Pork Report: Maintaining momentum

23 July, 2010
Pork has bounced back from the lows of just a few years ago, but can the industry sustain its success and avoid falling into a boom-and-bust rollercoaster ride for the category? Ed Bedington takes a look

Pork has been riding high on the hog for the last 12 months, with cash-strapped consumers looking for a more affordable option within the red meat category. But with beef prices starting to tumble, have the days of pork bringing home the bacon come to an end?


Terrible puns aside, the pork category has certainly been an area that has benefited from the recent recession, with the category outperforming total meat and volume sales, up by around 5% year-on-year. The reasons for its success are no great surprise, says Simon Parnell, consumer insight director with Kantar Worldpanel's meat and poultry division. "During the recession, pork was a key winner as a cheaper protein and people were looking to save money."

That view is backed up by the processors. A spokesman for Dunbia says: "We have seen, and continue to see, a definite shift in consumer purchasing habits from beef and lamb into pork. Although the prices for pig producers have been good in the past few months, the end-price has stayed relatively static, making pork an attractive product to purchase, especially for the price-conscious consumer."

But, Parnell points out, all that might start to change: "The growth of pork has slowed slightly in the last quarter, mainly because of the return to growth of fresh beef, which suffered in the past 12 months from being one of the most expensive proteins. The return of beef has had a knock-on effect on pork. Pork is still in growth, but how sustainable is that going forwards?"



Work to be done




Others point to the fact that while pork is perhaps not growing as strongly as it was, it is still moving in the right direction. However, there is still a lot of work that can be done, according to Gerry Smith, chief operating officer for Vion UK's pork division. "We need to work harder to get pork on the shopping list more frequently. That's a challenge for not just one part of the supply chain, though, but for all stakeholders."


Certainly the last year has seen more people adding pork to their shopping lists, says Parnell. "Around 75% of households bought pork in the last year, up from 74.4% to 74.7%."

He adds that while that percentage rise might not sound a lot, it effectively equates to a rise in sales of £8m a year. "Shoppers are buying greater quantities in each shop, buying more per trip," he says, with the bulk of that driven by heavy promotional activity from the supermarkets.

Promotional activity, particularly work by the likes of Jamie Oliver, has had a major impact on pork over the last year or so, particularly when it comes to more traditional cuts. Chris Lamb, head of consumer marketing with Bpex, says the growth is in roasting cuts, particularly shoulder and belly pork. "Why are they doing so well? Of all the red meat, pork is offering the best value and, within that, shoulder and belly are even better value."

He says the Jamie Oliver programmes, which aired in January 2009, gave consumers permission to purchase pork again, and retailers a reason to promote it. "It was once a distress sale, but now it's a proper sale," he adds.

All of this is to the benefit of the entire sector, points out Vion's Smith: "One issue that has been around for years is the focus on just two parts of the pig middle and legs. The sector still needs to improve carcase balance. There have been some steps, but there is still a way to go to."

To that end, one pig producer is hoping to develop a new concept for the rolled shoulder roast essentially to rebrand it as a hog roast. Alistair Butler, an East Anglian-based farmer, netted the £1,000 ABN Innovation Award at the British Pig and Poultry Fair in May this year with his concept, and says the idea of encouraging the home-cooked hog-roast pork would not only be cheap and simple, but would also help improve that carcase balance.

With the Jamie Oliver effect in danger of wearing off, a concept to keep shoulder sales high could pay dividends to the industry. Butler points out that consumers are familiar with the hog roast, which carries a number of positive associations, and creating a simple, easy-to-prepare product would be a good fit with modern consumer trends.

The concept could also prove a hit in the foodservice arena, points out Bpex's Lamb. "A smaller carvery, doesn't want a big hog roast, but they can do any size of rolled shoulder, keep waste to a minimum and do good business with it."

