Bacon and sausages have defied the recession and production cost pressure thanks to their ease of preparation and affortability. But premium lines are also doing well, finds Michael Barker

Say it quietly, but bacon and sausage producers are not too upset about the recession. While their cousins in the beef and lamb sectors are cursing the frugality of today's cash-strapped shoppers, the bacon and sausages category has emerged as one of the big winners in the downturn.

Value sales have risen 9% and 10% respectively to a combined £1.85bn and volumes are up 2.6% and 1% [TNS 52w/e 6 September]. By contrast, volume sales, which are the key metric in the current inflationary environment, of other red meats have declined. Fresh lamb volumes are down 6%, beef has fallen 3.6% and pork is down 1.3% [TNS].

That bacon and sausages are doing well is perhaps not surprising given that they address pretty much every recessionary trend going being tasty, comfort foods that are quick and easy to prepare yet also good in scratch-cooked family meals. But it is their relative affordability that has been the key driver of category growth.

Like other pigmeat products, they were hit by soaring pig feed costs last year, which combined with high fuel prices and low returns prompted significant retail price rises. But farmgate pressure has relented over the past few months, causing prices to fall back. A 454g pack of Wall's thick pork sausages now costs roughly the same as it did a year ago at just over £2, according to The Grocer Pricing Index, while a pack of own-label sausages is now just 97p some 20% cheaper than it was 12 months ago. An own-label eight-pack of unsmoked back bacon, meanwhile, is 13% cheaper at £2.07.

Heavy promotional activity has undoubtedly played a part, with retailers significantly increasing the number of money-off and two-for deals they have been running across the category.

The lower prices and increased promotional activity have helped sales growth accelerate as the recession has gone on, says Bpex consumer marketing manager Chris Lamb, citing the fact volume sales have risen 7.8% on bacon and 2.8% on sausages in the past few months [TNS 12w/e 4 October]. Increasing household penetration with twice as many consumers buying bacon and 1.5 times as many buying sausages as chicken breasts underscores the category's strong position.

"Buoyant is the word I'd use to describe the sector," enthuses Lamb. "It's one of those terrific success stories. Both are seen as a fantastic comfort food, and neither is seen as expensive."

Especially compared with pork. Bacon and sausages have avoided being dragged into the margin row that has engulfed the fresh pork sector. The National Pig Association has warned that since the start of the year a number of supermarkets have been sourcing more cheaper imported pork to be more competitive on price, which is putting pressure on processors and farmers (see box opposite)

Lamb is confident that as bacon and sausages, particularly at the value end, have been made with imported pork for many years, the sector won't be unduly affected by rising imports. The big four retailers have all pledged to push levels of British pork in their own-label products back up.

Own label still dominates the category. In the sausages top 10, Richmond and Wall's are alone in a sea of own-label and the bacon aisles are dominated by tertiary brands. However, brands are expected to drive long-term category growth.

Over the past year, branded bacon sales have already leapt 33.4% in value, giving it a 24% share of the market, while own label has only managed a 3.1% increase [TNS]. Branded sausages have also outperformed their own-label rivals with a 13.4% uplift compared with 7.9%.

With own-label brands very much playing the price card and often relying on imported meat to do so brands have an opportunity to add genuine value to the category, believes George Streatfield, MD of Denhay Farms, which produces the Spoilt Pig line. "People are definitely buying into provenance, and they want to know where the bacon comes from, who cures it, how the pigs are raised," he says. "A brand has to have integrity. I don't think tertiary brands add value, they just take up shelf space."

The company has received a regular stream of correspondence from customers praising the quality of its bacon and criticising the 'shrinking white trash' they claim populates the bacon aisle, he adds. "People hate white scum, and there's lots of it out there," he says. "During a recession, when you could say people trade down, there are also significant numbers of people who want really great food and are prepared to pay more. Bacon is also a comfort food."

It is also a food that benefits from its versatility. Research by Denhay shows 51% of shoppers are now buying bacon as an ingredient, giving the industry a new opportunity to promote the meat beyond breakfast, says Streatfield. Denhay has recruited a PR agency to promote the company and is making regular trips to shows and exhibitions to encourage tastings.

