Summary:
From meat sticks to cured steak and meat jerky, the global meat snack industry has experienced increasing growth in recent years. Within this industry, the North American beef jerky remains one of the largest segments with an annualized rate of growth of 3.4 percent from 2013 to 2018. This article details how the North American meat jerky industry has grown in recent years, industry growth drivers, analysis of the North American beef jerky industry, and opportunities and threats that companies need to consider.
The US Meat Jerky Industry
To get an understanding of the US beef jerky industry, it’s important to first understand the North American meat jerky market and how beef jerky products fit into this industry. According to IbisWorld, total revenue in the US meat jerky industry reached USD1 billion in 2018. With a 3 percent industry growth rate in 2018, despite declining red meat prices, growing meat consumption and product innovation have driven growth in the industry.
The US meat jerky industry is expected to continue growing at an annualized rate of 4.2% to 2022, according to organic packaged food product news publication NOSH. The majority of this growth is expected to come from companies producing natural or premium jerky products. Aligning with the current trends in other packaged food industries, consumers are becoming more health-conscious and want to buy healthy snacks. And as consumers opt to purchase products by smaller, artisanal producers, there’s a “feel good” factor that customers enjoy from supporting entrepreneurial brands and small businesses.
Canada’s Meat Jerky Industry
The meat jerky industry in Canada has experienced rapid growth in recent years. Similar to other developed countries, meat snacks were typically available to purchase only through gas stations, and the products didn’t have the “clean and green” approach that many healthy snack products have today. According to market research company Nielsen, grocery stores and mass merchants across Canada saw 15 percent dollar growth and 18 percent volume growth in meat snacks from 2017 to 2018. In the year up to September 2019, meat snack and beef jerky sales in Canada grew by 11 percent, compared to 5 percent growth in the sales value of salty snacks. This indicates that meat snacks and beef jerky are fast growing segments in Canada’s snacking categories.
Spending on meat snacks in Canada has been driven by consumers aged between 35 and 54 with a household income of at least CAD70,000. Those consumers who have children between six and 12 years old are driving sales volume. Amongst these groups, the demand for low-carb, high-protein snacks that can be eaten on the go has transformed meat jerky in Canada from a rarely consumed product to one that is widely available and a regular item in people’s grocery baskets
How the US Meat Jerky Industry has Evolved
The transformation of the US meat jerky industry came about in 2010, according to Project NOSH. Before 2010, Wisconsin company, Jack Link’s Beef Jerky made up around half of the market. The rest of this market was occupied by household names including Old Trapper Smoked Products, Oberto, Frito-Lay and Tillamook. With such big names holding most of the market share, it would be natural to think that the US meat jerky industry was going to include the same big players for decades to come. That was until, however, Californian company, KRAVE launched a range of ‘clean and green’ meat snacks. Marketed as gluten-free, low fat and free from artificial ingredients, products like KRAVE’s began to drive a shift in the industry with meat jerky products seen as a suitable snacking option for the health-conscious consumer.
In 2015, Hershey acquired KRAVE for a reported USD220 million. This demonstrates the vast opportunities available in this industry, particularly for entrepreneurial-minded producers who can tap into the preferences of the snack-happy, health-conscious consumer.
Busy millennials who tend to eat on the go are a prime example of the consumers driving growth in the US meat jerky industry. A 2017 study by The Center for Generational Kinetics found that within the past week (at the time of the study), 89% of millennials purchased and consumed a better-for-you snack. Of this cohort, 64% of respondents said they looked for snacks with the smallest number of ingredients, while 79% of these people trusted a snack if they could understand everything on the ingredient list.
Further, a study by research firm Technavio projects the global meat snack industry to be worth $9.47 billion by 2021, equating to a compound annual growth rate (CAGR) of 9.4%. And with 53% of meat snack sales in 2016 occurring in convenience stores, there’s an opportunity for a company’s products to be stocked in several stores without the arduous process that’s often associated with competing for shelf space in a large grocery store.
How Canada’s Meat Jerky Industry has Evolved
Shifting consumer demand and snacking trends have driven change in Canada’s meat jerky industry. Now seen as a clean and healthy high-protein snack, meat jerky products are available in major grocery stores such as Longos in Ontario and Red Barn Market in British Columbia.
Since the early 2000s, consumers have sought out healthier snacking alternatives to chips and sugary snacks such as chocolate bars and candy. At the same time, schools across Canada were removing unhealthy snacks from their canteens and the “food movement” grew. This movement places a high value on clean labels, local ingredients, suitability for popular diet trends such as Paleo, and environmentally conscious production methods and packaging materials.
There are many examples of Canadian meat jerky companies that are addressing consumer demand through their products. Waterloo-based Piller’s Fine Foods, for example, notes on its packaging that the company smokes its meat over natural hardwood fires and that their products are free from allergens. Convenient snacking is another key demand that’s driven growth in Canada’s meat jerky industry. Piller’s Fine Foods saw this as an opportunity in 2016, launching a range of salami “chips” that came in a resealable pouch. A range of meat flavours and types have also emerged across Canada in the last five years. Barbecue and maple flavours remain popular, while companies such as Hungry Buddha in Montreal provide vegetarian options with jerky made from dehydrated coconut.
About the North American Beef Jerky Industry
Approximately 80 percent of the US meat jerky industry is made up of beef jerky products, and in 2017, 122 million Americans ate beef jerky or meat snacks. In Canada, 30 percent of consumers said they consume meat snacks, with most people in this group citing protein content as a key driver for purchasing these products. The most common beef jerky flavors include teriyaki, peppered, original, barbecue, smoked, spicy, maple, and hickory. While these flavors are tempting for consumers, they can’t result in a long list of additives and unrecognizable ingredients, especially if you’re marketing a premium, healthy snack.
