream are going though turbulent economic times. This has a direct impact on consumer confidence and on out-of-home consumption such as restaurant meals in general. Italy, Spain, France and the UK are showing declining consumption levels in 2009, particularly in restaurants. On the other hand, current price levels are attractive for consumers but the absence of any joint or coordinated marketing activities by producers and common campaigns is making it difficult to communicate the positive product attributes of the two species to consumers. Price remains therefore the main sales parameter.


Outlook

2009 will be a difficult year for producers. Most companies already had a bad year in 2008 and with ample supplies in a situation of weakening demand, prices are bound to suffer. During 2008, remarkably strong bass prices provided some solace to farmers but lately also the bass market has been weaker, although price levels are still much higher than for bream.

In Greece, the difficult situation caused some of the larger companies to agree on reduced harvesting and sales before Christmas. The result was a positive lift for prices. If similar agreements could be done on a pan-European basis involving producers in Turkey, Spain and Italy in combination with new investments in joint marketing and sales campaigns, product and market development as well as branding, the foundation for new long-term growth could possibly be laid now.



By Audun Lem (GLOBEFISH)
© FAO GLOBEFISH 2009

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