Foodservice is certainly an area of opportunity for pork according to Jimmy Butler, who runs Blythburgh Free Range Pork in Suffolk with his son Alistair. "At long last, the catering industry is beginning to realise that pork is a good product to have on the menu, and they're realising that, unlike beef steaks, which are a loss-leader, they can make a profit with pork. People are starting to realise they need to put things on the menu that make money. There has been a definite shift in attitudes within restaurants that pork is good and that has helped to keep the amount of cut pork going into catering at a reasonable level."



Perception of pork




That positive view of pork is not restricted to the foodservice sector. Recent research carried out by Vion has shown that people view pork as tasty, versatile, lean and good value for money, says Smith.


However, he adds attitudes to pork are split on generational lines, with older people retaining positive attributes with the meat, while younger consumers seem to suffer from perceptions such as the meat being tough. "Older people appear to have a greater knowledge of pork and what to do with it and are more positive, while younger consumers know less about it and there's a question mark over it for them."

Smith says there is a need to bridge the generation divide and get some positive associations with pork to replace those negative perceptions. "These are issues the whole industry needs to address. There is a perception that pork can be tough, and we stress the word perception."

He says he is reluctant to use the word education. "We all talk about education, but to actually do it is a whole lot more difficult. We need to raise awareness of the good things about pork and communicate more with younger consumers."

To do that, there needs to be a shift in attitude, he says: "The more we treat it like a commodity, the more it will act like a commodity."

When it comes to positive marketing for pork, plans are afoot to increase the marketing funds available from the UK production base. A campaign from producer level upwards is seeking to double the current levy to enable better promotion of pig meat under the Red Tractor assurance scheme. The scheme was the brainchild of Jimmy Butler, who is now campaigning to sign up more producers to support the concept. The idea could see a further £10m raised to add to the promotional pot, giving pig marketers at Bpex a chance to invest in some sizeable marketing activities.

However, the move is far from a done deal, Butler admits: "The issue over the levy is still very alive, and Bpex is looking at what sort of marketing campaign it could put together, which it will then put to the board. Of all the people who have responded to a survey, done through the National Pig Association, around 75% have reacted positively to having the levy increased. However, that doesn't represent 75% of the pigs. The bigger boys have come back [with a] negative [response]."

He says the benefits would outweigh the costs of any increase: "We're only talking about a levy of 1p/kg. If we can put it across to the public about the benefits of Red Tractor pigs, and if that doesn't increase demand for RT pigs by 1p/kg then we'll have failed. There's £10bn worth of RT product sold in the UK with poor marketing. Just think what we could do if we educated the public. The idea hasn't fallen over yet. No, we've not got 100% yes yet, but it's not a no either."

Bpex's Lamb welcomed the move to increase marketing funds, but said the decision had to be taken by producers. "It's from the producer end, but we're happy to talk to them about it and put it into our planning processes."

The fact that the UK industry is considering upping its investment in marketing shows just how far it has come in recent years. Just a short time ago, the 'Pigs are Worth It' campaign for a rise in pig prices to enable the industry to survive proved a huge success and, combined with the falling feed prices, farmers are now considering raising their investments.

James Park, senior analyst with the Agriculture & Horticulture Development Board's Market Intelligence, says: "Feed prices have become pretty manageable. The general consensus is that the difficulties of a few years ago, when high feed prices saw people going out of business, are behind us. For those who stayed in business, they have paid off those losses and are now starting to think about reinvesting. Investment is needed in the industry, in terms of suitable accomodation for pigs."

John Howard, UK market director with the Danish Food & Agriculture Council, says that confidence is reflected in the Danish market as well. "At the moment, producers are quite cheery because, finally, the prices have started to move up, and that always helps. Feed costs have remained low and that's usually the root of most problems.

"From the production side in Denmark, the position has shown a significant improvement really in the last few weeks. If it is sustained, then it's obviously going to give farmers the chance to catch their breath and think about the future with a little more confidence and stability."

He adds that the confidence is also spilling over into the UK market, with Danish-linked processing businesses, such as Tulip and Direct Table, both putting in heavy investment of late.

