The UK marine aquaculture industry is dominated by Scottish-farmed salmon which generates more than 90 per cent of industry revenue. The industry is expected to continue growing well during the next five years to 2017-18 underpinned by solid demand for salmon both at home and abroad and demand for healthy, omega-3-rich seafood as consumers become more concerned with their health and wellbeing.
The UK marine aquaculture industry is highly cyclical. Scottish-farmed salmon generates more than 90 per cent of industry revenue. Salmon production is very responsive to changes in global salmon prices, which are, in turn, susceptible to changes in global demand and supply conditions.
This has been in evidence during the past five years, as the industry has enjoyed strong but volatile growth. Robust global demand for salmon and an outbreak of disease in Chile, one of the world's largest producers of salmon, sent prices soaring early in the five-year period. This resulted in a flood of foreign investment as players scrambled to increase their production to meet soaring export demand. During 2011-12, prices collapsed as global supply recovered, resulting in a sharp contraction in revenue and profitability.
During 2012-13, the industry is forecast to return to strong growth as salmon prices recover and export demand rises. According to industry analyst Steven Connell, “industry growth should also be supported by demand for healthy, omega-3-rich seafood as consumers become more concerned with their health and wellbeing”. Overall, in the five years through 2012-13, revenue is estimated to grow at a compound annual rate of eight per cent. In the current year, revenue is forecast to rise by 7.7 per cent to £603.4 million.
Mr Connell adds: “The industry is expected to continue growing well during the next five years, underpinned by solid demand for salmon both at home and abroad”.
Wild catch volumes are forecast to stagnate, so farmed salmon will supply most of this demand. Growth is likely to slow later in the period as global salmon supply increases. High salmon prices and the cost benefits associated with producers moving to larger farms are expected to support profitability.
The major threat facing the industry is the possibility of a disease outbreak, if companies expand too quickly. Producers will also come under increasing pressure from environmental groups and an increasingly eco-friendly public to improve the sustainability of salmon farming. Looking ahead to the next five years through 2017-18, IBISWorld estimates industry revenue will continue to increase, but at a lesser rate experienced in the past five years.
The marine aquaculture industry displays a high level of market share concentration, as the top five players account for almost 75 per cent of revenue between them. Major companies include Marine Harvest, Scottish Sea Farms, The Scottish Salmon Co, Hjaltland Seafarms UK and Meridian Salmon Group.
