Sector Trend Analysis – Fish and seafood trends in Lithuania

Introduction

Lithuania is a country in Northern Europe and is situated on the southeastern shore of the Baltic Sea between Latvia and Russia (Kaliningrad). The Lithuanian coastline is 90km in length and its territorial waters and economic zone within the Baltic Sea measure 7000 squared kilometers^{Footnote 1} Eurofish International Organization: Developing fisheries and aquaculture in Europe.

The fishing industry represents a component of the various sectors that contributes to Lithuania's trading activity within the European Union. Fish and seafood are significant to the country's economy in general. The fishing industry within Lithuania has a long tradition and plays an important role in the small communities that occupy its coastline. According to Eurofish International Organization: Developing fisheries and aquaculture in Europe^{Footnote 1}, the sector employs over six thousand full-time workers in the industry consisting of 565 in fisheries, 431 in aquaculture and over five thousand working in fish processing. Marine fisheries represent most of the Lithuanian catch from the Baltic Sea, long-distance ocean and coastal fisheries, followed by aquaculture companies whose common production supply is from within ponds (around 87%) and then fish processing companies, who are important in the industry due to their economic size and employment rate. The products produced within the fish processing companies are for Lithuanian consumption (64%), while the remaining products are for export abroad (36%) [30% to EU countries and 6% to non-EU countries]. Also, most of the material used by fish processing companies in the production of fish products are imported, accounting for 72% of all imports in 2017 and 2018.

Lithuania is the sixteenth most populous country in the EU with 2.8 million inhabitants in 2018. The total spending per capita on fish and seafood in Lithuania was US$141.1 in 2018, accounting for a 7% share of spending.

Trade overview

Lithuania is the thirty-third largest market for fish and seafood in the world with imports valued at US$634 million, and the twelfth largest fish and seafood importer among European Union countries with imports valued at US$443 million in 2018. Canada was the fifteenth largest market in fish and seafood, accounting for 2% of the total world market share.

Lithuania has a diverse supply network of fish and seafood products. In 2018, Lithuania's top two suppliers of fish and seafood were Sweden (US$287 million, 39,628 tonnes) and Norway (US$57.8 million, 22,397 tonnes). Canada supplied US$83,252 and 0.11 tonnes of fish and seafood to Lithuania in 2018.

The top imported products to Lithuania in 2018 were fresh or chilled Atlantic salmon, worth US$289.9 million, followed by frozen cod, worth US$56.3 million. Imports of both frozen sockeye salmon and frozen fillets of Pacific salmon increased significantly from 2014 to 2018, along with frozen coalfish in general.

Top ten fish and seafood Lithuania imports by product type, in 2018 in US$ millions

Canada's performance

Lithuanian imports of fish and seafood products from Canada between 2013 to 2017 was not extensively measurable. In 2018, Lithuania imported US$83,252 and 0.11 tonnes of fish and seafood products directly from Canada, however these numbers do not fully account for all the Canadian seafood products provided through other larger EU countries. According to industry sources (cited in Euromonitor International, 2018) Lithuania has very limited sourcing of local seafood with the vast majority of products being imported.^{Footnote 2} Lithuania's top three imports of fish and seafood products from Canada were live, products of fish or crustaceans, molluscs or other aquatic invertebrates (US$83,211, 0.055 tonnes); coral and similar materials, shells of molluscs, crustaceans or echinoderms (US$24.00, 0.005 tonnes); and frozen fish fillets, n.e.s (US$17.00, 0.050 tonnes).

Overall consumer trends

Lithuania is experiencing a decline in its population due to the rising emigration level of its younger generation (18 to 29 year olds) in pursuit of employment and greater opportunities, despite Lithuania's recent falling unemployment rate and improved economic conditions. The recent rise in emigration was originally thought to be due to those wanting to avoid a new health insurance tax, as well as those looking to migrate to the United Kingdom prior to the implementation of Brexit. However; other than greater employment opportunities, other factors such as income inequality, insecurity in retirement, social exclusion and a lack of strong cultural identity have also been cited as reasons for the exodus of Lithuanian's youth,^{Footnote 2} (Euromonitor International 2018). Nonetheless, a growing economy and faster wage growth has spurred consumer confidence, yet, price remains a main factor when consumers are considering a purchase.

E-commerce is emerging, though considered relatively new in its usage, while cross-border shopping mainly to Poland and Latvia for greater deals, is increasing. A 2017 SwedBank survey for Delfi revealed that the vast majority of respondents (95%), said they mainly buy food when they go to Poland, where certain products benefit from a preferential 8% value-added tax (VAT) rate. This trend has impacted tourism with outbound trips to Poland and Latvia increasing by 40% and 67%, respectively from 2012 to 2017^{Footnote 2}, (Euromonitor International 2018).

