Country of Origin labelling: Why seafood origin transparency makes economic sense

Consumers often wrongly assume that the seafood on a restaurant’s menu is Australian. From 1 July 2026, all hospitality venues must state the origin of their seafood as Australian (A), imported (I) or of mixed (M), mirroring the system used for seafood in retail since 2006. This small change addresses a big economic issue.

A simple policy fix for market failure

New Country of Origin Labels (CoOL) for ready-to-eat seafood tackle a textbook market failure known as ‘asymmetric information’. In this case, this is where restauranteurs know more than diners about the source of prawns, tuna, oysters, and other seafoods. Unclear product origins blur the price signals between Australian and imported seafoods, leading to consumers choosing the wrong products for them. CoOL will reveal this information to diners, allowing unique prices for domestic and local seafood to emerge.

Why consumers need clear seafood labelling

Australia currently imports approximately 62 per cent of its annual seafood consumption. Whilst many Australian consumers accept imported seafood, some prefer local options. Without CoOL regulations, consumers cannot compare local and imported seafood based on intangible traits, like freshness, traceability, ethical standards, and sustainability credentials, that can vary widely around the world. This causes inefficiency as the price differences between local and imported seafood at the fish market – where country of origin labelling has been required for some time - aren’t adequately reflected in the prices diners see on restaurant menus. Withholding this information can lead to:

• Underpriced local seafood. Since any consumers willing to pay a premium for a verifiable Australian product can’t identify it, prices for domestic seafood remain artificially low compared to imports.
• Overpriced imported seafood. Meanwhile, those unwilling to pay the premium for local seafood can’t find lower-priced alternatives because unclear labelling artificially inflates the price of imports relative to local seafood.

The payoffs from CoOL to the hospitality and seafood industries

By mandating a visible A, I, or M tag, CoOL provides consumers with the missing information at negligible cost to hospitality businesses. Shared, or symmetric, information between restauranteurs and diners allows the seafood market to split into local and imported segments. This is expected to lead to:

• Higher profits for local seafood suppliers. Clearer provenance lets Australian fishers and aquaculture operators charge more for their products to willing consumers, strengthening the industry’s bargaining power and improving profit margins, especially for scarce, high-value species.
• Competitive edge for the Australian seafood industry. Higher profits support the Australian seafood industry’s ongoing efforts in sustainable sourcing, labour protections, and other credentials that make domestic seafood so popular. CoOL will help Australian producers compete on its strengths, which are broader than just price.
• Closer connections between the domestic seafood and hospitality industries. CoOL allows restaurants and other venues to differentiate themselves from competitors based on where they source their ingredients, while selling local seafood for higher prices and at better margins. When local sourcing is more viable, the hospitality industry has greater incentive to invest in long-term relationships with domestic seafood producers.
• A more resilient Australian seafood industry. CoOL protects the brand of the Australian seafood industry without the need for more costly government intervention, like trade restrictions or industry subsidies.

Why it matters

CoOL is not just a labelling change. It will shift demand, pricing and margins across the seafood supply chain. Hospitality venues and producers will need to adjust sourcing, pricing and positioning as consumer preferences become more visible.

As the transition period unfolds, CoOL regulations should not be viewed as red tape, but instead as fixing a market failure that allows customers to make better decisions and domestic fishers to capture the full value of their produce.

For businesses, this is a shift in market dynamics rather than a compliance exercise. BDO supports government and industry to quantify these impacts and make informed decisions in response to changing policy settings.

Contact us to discuss the implications and economic merits of policy changes on your sector.