2019 Bacon Report: A slow in bacon's roll?

Bacon continues to fly off the shelves, but the growth has been stunted recently by outside pressures.


Elizabeth Fuhrman, The National Provisioner

September 20, 2019


The multi-year rise in bacon looks to be softening relative to the last five years, and much of that decline can be traced to the outbreak of African swine fever in China. The outbreak is driving a lot of pricing action in the recent quarter affecting pork prices in particular, says David Thompson, principal at IRI, Chicago.


“We saw last year there were some pricing actions, but the volumes were staying flat and the velocities were staying stable,” he says. “I’m seeing some softest in the velocity in the recent weeks.”


While bacon’s landscape is changing in the near term, bacon is still up 3.8 percent in volume and 1.4 percent in dollars for the year ending June 16 in total U.S. multi-outlets, IRI reports. Comparing the full year to this time last year, bacon also is still outpacing the refrigerated meats category, Thompson says. But in the most recent quarter, the bacon category has started to soften with the dramatic acceleration in pricing. For example, for the 13 weeks ending June 16, the price per volume per pound is up 3 percent from last year, IRI reports. In the month ending June 16, the price per volume per pound is up 8.6 percent.


“There’s been a big jump from a pricing perspective, and it’s having a negative impact on the velocity,” Thompson says. “The velocity in the most recent month is actually down 8.5 percent. Bacon still has very high penetration and the trips are up from last year. Consumers still are very interested in bacon, but now it’s facing some pricing challenges that are likely going to stick for the short term.”


Bacon continues to be a growth engine even in the current market where health is a driving factor, says Meagan Nelson, associate director at The Nielsen Co., in Chicago.


Nielsen tracks bacon is up 3.7 percent in dollars and 4.6 percent in units for the 52 weeks ending July 6. With African swine fever in China, however, Nielsen also sees moderation in the latest four weeks ending July 6 as prices have taken a sharp turn up. In the latest four weeks, dollars are up 9.8 percent as units flatten out to only 0.3 percent as average unit prices increased 9.5 percent from this time last year, Nielsen reports.


Bacon is a highly promoted product, so IRI’s Thompson expects the price increases will be mitigated by increased promotion in the category.


“In general, almost all of the bacon processors are very tentative right now on pricing,” says Chris DuBois, IRI’s senior vice president. “They know they have a great product. They know they’ve got something that people love, so pricing isn’t something that is taken easily. What we are overseeing are incremental moves as a way of trying to cover cost, recover risk and in this kind of competitive market, I wouldn’t expect to see crazy, huge price increases. I would expect to see incremental wait and see. So every three to six months you can begin to see small actions over time.”


While the 16-ounce bacon package is the sweet spot in the category, DuBois also expects that manufacturers will look to promote smaller pack sizes, such as 12-ounce, as a way for consumers to spend the same dollar amount, but receive a little less product.


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