Cracking the Egg Wars

While “Which came first, the chicken or the egg?” has been pondered over the millennia, the current question in the fresh egg marketplace is just how much egg production practices are affecting sales and consumer preferences.

Like the age-old riddle, the latter puzzle is subject to debate. Although hens have laid eggs for human consumption since ancient times and technically came first, eggs have only been commercially produced over the past several decades, while in the past few years, a surge of interest in cage-free, free-range and organic product has altered the marketplace for eggs in an everything-old-is-new-again kind of way.

Indeed, cage-free and free-range eggs have become both buzzwords and points of discussion in many circles. Actor Brad Pitt, for example, made news in July when he called upon a leading club store to carry only cage-free eggs.

This summer, Minneapolis-based food conglomerate General Mills revealed its commitment to 100 percent cage-free eggs for its U.S. operations, with a not-yet-specified deadline. According to Steve Peterson, director of sustainable sourcing, the decision was based on many factors. “We know that people care about where their food comes from and how it was cared for all throughout its journey to the store shelves,” he notes. “Our commitment to source 100 percent cage-free eggs for our U.S. business is, in part, in response to consumers’ ever-evolving food values, but also because we believe it’s the right thing to do.”

In addition to food companies that use eggs as ingredients, retailers are widening their refrigerator shelf space for more cage-free, free-range and organic products. Five years ago, the nation’s leading grocer, Bentonville, Ark.-based Wal-Mart Stores Inc., said that its private label Great Value eggs would be cage-free; this past May, Walmart asked its food suppliers to follow stricter guidelines for animal welfare; and in July, the mega-retailer revealed that it was boosting its offering of eggs from the San Francisco-based Happy Egg Co., which produces 100 percent free-range eggs and is guided by a hen welfare program.

David Wagstaff, COO for the Happy Egg Co., affirms that expanded distribution of its free-range eggs in Walmart and many other supermarkets around the country mirrors consumers’ mindsets. “Our growth is absolutely reflecting current consumer trends in fresh eggs,” he asserts. “There are two important dynamics that have been part of this: first, the recognition of progressive grocery retailers in the U.S. in terms of the growing need for innovation and change in the egg category, and second, the fact that consumers are beginning to further buy into the proposition and importance of consuming humanely raised eggs.”

Egg industry leaders agree that there’s growing consumer awareness of where food comes from and say there’s room for a variety of products in the market. “Recognizing that customers place value on having choices in the type of eggs they purchase, hens today are raised by our farmer-members using various housing and egg production practices,” says Chad Gregory, president and CEO of Alpharetta, Ga.-based United Egg Producers (UEP), a cooperative of egg farmers from across the United States that represents the ownership of about 95 percent of the nation’s egg-laying hens. “United Egg Producers fully supports having choices available in the marketplace, and that support is reflected in the diversity of eggs offered by America’s egg farmers. For retailers or foodservice operators wishing to provide more cage-free eggs in their supply, America’s egg farmers will work to meet those requests, while ensuring the health and well-being of the hens they raise.

Data by the Dozen

Market research bears out growing demand for a greater variety of eggs, and eggs in general.

After several years of fat or declining sales, eggs are trending up. According to data from Chicago-based market research firm IRI, sales of refrigerated eggs have reached nearly $6.2 billion, up 9.97 percent from the last 52 weeks ending June 14, 2015. Likewise, data from Schaumburg, Ill.-based Nielsen reveal a 10.6 increase in dollar sales from 2013 to 2014

Within the egg category, there are certain patterns of growth in the cage-free, free-range and organic sectors. SPINS, a Schaumburg-based provider of retail consumer insights, analytics and consulting for the natural, organic and specialty products industry, found that sales of eggs with a free-range claim in natural supermarkets, specialty supermarkets and conventional multioutlet stores, excluding Walmart and Whole Foods) rose 4.2 percent over the 52 weeks ending June 14, 2015, to reach more than $92 million. Sales of eggs with a pasture-raised claim surged 82.1 percent in that same time frame to reach nearly $26 million.

Retailers, for their part, are cracking open a new market — pun intended — with organic eggs. According to Nielsen research, sales of organic eggs rose 19.1 percent from 2013 to 2014, while SPINS reports that sales of organic eggs (with 70-plus percent organic content) climbed 27.3 percent to more than $517 million, and sales of eggs with organic and free-range/pastured claims increased 11.1 percent to more than $73 million.

Within the overall egg category, many brands of specialty eggs, including cage-free and free-range product, have experienced sales spikes. In its retail tracking, IRI finds that sales of eggs from the Pete & Gerry’s brand of natural eggs rose more than 61 percent in the past year, while sales of Great Day Farms fresh eggs are up 76 percent.

