Organic versions of sausages, hotdogs a new lucrative market

THE global hot dogs and sausages market is estimated to be worth US$80.4 billion by 2021, expanding at a CAGR of 3.1 percent from 2015 to 2021, according to Transparency Market Research (TMR). By volume, this market  is anticipated to expand at a CAGR of 1.8 percent during the forecast period. Cocktail sausages accounted for the highest in terms of volume, and the market for this product type is forecast to reach US$19.2 billion by 2021.

From red meat to chicken

Sausages and hotdogs are made from pork, beef, chicken, mutton, and lamb. Pork was the leading revenue generator for the hot dogs and sausages market in 2014. But the chicken sausage segment is catching on globally since pork products not also face religious barriers, but health issues as well.

The shift in consumer preference from red meat to chicken has to do with the higher cholesterol content in red meat, and the fact that chicken does not contain trans-fat. This is expected to increase the demand for chicken hot dogs and sausages during the forecast period. Furthermore, chicken is comparatively cheaper and there are negligible religious barriers or taboos associated with its consumption. This is as an important factor in the growth of the chicken hot dogs and sausages market, especially in the Middle East. On the other hand, pork is an attractive segment in the hot dogs and sausages market in Asia Pacific, especially in China.

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Appeal of low-calorie, organic versions

Globally, the trend for low-calorie and organic food products is gaining prominence. Even consumers of hotdogs and sausages now seek organic versions to prevent overweight and obesity risks. It is a trend that shows promise for players in this segment, according to TMR.

The competitive landscape is highly fragmented, with the exception of the Middle East and Africa region, said TMR. The Asia Pacific is the leading revenue contributor, with the top five producers accounting for 30 percent in 2014.  The region led the global hot dogs and sausages market in 2014, and will continue to dominate through 2021. Its top players are Shineway Group, Venky's, Goodman Fielder Ltd., Nippon Meat Packers Inc., and People's Food Holdings Ltd.

Growth strategies

To grow in this segment, manufacturers expand their product lines through mergers and acquisitions. As an example, Transparency Market Research names ConAgra Food Inc which acquired Ralcorp, a producer of private brand foods in the U.S. to strengthen its share in the packaged foods market.

Another approach is to develop new products in the meat and meat products segment.  A recent example would be the introduction of hot dog ATMs, wherein the customer places their order on the screen and the selected food item is moved from the refrigerator to the microwave to deliver fresh hotdogs in just a few minutes.

Popular among young consumers, hotdogs and sausages are the most preferred convenience food, with most households with children and college students becoming the most attractive consumer group. The growing population of individuals between the ages of 20 and 30 is a key factor driving this market.

"The demand for hot dogs and sausages varies from region to region and by season as well," the TMR analyst said. For instance, holiday months see a surge in demand for breakfast sausages. Major sporting events in the U.S. also contribute to the rising demand, according to a survey by the National Hot Dog and Sausage Council. The consumption of hot dogs and sausages during major leagues and at prominent ballparks in the U.S. is much higher than at any other time of the year.

Rising obesity cases likely to restrict demand

"The soaring incidence of obesity around the world is a key factor curbing the consumption of hot dogs and sausages as consumers shift toward healthier and less fatty foods," the author of the study finds.

The World Health Organization states that in 2014, around 1.9 billion adults were overweight and 600 million were diagnosed as obese. The WHO also finds an increase in the number of child obesity cases, which continues to threaten the demand for hot dogs and sausages.