Casings crisis

The sausage sector has found itself facing huge hikes in hog casing prices, and with no end in sight to the price rises, and fears supplies will run short, does this mean the sector will have to re-evaluate the role collagen plays within the market,

Premium sausages have been an industry success story over the last few years. Growth in sales for the sector continues to see double digit growth year-after-year - and is certainly showing no signs of slowing down.

However, a black cloud is looming over a sector which takes pride in its ingredients. Its reliance on natural or hog casings to give the sausages their premium look could see the sector face some difficult choices in the coming months.

With demand in China high for pork products, and a reduction of up to half in production in that country, hog casings are starting to run short on the rest of the world's markets.

Jim Brisby, sales and marketing director, for leading sausage producer Cranswick, said the sector is being hit by a double whammy of growing demand in the UK, coupled with shortages in the casing sector.

"The premium sausage sector is continuing to grow, with value sales up 19.8% in the last 52 weeks. At the same time, the Chinese market is also growing massively.

"A lot of UK casing is sent to China for washing and its staying there - so we have a combination of growth of our own market, and product not being available." The contraction in the UK herd is simply adding to the sectors woes, he adds.

And the situation is hitting the whole market, says Martin Blythe, of Martin Blythe Casings. "We're having major problems with hog casings, we've seen the prices rise from around €7 to €12 recently. The main problem is that China has halved its kill so they're wanting more pork products from elsewhere. In fact, I've just been quoted €16 a bundle."

Blythe says EU product has been a little cheaper, but obviously, with everyone beginning to scramble around looking for a good source for casings, prices there are rising too, climbing to around €13 to €14 a bundle. "Prices are ridiculous," he says, and its unlikely to change anytime soon. "We don't see any light at the end of the tunnel just yet and expect this situation to continue for another six months."

Gordon Whicklow, of wholesale suppliers Scobie and Junor, says many in the sector are just being overwhelmed at the sudden wave of price increases, sausage casings being just one. "Thing just seem to be going up and up. We haven't done an official price rise for six to seven years, but this year we've done 10 already."

Lee Hamilton, sales director with casings manufacturer Devro, says the situation is being closely watched. "We've just had Foodex Meatex and it was on everyone's lips about the recent trend in hog price increases."

And he is not expecting the situation to alter in the foreseeable future. "We're expecting prices to go up further and we're expecting a stronger reaction in the next eight to 10 weeks when supply really tightens."

Another potential danger for the industry, besides the hike in price, is the possibility that sources will simply dry up, or at least tighten to the point where manufacturers start having to consider an inferior specification on hog casings as an alternative.

Andrew Keeble, who runs premium sausage brand Debbie & Andrew's, says he's starting to see inferior casing being sold into the market.

And Brisby says that while Cranswick are not suffering any quality issues at the moment, he suspects others might not be so lucky. "Our spec is hand pulled, not knife pulled, but there is a limitation on how many hand pulled suppliers there are out there.

"Prices have doubled where they were, and we're now buying consignment to consignment as a result.

"At some point its got to stop, but can't see that happening just yet."

Blythe says that while his company has managed to maintain quality, he was starting to see the tightening effect elsewhere. "I have noticed some manufacturers have switched to whiskered, or knife pulled product recently."

Of course, there is perhaps a simple solution for the sausage sector in the face of its current troubles - a switch to collagen casings.

But with considerable investment in the development of the premium sector, are manufacturers willing to gamble with a sector which is seeing such strong growth by fiddling with a successful formula?

Keeble thinks there's an opportunity for collagen, but he says it would be an uphill struggle for the manufacturers to push it through.

"Premium sausage market is led by the buyers with the big retailers as much as by public perception. I don't think consumers put that much importance on it, don't think they mind.

"The buyers will always say it has to be in natural casing and they do look nicer in the packet. But from an eating point of view there are advantages to collagen - its uniform, and you don't get complaints about chewy casings."

Vince Minchella, from collagen specialists Naturin/Viscofan, agrees the retailers are a big influence: "As with everything, things are driven by the retailer and the growth in the last five to six years in premium sausages, in double digit figures, has been fuelled by those retailers and they're demanding the natural casings.

"We have customers who used to have little or no use for natural casings and now they use a lot. And until there is pressure from the retailers to change, I can't see there being much change."

Tom Harvey, from Sainsbury's, echoed those views: "I think we would be quite concerned about moving away from natural casings for premium - we tend to use collagen on our lower tier products. Natural casing is quite critical in the premium sector."

As it would appear, the main problem with collagen is one of perception in the sector. The more uniform look, with less meat show, typical of collagen is traditionally associated with the poorer quality, economy ranges of sausages, or mass manufactured products.

The premium end of the sector, in smart black trays and slick packaging has a more natural, less regimented look, and it is that appearance which buyers are pushing for.

Brisby says: "Premium product just wouldn't look right in collagen." He rules out a shift from natural to collagen for one simple reason. "It isn't an option because it's a different product."

Whicklow agrees: "If products are already selling in natural casing, I can't see them moving back to collagen. They are two very different products.

"Collagen has improved but honestly don't see a switch unless quality problems become a major issue on natural casings. At the end of the day, working with naturals has never been easy."

But not all sausage manufacturers are dismissive of the collagen casing. Keeble points to the fact that his company's best selling product, the premium Harrogate sausage is in collagen casing. "Sales on that are still growing, which suggests that people do not mind collagen casings, and from a manufacturing point of view, we'd rather use collagen."

He also points to the fact another top-end product, Kerry Food's Porkinsons sausage is also in collagen casing.