At the Happy Egg Co., Wagstaff likewise acknowledges burgeoning business. “The purchasing of eggs from more humanely raised hens, including free-range, has grown by a massive 57 percent during the last 52 weeks,” he notes. “The Happy Egg Co. has invested heavily in production capacity to meet this increase in demand and ensure an uninterrupted supply to its retail customers.”

Wagstaff projects even further expansion. “We do expect this interest to become the standard by which all egg production will be shopped,” he observes. “We are beginning to see how consumer purchasing habits have changed dramatically in such a short period of time, and more families are becoming concerned as to how their food is sourced. As it stands, cage-free will become the replacement for caged over the next five to 10 years, and free-range will be the gold standard for animal welfare and quality egg production.”

Brown eggs, meanwhile, are catching consumer attention, too, with sales rising 14.4 percent from2013 to 2014, according to Nielsen.

In addition to sales data, consumer attitudinal research supports the appeal of eating eggs. According to research from Chicago-based Mintel, 92 percent of consumers say that they eat eggs; more than half (52 percent) of consumers say they do so at least a few times a week. For those looking at demographics, Millennials lead frequency of consumption, followed by Generation X, Baby Boomers and the Swing Generation, per Mintel’s findings.

In a recent report on eggs, London-based market research firm Euromonitor International made the point that egg consumption is in positive territory compared with other food and protein types. For example, while fresh egg volume sales have risen in the United States, fresh meat volumes have declined. Within the breakfast daypart, sales of eggs are higher as sales of breakfast cereals dip.

New Varieties

Beyond formal research, just looking at today’s retail egg section supports the trend of an evolving market for eggs. Many specialty brands now have a stronger shelf presence, including product from suppliers like the Happy Egg Co., Phil’s Fresh Eggs, Niman Ranch, Blue Sky and Organic Valley. At the same time, several store brands and national egg brands are adding cage-free varieties to their traditional lines, such as Eggland’s Best and Land O’Lakes.

Shoppers can also opt for pasteurized eggs, especially if they’re looking to make foods with uncooked or slightly cooked eggs. “Interest and demand for pasteurized eggs is definitely growing,” affirms Jay Berglind, VP of Davidson’s Safest Choice Eggs, in Lansing, Ill. “Years ago, most consumers thought all eggs were pasteurized. Today’s consumers are becoming more aware and … more particular about the foods they purchase.”

Shell Games

While grocery shoppers are largely setting trends based on their various interests in natural, cage-free products; higher-protein foods; and safer raw eggs, there are other forces at work in the fresh egg marketplace.

For one thing, the price of eggs in many parts of the country experienced a significant uptick this year, following an outbreak of avian flu in many Midwestern states that substantially reduced (and, in some cases, decimated) flocks and egg supplies. In mid-July, the U.S. Department of Labor reported that the price for wholesale chicken eggs rose more than 84 percent from May to June. While avian flu isn’t as widespread now as it was earlier in the year, high prices are expected to continue into the fall, due to the smaller current inventory of chickens.

At General Mills, Peterson says that the situation has posed some issues. “Our commitment to work toward 100 percent cage-free eggs is significant, but it will be a challenge because the U.S. egg supply has serious shortages right now due to the avian influenza outbreak,” he admits.

In addition to supply issues, some legislation has affected egg production, as well as consumer perceptions of it. In California, Proposition 2, also known as the California Prevention of Farm Animal Cruelty Act, was passed in 2008 to ban conventional eggs and require those that produce and sell eggs in the state to allow hens able to stand up, lie down, turn around and fully extend their wings. That regulation, in turn, led to lawsuits from other egg-producing states, whose farmers contended that California’s requirements were affecting their own egg industries. The legal battle is ongoing.

Nearly five years ago, UEP and the Humane Society of the United States (HSUS) aligned in an effort to create a uniform cage production standard for the U.S. egg industry via a new farm bill, instead of more piecemeal state-by-state regulations like those in California. Last year, though, the two organizations ended their “understanding” and UEP has since refocused its efforts on other ways to deliver what consumers want, while ensuring “business certainty” for American egg farmers.

Innovations in egg production and marketing continue. For instance, Naturally Smart eggs, from Chicago-based Dutch Farms, uses “Hen2Home” technology, with each egg sporting a use-by date etched with organic laser lights, and a code allowing consumers to trace any egg back to the farm where it was laid and confirm its production method.

“Cage-free will become the replacement for caged over the next five to 10 years, and free-range will be the gold standard for animal welfare and quality egg production.”
—David Wagstaff, The Happy Egg Co.

“Our commitment to work toward 100 percent cage-free eggs … will be a challenge because the U.S. egg supply has serious shortages right now due to the avian influenza outbreak.”
—Steve Peterson, General Mills