With healthy volume growth, processors are determined to build on the fixture's potential. Ed Bedington reports
Bacon is the star performer of the pigmeat market. It is a convenient, flexible and fast food where sales have broken the £1bn mark after rising 7% on last year.
Taylor Nelson Sofres puts its worth at £1.05bn, which is higher in value than fresh pork and only a little lower than beef.
As well as the increase in value, there has been volume growth of 8%, while retail price has shown only a slight decline at 1%, along with a 3.3% increase in promotion.
But while bacon flourishes, the British industry is unable to take as much advantage of the growth as it would like because of the disastrous decline in the nation's pig herd for a wide variety of reasons, not least the high cost base and diseases such as foot and mouth and swine fever.
And the competition from over the Channel grows even more fierce as the Dutch and the Danish invest heavily in marketing and promotional activity.
However, the bacon sector's overall volume growth has pleased Chris Lukehurst, the Meat and Livestock Commission pigmeat marketing manager. He says: "If we had looked at this a year ago, we would have seen a 6% increase, but in value, not in volume, so it is quite healthy."
Market penetration has also grown, by 1%. On average consumers now buy bacon every three weeks. MLC retail trade manager Maurice McCartney says the growth in volume is driven by consumers buying more bacon when they make a purchase and not by frequency of purchase. Most producers believe there is potential to increase consumption and every sector of the market sees the need for new product development, improved merchandising, better promotion and customer education. John Howard, marketing director of the Danish Bacon and Meat Council, says: "The potential for bacon is untapped."
The beleaguered British bacon industry once dominant has been forced to surrender the middle ground and make its stand against the Danish and Dutch in the premium sector, so any work to add value would benefit it.
McCartney says: "Adding value will encourage more people to trade up and that will be disproportionately beneficial to the premium area, which will benefit the British."
Last year's acquisition of Malton Foods, Uniq's pigmeat arm, by major poultry supplier Grampian led to much speculation on its future, but as one industry insider said, Grampian is just getting on with running it. "The purchase of Malton was good, because there was a danger it would be run into the ground."
The problems of the diminishing British pigmeat industry may have played into the hands of the Dutch and the Danes who are increasing their pigmeat market shares.
However, the Continentals do not have the market to themselves because competition on the world market is heating up. There is increased production from Canada and Brazil, both cheap producers, and Spain is showing big potential in the pigmeat area.
Brazil flooded the Russian market with cheap pigmeat this year, and while the country is denied access to the EU market, any displacement caused by changes in world market dynamics adds pressure to the EU market.
The impending EU enlargement could also have an impact on the European pigmeat markets. So producers face the prospect of a future where new players with cheaper production costs are seeking a slice of the action. At the moment they are feeding demand from the Japanese, Russian and Mexican markets in particular, but that situation cannot be relied on to continue indefinitely.
So, although the bacon market has not seen huge change over the year, its future stability cannot be so certain.
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Bacon is the star performer of the pigmeat market. It is a convenient, flexible and fast food where sales have broken the £1bn mark after rising 7% on last year.
Taylor Nelson Sofres puts its worth at £1.05bn, which is higher in value than fresh pork and only a little lower than beef.
As well as the increase in value, there has been volume growth of 8%, while retail price has shown only a slight decline at 1%, along with a 3.3% increase in promotion.
But while bacon flourishes, the British industry is unable to take as much advantage of the growth as it would like because of the disastrous decline in the nation's pig herd for a wide variety of reasons, not least the high cost base and diseases such as foot and mouth and swine fever.
And the competition from over the Channel grows even more fierce as the Dutch and the Danish invest heavily in marketing and promotional activity.
However, the bacon sector's overall volume growth has pleased Chris Lukehurst, the Meat and Livestock Commission pigmeat marketing manager. He says: "If we had looked at this a year ago, we would have seen a 6% increase, but in value, not in volume, so it is quite healthy."
Market penetration has also grown, by 1%. On average consumers now buy bacon every three weeks. MLC retail trade manager Maurice McCartney says the growth in volume is driven by consumers buying more bacon when they make a purchase and not by frequency of purchase. Most producers believe there is potential to increase consumption and every sector of the market sees the need for new product development, improved merchandising, better promotion and customer education. John Howard, marketing director of the Danish Bacon and Meat Council, says: "The potential for bacon is untapped."
The beleaguered British bacon industry once dominant has been forced to surrender the middle ground and make its stand against the Danish and Dutch in the premium sector, so any work to add value would benefit it.
McCartney says: "Adding value will encourage more people to trade up and that will be disproportionately beneficial to the premium area, which will benefit the British."
Last year's acquisition of Malton Foods, Uniq's pigmeat arm, by major poultry supplier Grampian led to much speculation on its future, but as one industry insider said, Grampian is just getting on with running it. "The purchase of Malton was good, because there was a danger it would be run into the ground."
The problems of the diminishing British pigmeat industry may have played into the hands of the Dutch and the Danes who are increasing their pigmeat market shares.
However, the Continentals do not have the market to themselves because competition on the world market is heating up. There is increased production from Canada and Brazil, both cheap producers, and Spain is showing big potential in the pigmeat area.
Brazil flooded the Russian market with cheap pigmeat this year, and while the country is denied access to the EU market, any displacement caused by changes in world market dynamics adds pressure to the EU market.
The impending EU enlargement could also have an impact on the European pigmeat markets. So producers face the prospect of a future where new players with cheaper production costs are seeking a slice of the action. At the moment they are feeding demand from the Japanese, Russian and Mexican markets in particular, but that situation cannot be relied on to continue indefinitely.
So, although the bacon market has not seen huge change over the year, its future stability cannot be so certain.
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