<img height="1" width="1" src="https://www.facebook.com/tr?id=806477592798641&ev=PageView&noscript=1"/>

2023 economic trends: Seafood preparation

3 min read

This information is shared from the 2023 FCC Food and Beverage Report – highlighting the opportunities and challenges for Canadian food manufacturers by industry. To get the bigger picture – read the full report.

Despite a challenging year, demand remains strong

FCC Economics projects seafood product preparation and packaging industry sales to increase 9.8% YoY in 2023 but remain 5% below the 2021 level.

Figure F.1: Seafood product industry sales are expected to increase just under 10%

Graph showing seafood product industry sales are expected to increase just under 10%

Sources: FCC Economics, Statistics Canada, Barchart, Moody’s Analytics

Sales growth is expected to be weak in the first half of the year before picking up in the summer. We expect sales growth primarily driven by depleting historically strong inventories, higher lobster/crab exports to the U.S. and China, and strong salmon demand from the U.S. and UK. The inventory-to-sales ratio averaged 171% in 2022, the highest ever. We expect to see improved domestic retail demand for seafood in 2023 after a difficult 2022 amid elevated food inflation.

Supply is difficult to forecast as marine conservation policies are evolving and undergoing reviews. Policy decisions can have a material impact on sales, creating uncertainty in the forecasts. Yet we expect selling volumes to increase in 2023 due to robust global demand.

This strong demand is expected to improve gross margins in 2023 (Figure F.2). Our tracked index of raw fish, crustaceans and shellfish prices is projected to decline. We expect manufactured seafood export prices to remain relatively strong in 2023 due to a weaker loonie, helping margins. Labour costs as a percent of sales are also expected to decline slightly.

Figure F.2: Seafood product margins declined in 2022, expected to improve in 2023

Graph showing seafood product margins declined in 2022, expected to improve in 2023

Sources: FCC Economics, Statistics Canada

How we got here: Lower production numbers led to export declines

Seafood product preparation and packaging sales declined nearly 14% in 2022 (Table F.1) due to weaker exports. Salmon, lobster and crab export volumes declined YoY, and the closure of a salmon manufacturing plant in Surrey directly impacted sales. On the east coast, many operators were hit hard by Hurricane Fiona.

Table F.1: Lower exports resulted in a year-over-year sales decline

Table showing lower exports resulted in a year-over-year sales decline

Source: Statistics Canada

The U.S. increased imports of seafood products by 1% in 2022, while imports of Canadian products fell 9%. One of the largest discrepancies was in salmon, where the U.S. increased its quantity of imported salmon (both fresh and prepared/frozen) by 3%, but Canadian salmon imports declined 13%. The U.S. imported more from Chile, Norway and Denmark due to lower Canadian supplies. Lower crustacean imports from the U.S. resulted from weaker demand, with total imports declining 19% and imports of Canadian crustaceans falling 12%.

Lower domestic grocery sales also didn’t help. According to data from Nielsen IQ, grocery volumes of seafood declined 11% YoY. The higher price point of seafood relative to other proteins during this period of elevated inflation hindered sales. Sushi was the only category to see positive volume growth, while fresh seafood recorded a volume decline of 19%. Canned salmon and tuna volume declined 4%, while frozen seafood volume fell 9%.

Bottom line

  • Foodservice demand and export markets are paramount to Canada’s seafood industry success.

  • These two channels provide significant sales opportunities that can drive volume, especially for premium products like salmon, lobster and crab.

  • Production headwinds exist, but the global demand for sustainable seafood produced in Canada is very robust.

Read next
2023 economic trends: Meat products

FCC Economics projects sales from meat product manufacturers to increase 2.5% in 2023.