However, Danish farmers continue to face a number of political issues, he says, not least of which is environmental legislation. But he adds there appears to have been a thawing of attitude within the government on such issues. "The Danish government is looking to introduce some measures to help with environmental costs in Denmark and more flexibility. They're recognising that the environmental legislation is tough. It won't sort things quickly, but it will help with investment confidence."



Sow stall ban



On the wider political front, Howard says the EU ban on traditional sow stalls will come into effect from 2013, and he predicts some issues to arise from that move. "There is already doubt growing as to whether a number of EU countries will be ready and whether they'll look for a derogation on it. As far as Denmark and the UK are concerned, having both gone a big chunk of the way, we're certainly opposed to that. So there's quite a debate. We think Brussels will insist on compliance, which could create an interesting situation in some EU countries."

Politics is equally involved when it comes to country-of-origin labelling. Work has been under way to create a voluntary code through the Pig Meat Supply Chain Taskforce, and that work has recently been given a boost by the decision in the European Parliament to insist on compulsory country-of-origin food labelling. In a first vote on a new European Union food labelling regulation, MEPs accepted proposals that meat labels should indicate where livestock was born, reared and slaughtered. The proposal now returns to the EU Council of Ministers for further amendment and then MEPs will vote again.

Mick Sloyan, Bpex chief executive, who heads up the UK taskforce, welcomed the news at the time. He said the regulation was a justification of the taskforce's work: "We deliberately ran our labelling code along the lines of what Europe might propose and the new proposals looks great on paper. If you're selling a product and you make some form of claim for it either directly or through imagery say a pack of sausages with red, white and blue paper wrapping or the Queen's warrant on a pack then there's a duty on manufacturers to say where it comes from. If you source from within Britain, you can say it, but if you shop around to get the cheapest meat, then you should have to say it too."

Bpex has also launched a new website www.porkprovenance.co.uk to help encourage more honest labelling of pork and pork products, Lamb says. All organisations that have signed up to the taskforce's voluntary Code of Practice will feature on the site, providing industry and consumers with a reference point, which enables them to see those firms that are committed to providing customers with clear information about the pork products they sell.

Lamb says: "We think there's pretty much agreement throughout the top end of trade to get more honest labelling into production. That's going through, but it's not going to happen overnight due to packing stocks and runs that need to be sorted out."

However, he agrees that honesty of labelling applies on a wider level than just origin. "Work is also being done to define production methods. That will come through, but again, it's going to take nine months to a year to sort," he says. "Outdoor-bred means exactly that and then they are finished indoors, so we have to be clear on that for consumers. We need to be honest about the three types of production: outdoor, indoor with straw, and indoor with slats."

However, when it comes to consumers, origin labelling is not a top priority, according to research carried out by the Food Standards Agency (FSA). A study by the FSA, pulled together from five separate pieces of research, claimed that while there was an awareness of country-of-origin labelling, it was not a main concern for consumers when shopping. However, the research did reveal that consumers would most like to see origin labelling on meat products.

Vion's Smith says that while his company is backing the work of the taskforce and has participated fully, it is important not to get bogged down in trade issues and lose sight of consumer needs: "Anything that improves clarity and can help with sales of the product has to be a good thing and a positive step forward. However, we need to remember to start with the consumer in mind and make sure that any approach is market- or consumer-led, rather than just production-driven."

So overall, pork has bounced back from the brink over the last few years. Consumers consider it a versatile, healthy, good value option and are buying more of it, more frequently and, as a result, returns to industry are up and investment is taking place on a larger scale than in many years. The bounce-back of beef is a threat to that growth, but Vion's Smith says it is down to the sector to maintain its grip. "Can pork hold onto the gains?" he asks. "I wish I could predict that. It's almost a case of saying there remains a big opportunity for pork, especially when you compare pork consumption in the UK against that of European countries.