Young adults aged 18 to 29, having been raised in the post era of Soviet control; tend to have a more global outlook in comparison to their parents which has led to an increase towards a propensity for international foods and brands. In contrast, Generation X aged 35 to 54, prefer domestic over foreign brands and are interested in sustainability and other green issues. They support companies that promote cultural events or the environment and are willing to pay more for products whose packaging is recycled and/or reused. Mid-lifers aged 45 to 64 and later-lifers aged 65 to 79, are more conservative and prefer domestic brands, especially as later-lifers who lived under Soviet rule, were accustomed to rationing, nationalised property and travel restrictions^{Footnote 2}, (Euromonitor International 2018).

Lithuanian food consumption is varied with younger Lithuanians favouring International cuisine, while older generations prefer traditional cuisine including "zeppelins"^{Footnote 3}, cold soups, salted herring and pancakes. Lithuanian's prefer freshness (63%) and healthiness (25%) when buying food. A 2017 survey of cooking habits revealed that 95% made dinner meals at home as a healthier and cheaper alternative to eating out and to spend more quality time with family. Similarly, higher incomes and convenience have driven demand for ready meals and eating out.

Health awareness and healthier lifestyles are gaining traction within Lithuania. The demand for food that promotes health and well-being has increased in recent years and the consumption of fish has had some effect in promoting the perceived benefits of fish consumption. Spending on health goods and medical services has improved by 36% recently, as life expectancy for men and women are 63 and 71 years old, respectively. Alcohol consumption paired with a fondness for foods and drinks high in saturated fats and sugars have in part, contributed to more than half of all Lithuanian deaths due to heart disease and physical inactivity that has contributed to greater obesity rates. (Euromonitor International, 2018)

As seen in the chart below, Lithuanians consume more meat than fish and seafood products. The percentage share of spending and spending per capita on meat is significantly higher in both historic and forecasted periods in relation to fish and seafood consumption. However, the forecasted CAGR for the percentage share of spending on fish and seafood is expected to align more closely to the forecasted growth rate of percentage spending on meat by 2023.

Retail sales

Lithuanians consume predominantly more meat than seafood in their daily diets. In 2018, both processed meat and seafood grew in both retail value and volume terms which may be attributable to varying factors such as increasing urbanisation, in addition to rising disposable incomes within Lithuania.

The growth dynamic of the fish and seafood category can be categorized by the demand for fresh and chilled (both processed and whole cuts) processed seafood versus the availability of shelf stable and dried seafood which are perceived as consisting of high levels of varying preservatives. As cited earlier, Lithuania has very limited sourcing of local seafood with the vast majority of products being imported. Consumers tend to perceive imported frozen seafood as less risky considering it has to be imported from quite distant producers. However; Lithuanians still enjoy consuming fresh and chilled fish when available, over shelf stable or dried, even though its quantity is limited. Consumer preference for chilled and fresh products is attributable to the perception that these products are of better quality, healthier and of higher nutritional value and have greater flavour than shelf stable or dried. Retail sales of fresh and chilled raw packaged fish and seafood (both processed and whole cuts) accounted for 76% of total retail sales of fish and seafood in 2018.

The forecasted retail sales of fish and seafood are expected to reach US$63.8 million by 2022 and is forecast to attain a CAGR of 6.9%. Fresh fish and seafood is forecasted to account for US$18.6 million in 2022, while more popular categories such as chilled and frozen fish and seafood is expected to reach a combined total of US$35.7 million by 2022. The growing awareness of the health benefits associated with consuming fish and seafood (omega 3 fatty acids, rich in phosphorus and protein) propagated by nutritionists via mass media, paired with increasing disposable incomes and growing demand, will assist in increasing Lithuanian's future consumption of fish and seafood.

The historic and forecasted volume sales of fish and seafood highlight once again, the preference of consumption of fresh and chilled/frozen fish and seafood in comparison to shelf stable and dried fish and seafood consumption to Lithuanians. In 2018, fresh, chilled and frozen fish and seafood accounted for 82.5% of total volume sales of fish and seafood compared to 17.5% of total volume sales of shelf stable and dried fish and seafood in 2018. The retail sales are forecasted to attain a portion of 85.1% and 14.9% respectively by 2022.

Market concentration by company

Lithuania's processed meat and fish and seafood market is led by Biovela UAB that predominantly offers two main brands, Biovela and Utenos Mesa which cover the processed meat category. The company attributes its success to a wide range of products that target differing consumer segments, as well as having a strong distribution network and an explicit marketing strategy. In relation to Lithuania's fish and seafood market, Viciunai & Ko Uab maintained its leading position in processed seafood in 2018. The company offers diverse brands including three major brands, Vici, Esva and Columbus. Vici benefits from its longevity on retailers' shelves supported by brand awareness, various marketing activities in addition to price promotions. Esva and Columbus offer lower unit prices and can target lower-income consumers. Viciunai & Ko Uab make significant investments in advancing technologies in seafood processing to ensure safety standards through all processing levels.

