Casing out casings
Has the economic downturn had any effect on sausage casings? And is gut really better than collagen? Ed Bedington checks out the pros and the cons
While some sectors of the food industry are feeling the pinch from the economic downturn, sausages appear to be bucking the trend - at least if the casings market is anything to go by.
"We've had our best year in eight years of trading," says Martin Blythe, of Martin Blythe Casings, and he foresees the market remaining strong.
"The market is quite buoyant at the moment," agrees Vince Minchella of collagen casing specialist Naturin/Viscofan, who believes the majority of that strength is down to the credit crunch. "A lot of what we're seeing is what we know from history - people tend to trade down and consume more processed meats in a recession. And sales of products like sausages go up, because it's a meat replacement."
While people might be tucking in more at home, that's also translating through to the foodservice sector, he adds. "People are staying in more, but when they do eat out, they are often eating out at the kind of places that are more likely to feature choices such as sausage and mash."
All of this is good news if you happen to be selling sausage casings. But is the economic downturn really having an impact on the casings sector? With companies looking to cut costs and offer the best deals to cash-strapped consumers, the high price of hog and sheep casings could prove to be their downfall, argues Nick O'Mara, national sales manager with Devro.
The sausage sector has transformed over the past few years, with increasing shelf space being devoted to premium sausages and, for the majority of these, gut is the casing of choice - driven by the supermarkets, says Minchella. But is that likely to change? O'Mara thinks the opportunity exists for the collagen sector to knock down a few doors. "Premium sales are not at the same level they were and that's positive from the collagen sales point of view," he says. O'Mara believes that the high prices of hog casings are pushing some in the sector to reconsider their choices. "Hog casings had got tight and expensive last year, but while they've eased back a bit, they are still more expensive." And he claims Devro is the only collagen manufacturer able to offer a man-made pork protein-based alternative to gut casings.
"From a bite perspective, collagen is a better product and people are looking at it as a real alternative. It's a lot cheaper and you can make significant savings by switching from hog casings," he says. "We're making great progress with our protein product as a replacement to hog. It allows manufacturers to implement value engineering without changing the product - they can just take costs out. People are looking to trade down from premium to standard and that's forcing the premium manufacturers to look for ways to cut costs."
However, not everyone agrees that the premium sector is suffering. Blythe acknowledges that gut casing prices are high: "Prices for hog casings still remain quite strong, because of demand in Europe and China. Prices dropped off slightly from their highs, but they still remain strong and I don't see them going back at all looking forwards."
Juergen Maurer, a partner with Continental Meat Technology, agrees that hog casings are still high, and says sheep casings are also creeping up again. "That's down to a drought in Australia and a reduction in production from New Zealand. The casings business is truly global; they have a drought in Australia and it affects us here."
But both report little change in demand from the premium sector. "I haven't seen people switching from hog to collagen casings," says Blythe, who reckons the premium sausage manufacturers don't seem to be making any changes. "I think that sector will stay strong." In fact, he points out that his butchery customers are more interested in the quality and look of the product, with price less of a factor.
Maurer agrees that people are not being put off by the high prices, but he does admit that the casing is now a sizeable percentage of the overall cost of a sausage. He also warns buyers to beware of the possibility of shorter bundles. "Traditionally, it used to be a 100 yards to a bundle, but some people have been getting 70 yards, so you need to specify exactly what it is you want."
Blythe points out that even if some consumers have traded down from premium sausages, there are plenty more to take their place. "We may see some people who buy premium sausages on the weekend switching to standard, but for those consumers buying fillet steak, their next step down might be a premium sausage."
Minchella agrees: "People are having premium sausages as a meal choice instead of steak. The fact that they are appearing on menus more and more is helping that trend as well."
Blythe adds: "You can still buy six to eight sausages for £3. I cannot see the market dropping that much. In fact, it may even strengthen." O'Mara agrees that overall sausage volumes are up and can see that trend continuing. "We're seeing the volume growing, up around 1%. And, with the credit crunch, sausages still offer a high-value meal, so we would expect them to continue to grow."
But while demand is buoyant despite the recession, the lack of wider market confidence does have a dampening effect on innovation. Few manufacturers are prepared to invest in research and development in an uncertain market, says Minchella. "Now is not the climate to be experimenting or be overly innovative. We're focusing on doing what we do and maximising sales around our core capabilities. We're always thinking ahead, but the main focus is on continuity and quality."
In fact, any investment in development is now focused on creating efficiencies to assist the customer, adds Minchella. "We've got a lot of customers pushing to get a few extra percentage points on yield, so all our work is focusing on delivering greater efficiencies," he says. So with the sausage market staying strong, and the economy working in its favour, the casings sector is one of the few markets that can look ahead with a degree of optimism. l
=== Collagen vs gut ===
Collagen has often been considered the poor relation when it comes to sausage casings, with premium producers mainly opting for gut. But with the changing economy, are producers going to have to rethink their attitudes.
Vince Minchella, of Viscofan/Naturin, does not think so, unless the retailers change their minds. He says the retailer specifications for premium bangers are what drive the demand for gut. "It has to be in a black tray and use gut casings, it has to tick those boxes," he says.
In fact, one retail buyer says: "Natural casing is critical in the premium sector. We tend to use collagen on our lower-tier products."
In the past, collagen has suffered from being seen as a manufactured product, compared to the more "natural" gut casings. While its uniformity has allowed for greater production efficiency, it has generally been seen as the product of choice for the cheaper, more industrial end of the market. Unless costs rocket from their already high position, not many in the sector expect that to change any time soon. But is it a choice consumers have an opinion on? Most are not even aware of the debate, says Devro's Nick O'Mara, who adds: "We've always believed the consumer doesn't have a problem with collagen. Six-and-a-half out of 10 sausages consumed are collagen-cased. Consumers aren't even aware of the difference."
He points out that, from an eating experience, collagen is better, as it delivers a more consistent bite than gut casings. So perhaps there is an opportunity in the market for the collagen boys. A little investment in some consumer education might even pay dividends. If producers can generate some pull from consumers, entrenched retail attitudes might just start to change.
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