"If the pork sector can capitalise on some of those positive attitudes, then it will be able to maintain that momentum. But if suppliers sit back and do nothing, then consumers might just be more open to switching."




Innovation in pork


Fresh pork is not a category renowned for its new product development. The number of new launches and innovative moves over the last few years could probably be counted on one hand. However, recent movements are starting to bring new hope in that sector.

Bpex's Chris Lamb remains sceptical when it comes to innovation. "What is there particularly that can be done?" he asks. "There's nothing that grabs."

However, he points to an upcoming new range of pork, developed by Jamie Oliver with Cranswick. "One we keep hearing about is the Jamie Oliver range, which was supposed to be coming out soon. There has been a lot of noise, but I've not seen it yet. They're talking about extra maturation and a few hedge cuttings on top, but I don't think there's any real innovation in hedge trimmings."

The deal with Cranswick will see the Yorkshire-based business provide all the meat for Jamie's range of fresh pork joints, pork steaks, marinated ribs and bacon. Reports say that Jamie, his development chef and food developers, worked together with Cranswick's own food experts to develop a range of recipes, although details have yet to be released.

Speaking at the time of the announcement, Cranswick chief executive Bernard Hoggarth said: "Jamie Oliver has a very good reputation with consumers as being a very straightforward and straight-talking chef and, when you meet him, he is the same as the guy you see on the television. We have been developing products with Jamie and his team for the last six to nine months and are very excited about the range."

Innovation comes in many forms, of course, and Quality Meat Scotland recently pulled off a coup by signing a deal with the Scottish Society for the Prevention of Cruelty to Animals (SPCA) to gain that organisation's welfare accreditation for its Specially Selected Pork brand.

Gordon Sloan, marketing executive with QMS, says: "The initiative also aims to highlight the high health and welfare standards involved in the scheme and we're able to communicate the association with the Scottish SPCA, Scotland's animal welfare charity, whose inspectors visit Scottish farms to monitor the high welfare standards on-farm."

QMS promoted the scheme with billboard posters, as well as television and taxi advertising, reaching over 1.2 million shoppers each week.

Other new developments in the pipeline include work from Vion, although, at the moment, the chief operating officer for Vion UK's pork division Gerry Smith is keeping his cards close to his chest. "Vion has a few NPD things coming to fruition, hopefully later in the year, so we're investing in product development across a broad range of things," he adds.




fresh pork analysis by Kantar worldpanel


The fresh pork market in Britain is worth £811m in the 52 weeks to 13 June 2010, an increase of 2.9% on the previous year. The category has also seen real volume growth in the last year.

Category volumes have increased by 4.6% over the same time period, driven primarily by households buying more per trip. British households are being encouraged to buy in greater volumes through Y-for-£X deals which have become more prevalent in the last 52 weeks. However, while promotions have driven larger baskets, the percentage of households buying fresh pork over the year remained static, at almost 75%, and households continue to buy fresh pork on average 10 times per year.

All cuts within fresh pork have seen sales growth in the last year except steaks and leg joints. Steaks make up the largest sector, accounting for one-third of fresh pork sales, but value sales have fallen by 2% and volume sales have declined by 6%. While leg roasting joints have become less popular in the last year, sales of shoulder and loin joints have increased, as more households buy into these sectors. It is also important to note the strong performance of the mince and diced/cubed sectors, which have both performed ahead of the wider fresh pork category.

In terms of retailers, Tesco continues to hold the largest market share, accounting for 28.2% of sales. Of the big four supermarkets Tesco and Morrisons are the main winners, as both extend their market share by performing ahead of the market. Waitrose is the other noticeable winner, reaching 4% share in the latest 52 weeks.

Private-label lines account for 80.6% of the market and drive performance, growing by 7% year-on-year, while branded and loose pork are in decline.

Kantar Worldpanel monitors the grocery retailer take home purchasing habits of 25,000 demographically representative British households.

Contact: meatdivision@kantarworldpanel.com

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