Record U.S. bacon prices poised to drop on fat pigs

Baconalia! Menu

Denny’s Corp., which operates more than 1,680 restaurants, reprised its 2011 “Baconalia!” menu in March with 12 items including BBQ Bacon Mac ’n Cheese Bites and Caramel Bacon Stuffed French Toast. Wendy’s Co. started selling the Bacon Portabella Melt on Brioche in November. McDonald’s Corp., the world’s largest restaurant chain, last month added three $2 sandwiches with bacon.

Barley & Grain in New York offers a Bacon Manhattan, while Double Down Saloon in Las Vegas serves a Bacon Martini.

A spreading virus called porcine epidemic diarrhea may curb gains in pork production. Reported in 19 states since April, the virus slows growth of older hogs and has a mortality rate as high as 100% in suckling pigs younger than three weeks, data from the Iowa Pork Industry Center data shows.

There will be about 1 million to 1.2 million fewer hogs coming to market in the first four months of 2014 because of the virus, according to Steiner Consulting Group, the Manchester, New Hampshire-based consultant to the food industry.

Virus Concern

Some companies are concerned that the virus could boost pork prices. Headwinds for Hormel Foods Corp. in 2014 include “potentially volatile hog cost” if the virus limits supply, Jeffrey Ettinger, chief executive officer of the Austin, Minnesota-based meat producer, said on an earnings conference call on Nov. 26. Still, bacon prices helped improve margins for Hormel in the three months through October, Ettinger said.

Traditionally cheaper than other cuts, bacon caught up with pork chops in 2007 and became more expensive in 2010, according to Ronald Plain, a professor of agricultural economics at the University of Missouri.

“Bacon has become more popular than other cuts, but hogs are not producing more bacon than they ever did, and so the price has gone up dramatically,” Plain said. “Food fads come and food fads go. History says, at some point in time, this will go away.”

‘Hot Trend’

Fine dining has embraced bacon as well, often artisanal varieties. Bacon has become something chefs are expected to put on the plate to add value, said Clark Wolf, a New York-based restaurant consultant who has advised hotel companies, casinos, arts institutions and universities.

This year, 67.5% of restaurants have at least one menu item with bacon, compared with 67.4% in 2012 and 67.0% in 2011, according to Datassential, a Chicago-based company that tracks menu trends. Popularity at quick-service restaurants fell 1 percentage point to 65.4% since 2009, compared with a 2.1 point drop to 75.4% at fine-dining establishments, data show.

In a survey of U.S. chefs by the National Restaurant Association, 60% said bacon-flavored chocolate would be “yesterday’s news” in 2014. Still, 64% called artisan or specialty bacon a “hot trend,” up from 60% in last year’s survey.

“That old adage that everything goes better with bacon obviously translates into the restaurant arena,” said Hudson Riehle, senior vice president of research at the National Restaurant Association in Washington. “For an operator to remain au courant with the evolving consumer palate, it’s entirely logical that they start expanding and promoting bacon offerings.”

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