Most Lithuanians shop at supermarkets (42.5%), as they provide more convenience, a wider range of products and competitive pricing through promotions and discounts not offered through traditional grocers (representing 21.4%) of the distribution market in 2018. Discounters such as Lidl, representing 6.1% share of the distribution market, are a new concept for shopping and are popular amongst young consumers as they provide low prices and quality private label products. Local markets are still popular as they provide freshness and higher quality products to the consumer.

Manufactured product analysis

According to Mintel (2019), Lithuania has manufactured several products containing fish or seafood as an ingredient, sub-category 'fish products' in their markets between June 2013 to February 2019. "Fish products and fish products" includes fresh, frozen, dried, preserved, smoked, or canned fish, shellfish (shrimp/prawns, oysters, mussels, clams, crab, oysters), squid, octopus and lobster. It also includes breaded products that are not positioned as hors d'oeuvres, along with seafood and vegetable mixes. The manufactured products are mainly of the new/variety/range extension and some of the key attributes are ethical-environmentally friendly packaging, ease of use and no additives or preservatives (many products may list more than one claim per package). The top packaging types are tray, skin pack, carton, and flexible stand-up pouch or tub format. Most products manufactured can be categorized under the chilled versus frozen storage types, and most are distributed by supermarkets.

Examples of manufactured products

Seafood Sticks

Source: Mintel, 2019

Company	Sainsbury's
Brand	Sainsbury's
Category	Processed fish, meat and egg products
Country	United Kingdom
Country of manufacture	Lithuania
Import status	Imported product
Date published	February 2019
Launch type	Relaunch
Price in US dollars	1.72

Sainsbury's Seafood Sticks have been relaunched with an improved recipe, and a new pack. This responsibly sourced product is described as individually wrapped surimi fish protein sticks with water and starch, and now retails in newly designed widely recycled pack containing 16 sticks, and featuring the Certified Sustainable Seafood MSC logo.

Giant Surimi Prawns in Garlic Oil

Source: Mintel, 2019

Company	VG Handel
Brand	Vici
Category	Processed fish, meat and egg products
Country	Austria
Country of manufacture	Lithuania
Import status	Imported product
Date published	December 2018
Launch type	New packaging
Price in US dollars	3.40

Vici Surimi in Jumbo-Garnelenform in Knoblauch-Öl (Giant Surimi Prawns in Garlic Oil) have been repackaged with a slightly altered design. The MSC certified imitation prawns are made from fish muscle protein and retail in a 320 gram (g) pack with 200g drained weight.

Large Seafood Stick

Source: Mintel, 2019

Company	Tesco
Brand	Tesco Ready to eat
Category	Processed fish, meat and egg products
Country	United Kingdom
Country of manufacture	Lithuania
Import status	Imported product
Date published	November 2018
Launch type	New variety/range extension
Price in US dollars	0.58

Tesco Ready to Eat Large Seafood Stick is now available. The crab flavoured surimi stick is made with Alaskan Pollock (Theragra chalcogramma) and hake (Merluccius productus) with added water and starches. It is high in protein and retails in a 50g pack, featuring the MSC Certified Sustainable Seafood logo.

Seafood Snack with Cottage Cheese and Dill Filling

Source: Mintel, 2019

Company	Plunges Kooperatine Prekyba
Brand	Vici
Category	Snacks
Country	Czech Republic
Country of manufacture	Lithuania
Import status	Imported product
Date published	January 2017
Product source	Shopper
Launch type	New product
Price in US dollars	1.56

Vici Surimi Rybí Tycinky s Tvarohovou Pomázánkou s Koprem (Seafood Snack with Cottage Cheese and Dill Filling) is a source of protein and is high in unsaturated fats. The product is retailed in a 160g pack.

Conclusion

Lithuania is a moderate consumer of fish and seafood and imports a significant portion of what they consume. Lithuania is the thirty-third largest market for fish and seafood in the world with imports valued at US$634 million in 2018. Imports from Canada from 2013-2017 were not extensively measurable, with moderate import improvements recorded in 2018, however; there is still opportunity for growth, especially with the progressive elimination of tariffs under the Canada-Europe Trade Agreement (CETA). For example, the pre-CETA EU tariff on frozen mackerel was 20%. Elimination of this tariff will allow Canada more access and enhanced export opportunities into the EU market.

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

• Overview of the Trade Commissioner Service in Lithuania
• Find a Trade Commissioner

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ben.berry@canada.ca

Sector Trend Analysis – Fish and seafood trends in Lithuania
Global Analysis Report

Prepared by: Laurie Bernardi, International Market Research Analyst

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