That higher profile will give added impetus to already impressive sales figures. Sales of Spoilt Pig, launched a year ago in Morrisons, have been "superb", Streatfield says, and the line also went into Tesco in September, the same month the company added a Spoilt Pig streaky variant.

Meanwhile, Vion the country's largest supplier of bacon admits that bacon has previously lagged behind sausages in terms of NPD but argues there is now a range of tiers to suit every consumer. The company's Case & Sons bacon production division took the overall award at this year's Bacon Connoisseurs Week for a traditional smoked bacon, while Vion Scunthorpe also known as Key Country Foods moved up to become the number one selling bacon brand this year.

There has been quite a bit of movement between bacon tiers as consumers re-evaluate what they can afford to spend, according to Bill Thurston, MD of Vion's pork business unit. That has led to some shoppers trading down from premium lines, but others trading up to premium lines rather than eating out. "One challenge is to be more effective at communicating the benefits of the different quality tiers," he says.

Rick Bourne, Asda's general manager for meat, fish and dairy, argues that more could be done to improve the top bacon tier. Thicker, more premium rashers are one area of potential growth, he says. And while both sausage and bacon sales are doing well, further growth in both products could also come from helping the consumer better understand the category. "Customers are getting confused with the different sausage tiers," he claims. "We need clearer labelling. There are too many tiers and people also need clearer labelling of pork content."

Sausage innovation

While consumers may find the number of tiers within sausages confusing, that certainly hasn't stopped NPD.

Some 30% of sausage lines on shelf are either new products or new variants of existing ones, with 14% of spend accounted for by products launched in the past year alone [TNS]. Premium products now account for a third of all sausage sales, and there is no end in sight to the steady stream of NPD. Westaway Sausages plans to launch two "never before seen" products in the new year, according to marketing director Charles Baughan.

"Our two new projects will add real innovation to the sector," he says. "It's a sausage, Jim, but not as we know it."

Westaway achieved 7.2% value and 6.3% volume growth in the year to September, despite a sales stutter when poor summer weather hit the barbecue market.

The Black Farmer has also continued its march to add value to fresh food with the launch of The Black Farmer's Daughter chipolatas, a line of chicken and a mature Cheddar. Its core sausage and bacon lines, meanwhile, are outperforming the market, sausage sales rising 31.6% in the past year to £3.8m, with increased customer numbers responsible for £608,000 of the £910,000 sales increase, and the rest down to price inflation [TNS 52w/e 6 September].

Owner Wilfred Emmanuel-Jones believes the time for small companies has come. "The recession has brought a severe mistrust of big corporate institutions," he says. "Small will be key." Direct consumer engagement is essential to ensure retailers have no excuse not to stock your products, he adds.

Emmanuel-Jones, who is also launching the Black Farmer Online to sell meat direct, is a self-confessed crusader against supermarket own-label products. Despite the success of own-label lines he has called for more space to be given over to branded products. "Since the recession, price has been a key factor, and the own-label boys have had it pretty good," he says. "They are trying to get people to switch from brands to own label, but I would like to see a more level playing field."

The Black Farmer is not the only brand adding value at the top end of the sausage category. Premium brand Debbie & Andrew's, for instance, secured a tie-up with Diageo this year to produce a range of Guinness and steak pies as it looks to expand its presence.

The company's core sausage lines had another good year, with strong sales backed by a £1m contract to supply Tesco with gluten-free sausages. But times are challenging, according to founder Andrew Keeble, with the sales boost offered by more people cooking at home being countered by shoppers increasingly hopping between brands as a result of heavy supermarket promotions.

Innovation doesn't just mean new products, according to Vion's Thurston. "We also need to talk about NPD through the supply chain," he says, "on the feed side, the farm side, in processing and packaging. We are working on a number of projects through the chain."

With all the effort going into product quality and better consumer communication, producers are confident the bacon and sausage category's key benefits will stand it in good stead long after the recession has passed. "Both products are very dear to the hearts of the British consumer," says Thurston. "We have a consumer that has a very positive view of the products, and we need to make sure we satisfy their demands. It's a great position to be in."

Focus On Bacon & Sausages