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Bacon and Lunch Meat - US - October 2016

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY 
The issues
Stagnating sales expected to increase
Figure 1: Total US sales and fan chart forecast of bacon and lunch meat, at current prices, 2011-21
Slower DPI growth could to lead to less dining out
Figure 2: Disposable Personal Income change from previous period, August 2014-July 2016
Consumers seek lower-sodium options
Figure 3: Interest in low-sodium options, by generation, July 2016
The opportunities
Quality proves key
Figure 4: Important attributes, July 2016
Diverse flavors appeal
Figure 5: Increasing purchase, July 2016
Price impacting Hispanic lunch meat choice
Figure 6: Opinions of lunch meat, by Hispanic origin, July 2016
What it means
THE MARKET – WHAT YOU NEED TO KNOW
Category sales to jump in latter half of decade
Deli-counter lunch meat leveraging fresh appeal
Less dining out could impact category
Brown-bagging lunch may boost meats
MARKET SIZE AND FORECAST
Historic and projected sales performance
Figure 7: Total US sales and fan chart forecast of bacon and lunch meat, at current prices, 2011-21
Figure 8: Total US sales and forecast of market, at current prices, 2011-21
MARKET BREAKDOWN
Deli-counter lunch meat to pace the category
Figure 9: Sales of bacon and lunch meat, by segment, 2011-21
Figure 10: Sales of bacon and lunch meat, by segment, 2011-21
Slow sales for bacon should be short-lived
Figure 11: Total US retail sales and forecast of refrigerated bacon, at current prices, 2011-21
Refrigerated non-sliced lunch meat sales to slow
Figure 12: Total US retail sales and forecast of refrigerated non-sliced lunch meat, at current prices, 2011-21
Refrigerated sliced lunch meat largely stagnant
Figure 13: Total US retail sales and forecast of refrigerated sliced lunch meat, at current prices, 2011-21
Shelf-stable lunch meat to grow but slowly
Figure 14: Total US retail sales and forecast of shelf-stable lunch meats, at current prices, 2011-21
Deli-counter lunch meat leveraging fresh appeal
Figure 15: Total US retail sales and forecast of deli-counter lunch meat, at current prices, 2011-21
Sales growth consistent among retail channels
Figure 16: Total US retail sales of bacon and lunch meat, by channel, at current prices, 2011-16
Figure 17: Total US retail sales of bacon and lunch meat, by channel, at current prices, 2011-16
MARKET PERSPECTIVE
Lower prices across the grocery aisles
Lower DPI likely to lead to less dining out
Figure 18: Disposable Personal Income change from previous period, August 2014-July 2016
Snacking culture eats into lunch meat usage
MARKET FACTORS 
Taking lunch should boost category
Figure 19: Typical lunch, July 2016
Youth movement could lead to more demand
Figure 20: US population by generation, 2010-20
Figure 21: Households, by presence of own children, 2003-13
Looking for healthier lunch meat options
Figure 22: Interest in low-sodium options, by generation, July 2016
Hispanics more likely to use lunch meat and bacon
Figure 23: US population by race and Hispanic origin, 2009, 2014, and 2019
KEY PLAYERS – WHAT YOU NEED TO KNOW 
Sales drops for leading brands
Bacon on track to eclipse $5 billion mark by 2020
Slowing lunch meat sales
Breaking free
BRAND SALES OF BACON AND LUNCH MEAT
Kraft dominates market share, though leading brands see sales drops
Brand sales of bacon and lunch meat
Figure 24: MULO sales of bacon and lunch meat, by leading companies, 52-weeks ending May 16, 2015
Figure 25: Manufacturer sales of bacon and lunch meat, 2015-16
Private-label options not resonating
Figure 26: US introductions of processed meats, branded versus private label, 2011-16
WHAT’S WORKING?
Better days for bacon
Figure 27: Tyson Refrigerated Processed Meats' Bacon
Figure 28: Smithfield Foods' Bacon
Figure 29: Bacon as a component of new products
WHAT’S STRUGGLING?
Lunch meat sales stagnate
Figure 30: Kraft Foods's Oscar Mayer
Figure 31: New processed meat introductions, branded versus private label, 2011-16
WHAT’S NEXT?
