Bacon makes consumers hog wild, but producers can't keep up
- Hormel, one of the nation’s largest bacon producers, saw a 7% drop in profit for its third quarter — despite skyrocketing demand for bacon, according to the Star Tribune.
- The price of pork bellies more than doubled since April, but pork processors like Hormel can’t pass the price increase along to consumers fast enough to make up for the increased cost.
- Earlier this month, Hormel announced a $130 million expansion of its precooked bacon plant in Kansas. The company also recently acquired Cidade do Sol, a Brazilian meat company, and Fontanini Italian Meats and Sausages, which provides Italian meats for the foodservice industry.
Consumers want bacon faster than farmers can raise pigs to deliver it. The boom started years ago and doesn’t appear to be letting up anytime soon. There was even a bacon scare last winter, when the nation’s pork belly reserves hit a 50 year low. Consumers were still able to bring home the bacon then, and they will today, too.
Hormel has already responded by issuing price increases on products that use pork bellies, pork trim and beef trim. The company estimates it will start to see the effect of the price hikes around October, and profits should return to normal levels. In addition, Hormel's investment in its precooked bacon factory in Kansas should also help the meat producer recover.
Demand for bacon has continued to rise in recent years, thanks to a number of factors: Growing foreign markets, an increase in popularity of Asian cuisines that frequently use pork belly, elevated demand for fast-food breakfasts with bacon and sausage, and more bacon on restaurant menus.
It’s interesting that consumers clearly want more bacon in their lives at a time when many also report trying to eat a healthier diet. Bacon is delicious, but not a superfood. However, there are a number of organic and nitrate-free options available, which may give health-conscious consumers reassuring peace of mind that they can treat themselves.
The pork market is enjoying a steady upswing as bacon demand continues to soar. Many pork producers are expanding operations to meet the increased demand for their meat. Seaboard Triumph Foods is investing $300 million in a Sioux City, Iowa plant that will process roughly 20,000 hogs a day when complete. Prestage Foods has a new pork plant under construction in Eagle Grove, Iowa that will process 10,000 hogs daily.
The U.S. Department of Agriculture predicts that when these and other expansion projects are complete, the U.S. market will get an additional 900 million pounds of pork. By the end of 2018, U.S. farmers expect to reach a milestone: turning out as much pork as beef.
- Star Tribune Hormel signals higher prices for bacon amid soaring demand
- Faribault Daily News Demand for bacon catches Hormel in cost and price squeeze