However, while Keeble sees the potential for collagen and has experience the benefits, he still thinks it would be a risk to go all out on collagen. "I think we'll always try and use a natural casing, and always strive to do that. We're at the top end of the market, and if we suddenly switch to collagen completely, I think we'd be in trouble."

However, in the face of the current hog casing market, he rules nothing out: "If the quality on natural casing deteriorated and couldn't get it, we'd have to look at it. The evidence we're seeing is that consumers don't mind collagen casings."

Minchella echoes the view on consumers. "We've done a lot of research into consumer perception, and by and large, they don't know what they're buying. Having said that, they do have eyes and can see the difference between the products in terms of consistency."

He agrees that the collagen sector has been maligned in terms of perception. "From our point of view, we're playing catch up with the natural casings industry. We've got this tag of being artificial, despite the fact that collagen casing is a natural product - people still refer to it as artificial, and that's a clear indication of how the market stands."

Hamilton says there is work needed to change people's views: "Collagen is natural, its made from animal protein. We definitely want to change perception of the market full stop, make people aware of the fact it's natural. People see collagen as the lesser product and that's not the case."

Minchella says it is something his company is pushing for: "Collagen casings traditionally have been associated with economy and value ranges and high volume. But slowly and surely we're trying to break down those barriers."

He says there is some evidence of that starting to happen in the sector: "If you look at events like Champion of Champions [MTJ's premier sausage competition], people wouldn't have considered entering a collagen sausage, but time moves on and we are now starting to see entries using collagen. The shows the barriers are coming down, but I'm sure it will still be a long time before a sausage in collagen casing wins Champion of Champions."

It is not like the product does not have some advantages over its hog casing counterpart either. Keeble says: "From an eating point of view it's better - it's uniform, and you don't get complaints about chewy casings."

Minchella agrees there are good points with collagen: "It offers a lot of advantages - it has a more tender bite and uniform yield. Unfortunately, it does communicate to the consumer that its premium. They associate that uniform look, all nice and neat with economy."

However, attitudes are changing, and part of that change has come from innovation and development on the part of the manufacturers.

Naturin/Viscofan are certainly pushing for improvements, since Minchella: "I believe collagen products have improved. We're strongly focused on that, we're not alone, our competitors in the sector are innovating all the time.

"A key factor holding us back on development of collagen has been due to the structure of protein - when you apply heat to it, it straightens out.

"We've now come up with an innovation that gets round that and the sausage has a gentle curve when cooked, it just makes it look that little bit less uniform. And we believe that's a major step in giving a collagen product to market that looks the job."

Hamilton points to his own companies pork based products as a potential alternative to hog casings. "Most collagen casings are bovine based, but we've developed a porcine range, and that has seen high growth, growth which has particularly accelerated in the last few weeks alone. And that's all new business for us."

He says the porcine casing give better clarity, which allows for greater meat show on the sausage, which is proving attractive to manufacturers.

And its not just the big manufacturers who are starting to show an increasing interest in the collagen offering. Hamilton says they are seeing a growing demand within the traditional craft butcher sector, an area more commonly associated with the hog casings.

"We have a butchery style range, which has been established for some time now, but in 2007 we saw some increase in usage there, and that grew even stronger towards the second half of the year." He adds sales to that sector have grown by around 4%.

Minchella says his company is also seeing a rising interest from butchers who are starting to struggle to find the quality they want from hog casings.

Hamilton says the price rises are forcing manufacturers to re-evaluate their options. "There are people considering a change because of the hike in prices. People are now talking to us who would have been firmly gut casing before."

Minchella agrees that the situation could play into the collagen market, although he feels both have a place in the sector. "The way prices are going, from an economic point of view then its perfectly natural to consider collagen, otherwise people won't be able to make sausage, or it won't be at the standard you want."

However, regardless of the fact the wider supply situation is providing an opportunity, the collagen sector has to consider its options in the premium market, as Minchella points out. "The economy sausage sector, the traditional area for collagen, is falling while the premium is in growth - its natural for the collagen sector to want to move into that area."

So perhaps the current problems facing the hog casing sector could prove to be a helpful advantage. Hamilton certainly thinks so: "We were looking for growth in that area anyway, but we're going to capitalise on the current situation.

"I think hog pricing is going to be high for the foreseeable future and it's going to get worse before it gets better."

However, Blythe is more philosophical: "We saw the same problem in sheep casing not so long ago, prices went very high, around £9 a bundle, and now its half that. You can't have the good times all the time."

So, while the industry remains unsure how long the tightening in the supply of hog casing is likely to last, there remains a window of opportunity for the collagen sector to stamp its mark on a sector that has previously ignored what it has to offer. Time will tell if that opportunity becomes a reality.

The case for collagen?

Collagen suffers from the belief the product is artificial, and while it may be the result of a man made process, the product is still created from natural protein. However, that is often overlooked, and reinforced by the common reference to hog casings as natural casings, Devro's Lee Hamilton points out.

Collagen cases were created after scientists discovered that the naturally occurring collagen protein could be broken down and reconstituted into an extrudable mass. This could then be formed into a tube or casing suitable for use in sausage manufacturing.

The advantages of this method, over the more traditional animal gut casings, was the ability to gain uniform size and weight.

However, with the reinvigoration of the sausage category through the premium sector, collagen casings were passed over in favour of the more traditional, and less uniform, hog cases.

However that lack of uniformity, while seen as a strength for the premium sector, poses problems for manufacturers due to variability in product size and quality, and eating quality can be impaired with consumers occasionally encountering "chewy" skins.

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