Free market
Figure 32: Lunch meat options bearing free-from claims
Figure 33: Processed meat launches by claim category, 2011-15
THE CONSUMER – WHAT YOU NEED TO KNOW 
Expanding lunch meat usage
Fresh bacon lags packaged options
Parents notably more interested in gluten-free lunch meat/bacon
Flavor trumps healthy attributes
Millennials seek more options to use lunch meat
Hispanics less likely to skip lunch
USAGE OF LUNCH MEAT 
Lunch meat typically on a sandwich
Figure 34: Usage of lunch meat, July 2016
Consumption of lunch meat declines with age
Figure 35: Usage of lunch meat, by generations, July 2016
Expanding lunch meats’ usage options
Figure 36: Usage of lunch meat, by household income, July 2016
Larger households turn to convenience of lunch meat
Figure 37: Usage of lunch meat, by presence of children in household, July 2016
Hispanics using lunch meat in sandwiches, salads
Figure 38: Usage of lunch meat, by Hispanic origin, July 2016
USAGE OF BACON 
Fresh bacon usage lags other category segments
Figure 39: Usage of bacon, July 2016
Younger generations notably more likely to use bacon
Figure 40: Usage of bacon, by generation, July 2016
Fresh options resonate strongly with Hispanics
Figure 41: Usage of bacon, by Hispanic origin, July 2016
IMPORTANT ATTRIBUTES
Quality impacts purchase nearly as much as health
Figure 42: Important attributes, July 2016
Strongest interest in gluten-free among parents
Figure 43: Important attributes, July 2016
Low-sodium lunch meats have room to grow sales
Figure 44: Important attributes of prepackaged/deli lunch meat, by race, July 2016
Low-sodium, low-fat bacon options resonate
Figure 45: Important attributes of bacon (prepackaged or freshly sliced), by generation, July 2016
PURCHASE INTEREST
Diverse flavors may lure adventurous consumers
Figure 46: Increasing purchase, July 2016
Allergen-free options resonate with Millennials
Figure 47: Increasing purchase, by generations, July 2016
Uniquely flavored bacons have widespread appeal
Figure 48: Increasing purchase, by household income, July 2016
OPINIONS OF LUNCH MEAT
Fresh perception of key importance to lunch meat shoppers
Figure 49: Opinions of lunch meat, July 2016
Millennials seeking more possibilities with lunch meat
Figure 50: Opinions of lunch meat, by generation, July 2016
Price could be guiding Hispanic lunch meat choice
Figure 51: Opinions of lunch meat, by Hispanic origin, July 2016
OPINIONS OF BACON
Consumer concern about preparing bacon
Figure 52: Opinions of bacon, July 2016
Packaging could guide consumer usage as snacks
Figure 53: Opinions of bacon, by generation, July 2016
Value a key motivator
Figure 54: Opinions of bacon, by household income, July 2016
Origin of particular importance to parents
Figure 55: Opinions of bacon, by parental status by gender with children in household, July 2016
Hispanics may accept diverse applications for bacon
Figure 56: Opinions of bacon, by Hispanic origin, July 2016
TYPICAL LUNCH
Leftovers lead typical lunch, sandwiches a close second
Figure 57: Typical lunch, July 2016
Millennials more likely to dine out for lunch
Figure 58: Typical lunch, by generation, July 2016
Lower-income consumers more likely to skip lunch
Figure 59: Typical lunch, by household income, July 2016
Potential for salad-ready cuts
Figure 60: Typical lunch, by parental status, by gender, July 2016
Hispanics less likely to skip lunch
Figure 61: Typical lunch, by Hispanic origin, July 2016
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Sales data
Fan chart forecast
Consumer survey data
Abbreviations and terms
Abbreviations
APPENDIX – MARKET 
Figure 62: Total US sales and forecast of bacon and lunch meat, at inflation-adjusted prices, 2011-21
Figure 63: Total US retail sales and forecast of bacon and lunch meat, by segment at current prices, 2014 and 2016
Figure 64: Total US retail sales of bacon and lunch meat, by channel, at current prices, 2014 and 2016
Figure 65: Total US retail sales and forecast of refrigerated bacon, at inflation-adjusted prices, 2011-21
Figure 66: Total US retail sales and forecast of refrigerated non-sliced lunch meat, at inflation-adjusted prices, 2011-21
Figure 67: Total US retail sales and forecast of refrigerated sliced lunch meat, at inflation-adjusted prices, 2011-21
Figure 68: Total US retail sales and forecast of shelf-stable lunch meats, at inflation-adjusted prices, 2011-21
Figure 69: Total US retail sales and forecast of deli-counter lunch meat, at inflation-adjusted prices, 2011-21
Figure 70: US supermarket sales of bacon and lunch meat, at current prices, 2011-16
Figure 71: US sales of bacon and lunch meat through other retail channels, at current prices, 2011-16
APPENDIX – KEY PLAYERS 
Figure 72: MULO sales of refrigerated bacon, by leading companies and brands, rolling 52 weeks 2015 and 2016
Figure 73: MULO sales of refrigerated non-sliced lunch meat, by leading companies and brands, rolling 52 weeks 2015 and 2016
Figure 74: MULO sales of refrigerated sliced lunch meat, by leading companies and brands, rolling 52 weeks 2015 and 2016
Figure 75: MULO sales of shelf stable lunch meats, by leading companies and brands, rolling 52 weeks 2015 and 2016
CORRESPONDENCE ANALYSIS – BACON AND LUNCH MEAT – OCTOBER 2016
Methodology
Figure 76: Usage of lunch meat, hot dogs, sausage, and bacon and lunch meat, July 2016

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