The smoky, sweet aroma wafts up through the kitchen and teases your nose. Bacon – there’s nothing like it. The turkey industry has tried to compete, but the product pales in comparison.
Okay, maybe it’s been a while since you woke to bacon’s tantalizing smell, but just thinking about those crispy strips is a pleasant experience. Who doesn’t love bacon? Nobody, if recent market results are any indication.
The hog market’s price resurgence is due in a large part to booming bacon sales. It’s hard to put an exact figure on the impact but $10 per head is not an exaggeration.
“I wish every hog came with two bellies today,” says one Midwest packer, emphasizing today’s red-hot demand.
Most, but not all of bacon’s gains have occurred in the fast-food arena. Pork has outpaced other meats, increasing foodservice use by 1.3 billion pounds in the last three years. Bacon has accounted for 19 percent of that. We all know that burger joints are over cooking hamburgers to ward off E.coli. But lets face it, fast-food hamburgers are pretty tasteless regardless of how they are cooked. Bacon as a condiment is the savior.
McDonald’s was the last great hold out and now you can even buy bacon by the slice, cooked right in the store.
Retail bacon prices averaged $2.92 per pound during March, that’s up from $2.50 in 1999. Retail pork prices averaged $2.52 per pound in March, breaking the previous record of $2.49 set in August 1997. Bacon is responsible for most of that gain.
What’s more, we’re just now entering bacon’s historical demand season, with the ever-popular bacon-lettuce-and-tomato sandwich.
Imagine, all that attention for pork’s most undeniably excessive product. The take-home points: Give consumers what they want and you will be rewarded; and, taste is still king.
But there’s more to the message. It shows that you can teach an old product new tricks. A traditional breakfast product, bacon is making its gains as an ingredient for any-time food. You can even find it on pizzas. So instead of the same-old, same-old, it’s making new inroads.
Hormel and Oscar Mayer have expanded their bacon lines. Oscar Mayer sells pre-cooked bacon in one-pound packages. Hormel’s newest bacon product features individually packaged slices that you can pop in the microwave. By reading and adjusting to market demands, these kinds of value-added products have secured customers that would otherwise walk away from the supermarket’s bacon display. Sure, these products are more expensive, but they also are fast, easy and reduce waste.
They’re also an example of why you don’t get more of the consumer dollar. You didn’t do anything to create or promote those products.
Will bacon’s heyday continue? Who knows. But bacon won’t continue to support profitable live hog prices long term. Back in 1994 when hogs were $16 per hundredweight, packers couldn’t get enough loins. Market hog numbers and abundant supplies of other pork products sent prices lower. In late 1998, once the export market tightened up, hog numbers and pork supplies once again crushed prices. Single-focus rallies aren’t sustainable.
It’s okay to feel good about profitable prices and pork successes, but remember the inelastic market that you live with today. You are now benefiting from the market’s volatility just like you suffered from it a year ago. A 1 percent change in production used to mean a 2 percent change in price – not anymore. In April, pork supplies were down 6 percent from last year, yet hog prices were 61 percent higher. The inverse response will return.
Packers and retailers have tightened their margins recently – again, to your benefit. Perhaps they took advantage of the market in 1998-99, but they’re paying some of it back now. It’s part of the yin and yang of the market.
We used to say “there’s more to a hog than chops,” today that applies to bacon. What will apply long term is the need to develop new products and markets, meet consumer demands and for producers to link further through the pork chain. All – not just one – of those combined will secure profitable hog prices.