According to research by trade publication, Convenience Store Decisions, 79% of consumers want to be able to understand the ingredient list on packaged products. To capitalize on this consumer demand, many beef jerky products sold in North America have at least one of the following terms on its packaging – ‘grass-fed, organic and paleo-friendly.’ According to FONA International, further top claims made on meat snacks in North America from 2013 to 2018 included:
Once an industry of highly processed meat sticks geared towards lower-income male consumers, the evolution of the beef jerky industry into a market of premium, health food products demonstrate how the industry has evolved. Demonstrating the force at which new entrants are impacting the industry and taking market share, large industry players such as Jack Links are feeling the brunt.
According to a study by Robert Yaman, Founder of clean meat startup Kiran, Jack Links went from holding 56% market share of the beef jerky industry in 2016 down to 51% in 2017. The company’s market share is expected to drop further to 40% in 2021. This decreasing market share of one of the biggest players in the North American beef jerky industry demonstrates the significant opportunity for new companies focused on producing a premium product to make their impact in this space and rapidly grow a successful business.
What do North American Consumers Like and Dislike About Beef Jerky?
As the biggest category in the global meat jerky industry, accounting for 50% of sales in 2019, consumers purchase beef jerky for several reasons. These reasons, in recent years, have been particularly focused on the health benefits of a high-protein, low-carbohydrate diet. Eating foods with few artificial ingredients and the convenience of on-the-go products like beef jerky have also been significant factors. Beef jerky is light and has a long shelf life. This makes it a perfect item to pack for people who enjoy long hikes and camping — both outdoor activities that remain popular amongst health-conscious consumers with adequate disposable income to purchase products like beef jerky.
The purchase of meat snacks has an average transaction spend of USD7.42 compared to USD3.61 to USD4.01 for other salty snacks such as potato chips. This demonstrates that consumers aren’t deterred by price and are instead focused on purchasing premium snack products.
It’s also important to understand what consumers dislike about beef jerky. Many consumers report that texture and thickness are two key factors that make them dislike a beef jerky product. For example, consumers have reported that lower end jerky brands have inconsistent texture and can be tough to chew. Higher-end brands, however, have a more consistent texture and aren’t as tough to chew.
The likes and dislikes that consumers have for beef jerky differ between value-focused, affluent and paleo snackers. The diagram below details the sensitivity of these consumers between taste, health, quality and price.
As expected, value-focused snackers are most focused on price and taste. In contrast, affluent snackers are most focused on quality and health benefits, while paleo snackers are most sensitive to quality and health. It’s important to have these customer segments in mind when producing beef jerky products as it helps to determine which elements of your product that you need to optimize to reach your target market.
Opportunities and Threats in the North American Meat Jerky Industry
One of the most important factors in meat jerky production is the cost of meat, particularly red meat as beef jerky still retains the majority of market share in the industry. Approximately 90% of meat jerky is produced from red meat. As the price of meat fluctuates, price increases can’t always be passed down the supply chain, which results in diminished profit margins. This is a key risk that meat jerky producers need to keep top of mind and address in their business planning and strategy.
As a product that is popular to purchase from convenience stores, the sheer number of these stores presents an attractive opportunity for producers looking to expand their reach across North America. According to Neilsen, there were 153,237 convenience stores (including gas stations) operating in the US as at 31 December 2018. And in Canada, the growing trend of in-store product activitations in snack aisles and checkouts at higher end grocery stores and markets presents opportunities across the country. Producers that can balance the risk of fluctuating meat prices with distribution to retailers located in their target market’s demographic will have a competitive edge as the industry continues to grow.
Where North America Fits within The Global Meat Snacks Market
According to Technavio’s study, Global Meat Snacks Market 2017-2021, jerkies make up half of the global meat snacks market. Within the jerky category in the US, 80 percent of this market is occupied by beef-based products demonstrating that beef jerky is a mainstay of the US meat jerky industry. Driving further growth in the North American beef jerky industry is the fact that in the US, snacks are considered a basic food product. Within the US, people who live an active lifestyle and like convenient snacks that address their key nutritional needs are purchasing products like beef jerky due to the great taste, health benefits and convenience of consumption.
Similarly in Canada, meat snacks are seen as a healthy, convenient snack that is often an impulse purchase in grocery stores. Young men, for example, buy meat snacks as a post-workout protein source while young women look to snacking products when they are too busy to eat a meal.
The image below details the saturation of the global meat snacks industry. As detailed in the image, North America is the largest market in the world, presenting opportunities for new market entrants looking to expand their global footprint.
To Summarize
For businesses looking to expand the distribution of their beef jerky products, North America remains a key opportunity due to the size of the industry in the region and consumer’s snacking habits.
With just over half (53% in 2016) of meat snack sales in the US occurring in convenience stores, and meat snack availability continuing to grow in grocery stores across Canada,there are several entry points into the market from smaller, independent retailers up to large gas stations and grocery stores. And as the health food and snacking section in convenience stores continues to grow and evolve, there’s increasing opportunity for entrepreneurial beef jerky producers to expand their distribution and become a household name.
As the fastest growing snack category in North America, and one that has adapted to and reflects current consumer trends, producers can set themselves apart by focusing on the health benefits of their product, creating new flavors and ensuring their jerkies have a premium feel. If producers can address these important factors and tap into the continually growing North American beef jerky industry over the coming years, the question isn’t if another jerky producer will become a household name, it’s a matter of when.
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