Protein craze fuels bull market in pork bellies

CHICAGO -- It's crunchy, it tastes good, and it's become something of a food craze.

Bacon is being sold by restaurants on everything from salads to hamburgers to boost flavor and attract the legions of consumers on high-protein diets.

And what's good news for dieters is money in the bank for pork belly traders at the Chicago Mercantile Exchange.

The bull market in bacon has pushed prices for pork bellies, the raw pork used to make bacon, to record highs.

Last week, pork belly futures at the CME reached $1.10 per pound, the highest price in the market's 43-year history.

Meat industry analysts say prices may go even higher because the peak demand time for bacon is in the summer, when bacon-lettuce-tomato sandwiches become popular.

''I love the taste of bacon. I don't know what it is about bacon, but it works," said Terri McHugh, who had just bought a low-carbohydrate bacon wrap Thursday at a Subway restaurant in downtown Chicago.

McHugh is on the Atkins diet, one of several popular diets promoting high-protein foods, such as meat, while discouraging breads and high-carbohydrate foods.

''I think the Atkins diet has had a big impact on bacon demand," said Harvey Paffenroth, who trades pork belly contracts at the CME. ''I think we just underestimated the amount of demand we had created for bacon."

That demand shows no signs of slowing.

''I don't see any indication that prices are high enough to stifle demand," said Joe Kropf, a meat industry analyst for Kansas City-based Kropf and Love Consulting.

A few strips of bacon on a sandwich cost very little and as a result high bacon prices are not likely to slow demand any time soon, analysts said.

''If the taste is so important, who gives a darn about a few pennies," said Charlie Andrews, managing director of Chicago-based AAA Meats, a wholesale meat distributor.

Andrews predicted pork belly prices could easily reach $1.50 this year and possibly $2.00 or more by next year.

The recent introduction of precooked bacon has helped drive bacon sales, primarily to restaurants.

''Precooked bacon is an unbelievable market," said Andrews.

Smithfield Foods Inc., the nation's largest pork producer, has plans to increase bacon production and has been a leader in precooked bacon.

''About 10 or 11 percent of the total bacon market is precooked," said Jerry Hostetter, spokesman for Smithfield.

''It was hardly around five years ago."

For meat companies like Smithfield, precooked bacon sells at higher prices than regular bacon and returns greater profits.

''It is big dollars. It sells for so much more than raw bacon and the margins are so much higher," said Hostetter.