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Processed meat and seafood, worth US$238 billion in 2015, accounts for over 10% of total packaged food sales, making it one of the biggest staple foods categories. In part this is due to high unit prices. Chilled processed meat represents half of total processed meat and seafood sales but is coming under increasing pressure, not least because of the recent report by the WHO naming processed red meat as carcinogenic, putting it in the same class of cancer risk as tobacco smoke.
Whilst chilled processed meat is set to grow by a mere 3% over 2014-2015, shelf stable seafood is expected to outperform the wider processed meat and seafood category with value growth of 11%. Brazil, Russia and the US are expected to be the biggest contributors to shelf stable seafood’s growth, aided by the rising popularity of tuna and success of new product developments from Grupo Calvo in Brazil and Bumble Bee’s owner Connors Bros in the US.
Meat substitutes continues to gain in popularity but within meat substitutes consumers are shifting from frozen to chilled variants, which is forecast to grow by 7%; well ahead of its frozen counterparts at 4%. Chilled products is typically perceived to be fresher and more natural than frozen ones.
2015 has also seen shifts in the top five country rankings. The US has overtaken Japan to be the world’s largest market whilst Italy has leapfrogged France to jump into fifth place.
Japan has lost its leading place to the US for the first time since 2000. This is to a large extent a result of the falling consumption of seafood. The Westernisation of diets, with people eating more meat and dairy products, has weighed on fish demand. Yet perhaps the main reason for the shrinkage is the Fukushima nuclear meltdown, which contaminated nearby oceans. Annual consumption of fish per person in Japan fell by 10%, from 13.2kg in 2010 to below 12kg in 2015, while that of processed meat increased from 4kg in 2010 to 4.4kg in 2015.
The slump in Japanese fish demand stands in stark contrast with that of China, the world’s fourth largest processed meat and seafood market. In China, consumption of seafood is expected to rise by 7% over 2014-2015, while that of processed meat will fall by 3% over the same period, due to a stampeding herd of meat scares. Following the tainted meat scandal affecting McDonalds, KFC and Pizza Hut in 2014, Chinese authorities seized 800 tonnes of smuggled 40-year-old frozen meat in June 2015, which inevitably led to negative impact on meat sales and consumer confidence.
Similarly, in the US, volume sales have increased by 4% since 2013 as consumers seeking a healthier diet have been turning to fish. Western Europe has also continued its steady performance, and markets like Italy, which have traditionally been associated with processed red meat, have seen a boost in seafood sales aided by the increasing popularity of chilled processed variants. While at the moment seafood seems relatively resilient to concerns over health and animal welfare which has affected processed meat, future supply and sales could potentially be impacted by overfishing and the environmental and ethical issues generated therefrom.
Although seafood growth has been recovering, processed red meat sales are under pressure. Global retail volumes slumped by 1% in 2014, with consumption in China and the US each showing a 3% decline. Concerns over health, the environment and animal welfare, as well as changing demographics and tastes, have all contributed to red meat’s waning popularity across its largest markets. The WHO’s latest report labelling red meat as carcinogenic will likely to add to manufacturers’ woes, at least in the short term. Meat associations are already alarmed, with Italy’s Parma Ham Consortium stating that Parma Ham is not a processed meat and should not be treated as such. Researchers from the University of Guelph called the report a “severe threat” to Canada’s meat industry.
In the face of the latest developments, meat-oriented businesses will need to defend their brands and are likely to emphasise the benefits of meat consumption, such as the fact it contains important nutrients and high quality proteins. They are also likely to include a greater variety of less processed products in their portfolios. This is already happening as seen by Hormel Foods’ acquisition of Applegate Farms, which sells organic meats, and does not use antibiotics, hormones, or chemical preservatives. The future is likely to see mainstream meat brands moving away from conventional red meats towards healthier variants, such as organic meat or poultry, and possibly the addition of meat substitutes to their portfolios. Quorn and Granja del Sol are potential brands to look into.