Rebranding meat jerky as health food drives sales as category nears saturation, IBISWorld reports
But, it cautions, the category is increasingly competitive and will reach saturation in the next five years. New companies hoping to carve out a space in the category before it is too late not only must overcome the competition, but hurdle other substantial barriers as well, IBISWorld adds in a report on the industry published in November.
The meat jerky industry’s “small-scale nature, relatively low prices and innovative flavors and content have led revenue to grow an estimated annualized 4.5% to $1.1 billion in the last five years to 2014,” which saw a slightly higher 4.9% increase, IBISWorld says.
“In the five years to 2019, revenue is forecast to continue growing, albeit at a slightly slower rate of 1.7% per year on average to $1.3 billion,” it adds, noting revenue likely will fall sharply in 2015 – perhaps even dipping into the negative before quickly climbing again.
Repositioning marketing towards athletes, health-conscious consumers
One of the five main growth drivers for the meat jerky industry was a concerted effort to reposition the food as healthy in order to tap into consumer concern about wellness and desire for fresh, less-processed products, according to the report.
“Traditional jerky products were viewed by a number of consumers as unhealthy, full of artificial flavors, preservatives and overloaded with sodium. Major players in the industry have battled this perception by launching a number of products emphasizing the artisanal nature of jerky,” IBISWorld says.
Thanasi Foods latched on to this trend with the 2012 launch of its Duke’s Small Batch Smoked Meats. Jack Link’s Small Batch Handcrafted Jerky also supported this trend with multiple flavors, including teriyaki, peppered and original. Newcomer Lawless Jerky got into the artisanal, small-batch jerky business with the help of a Kickstarter campaign in 2013 that raised $31,777 with 683 backers.
Jack Link’s and Krave also reimaged jerky as a food for the physically active. Jack Link’s ads with Sasquatch evoked “the great outdoors,” while Krave handed out samples to marathon runners crossing the finish line, IBISWorld noted.
Oberto Sausage Company also helped move jerky’s image away from one that is loaded with artificial ingredients by launching Oh Boy! Oberto All Natural jerky, which does not use artificial flavors or preservatives.
Health conscious consumers also are changing the jerky landscape by increasingly reaching for poultry and game jerky over traditional jerky made from red meat, which has been linked to heart disease and is more difficult to digest.
IBISWorld points out, however, that beef jerky still makes up the vast majority of jerky sales – accounting for 79% of the products sold in 2014 compared to 8% from poultry jerky and 7% from game jerky. Pork jerky also accounted for 6% of the products, but this likely will decrease as Americans continue to demand meats that are lower in fat, the report adds.
Health-conscious consumers also are demanding more single-serving jerky products, such as Link Snacks’ 50-calorie packs, the report notes.
New flavors fuel growth
The introduction of innovative flavors and jerky products also is driving category growth, according to the report.
“Changes in population demographics and ethnicity have given rise to new tasks and preferences, causing manufacturers to adapt their product lines to meet these needs,” IBISWorld says.
Popular flavors provided by Link Snacks include teriyaki, barbeque, jalapeno and carne seca, hickory smoked and sweet & spicy Thai. Lawless Jerky also cranks up the heat with flavors including Paleo pepper, mango habanero, honey chipotle and sweet sriracha. It also offers Japanese curry, pho and aloha teriyaki.
American’s evolving taste also explains the increased interest in jerky from wild game, such as deer, elk, caribou, bison and moose, according to the report.
Price is a plus and minus
Price is another key element that kept the jerky industry afloat during the recession and in the last few years, according to IBISWorld.
“Most jerky’s typically low price point compared with other meat products has made it resistant to drops in consumer sentiment and per capita disposable income, even though these declines limited spending on most other goods during the recession,” the report explains.
As consumers return to the work force they will pay higher prices for more premium jerky products, such as the small batch and new flavored jerky. They also will have less time to prepare food and more likely will buy snacks at convenience stores – which are the single largest point of purchase for meat jerky, according to the report.
Competition is tight
Price can cut both ways though. If it increases too much, consumers will look elsewhere for protein and snacks, IBISWorld warns. It adds increased competition from other snack makers is one of the top factors that will slow jerky sales in the future.
“Large snack producers like Frito-Lay and Kraft Foods … are introducing new products that cater to a more health-conscious and flavor-seeking consumer demographic,” including low-sodium, high-fiber products, according to the report.
“To stay competitive with these manufacturers, industry operators need to keep creating new products and marketing products that are sensitive to changes in consumer preferences,” IBISWorld recommends.
Internal competition in the jerky industry also is fierce, IBISWorld notes. It said the number of jerky producers increased 1.2% annually to 301 in the five years leading to 2014. It predicts the number of players will continue to grow 0.7% annually through 2019 to reach 350.
“The industry is currently in the growth stage of its life cycle, but it faces saturation over the next five years,” warns IBISWorld.
Firms hoping to break into the industry before it is too late face substantial entry barriers, including stringent food safety standards and regulations; pre-existing supply arrangements by established businesses that restrict ingredient access; and the need to buy and maintain machinery and meat without the product spoiling, IBISWorld says.
However, it notes, newcomers can succeed if they operate larger more profitable manufacturing plants, offer product differentiation, secure sufficient livestock supplies and are able to adapt.