Since the onset of the COVID-19 pandemic, retail sales in the meat department have surged as consumers shifted spending from eating out to eating almost exclusively at home, especially in early 2020. Of all the categories in the meat department, bacon sales in the United States showed the biggest growth, going from an increase of 2.9% at the end of 2019 to nearly 14% in Q1 of 2020 and spiking to 33% over the previous year’s second quarter, according to data from IRI Integrated Fresh. The last two quarters of 2020 saw bacon sales gains over the previous years of approximately 18% and 19%, respectively. As of January 2021, bacon sales grew nearly 23% over the same period the previous year with sales topping $489 million.
Despite channel shifting from nearly 60% of US bacon being sold at foodservice to almost all being sold at retail in 2020, the demand for bacon has remained rock solid. According to an economist for the pork industry, market prices had nothing to do with Americans’ insatiable appetite for pork, but instead had everything to do with pork processors coping with COVID-19-related closures combined with the logistics of reconfiguring foodservice-serving plants for retail customers and creating production lines that keep front-line workers safe.
“When we took bellies to 30¢ [per lb] at the very beginning of April last year, it had nothing to do with consumer-level demand,” said Steve Meyer, PhD, consulting economist with the National Pork Board and National Pork Producers Council, “it had everything to do with the fact that we couldn’t process them all.”
Historically, belly pricing is routinely volatile, Meyer said, with the bulk of the supply going to supply restaurants with bacon.
“That’s what has driven the belly market over the last decade,” he said.
The oversupply issue was so dire at the height of the bottleneck that bellies were being rendered due to the capacity limitations of processors.
“You couldn’t move the foodservice product over into retail fast enough,” Meyer said. “So, all of a sudden you had too many bellies on your hands, but you didn’t have enough at retail and belly prices went through the roof at $1.90 to almost $2 a pound for a little while in May.”
The roller coaster continued into the summer of 2020, when belly prices moderated to about 90¢ as processing plants slowly came back online. At the end of the summer and into the fall, the market seemed to reach an equilibrium, Meyer said, with belly pricing that was in the $1.60 to $1.80 per lb range.
“So, if anybody wants to try any predictions in the belly market, good luck,” Meyer said.
Heading toward the end of February 2021, continued strong demand for bacon is reflected in the average price of belly primal, which was $1.58 the week after Valentine’s Day, compared to the same time in 2020, when that price tanked to 71¢ and six weeks later bottomed out at 30¢.
“But we have a different dynamic now because a lot of people had to use bacon at home last year because restaurants were shut down. So now, if those folks stand in and say, ‘Well, gee, I kind of like having my bacon at home,’ and then the restaurants get back [reopened], it can be a very strong belly market all year,” Meyer said, adding that cold storage stocks of bellies are much lower than in past years.
The fact that US pork demand actually grew by 3% last year came as a surprise to most.
“I would have never told you that could happen, and it did,” Meyer said. “And now, what happens with people that may have not used much bacon at home before and now do and then if you start having the foodservice industry come back, it could be a very good year for bellies.”