EU fresh pork demand still declining, but processed improving
Consumer demand for pig meat in key EU markets has shown a mixed picture in the year so far.
Although purchases of fresh pork meat have generally continued to decline, some improvement in the processed/charcuterie sector has been recorded compared to a year earlier.
For fresh pork, volume sales were down year-on-year for January-August 2017 in Germany and France. Likewise, year to date (January-June) sales are also down on year earlier levels in Spain. However, a modest increase of just over 1% was recorded in Italy over the same time frame. This was likely related to improving economic conditions, with gross income and consumer spending reportedly increasing.
The decline in sales of fresh pork was particularly severe in Germany, with volumes falling 7% year-on-year between January and August 2017. Data for the first half of the year from the GfK household panel indicates households that purchase pork did so less frequently in 2017, although the number remained the same. This comes despite extensive advertising campaigns promoting marinated pork steaks over the summer. While declining fresh pork sales in Germany is a long term trend, higher prices may have been a factor accelerating the drop this year. Fresh pork prices were 5% above year earlier levels in the first eight months of the year. At the same time, beef prices in Germany were 2% behind 2016 levels, and volume sales were over 10% higher.
The situation for processed/charcuterie products was more positive, with the value of the market increasing across the key EU member states. While the increase in value was largely driven by higher prices, volume sales also showed some modest increase on the year in Spain (+1.5% YTD June) and Germany (+0.4% YTD Germany). This reflects similar developments in the UK, where fresh pork sales have been declining, while ham and bacon sales have improved somewhat. Consumer trends in the UK show a shift towards convenience, to which processed pig meat products appeal; perhaps this is also influencing other EU member states.
Despite the improvement in processed pig meat sales, the continuing decline in demand of fresh pork remains a concern for the EU pig market. With the latest EU census results showing some growth in the EU pig herd, the soon to be released EU commission forecasts are likely to anticipate an increase in production in the latter part of the year. With export conditions for the EU less favourable than 2016, lacklustre domestic demand could lead to further pressure on the EU price in the short to midterm.
Bethan Wilkins, Analyst
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