And that spells opportunity for retailers who play their cards right.
There’s good news and bad news in the egg category, and that combination means there’s also lots of opportunity — provided you play your cards right.
First the bad news: Conventional egg prices have shot up by 29% (often much more) during the past year, thanks to the bird flu outbreak that has cut the national flock by 12%. The bad news on that front is coming out so fast I can’t keep up with it.
SPECIALTY GAINS STRONG
But then there’s the good news: Collective sales of the cage-free/free range/organic egg market have grown more than 15% annually for the past 16 years, according to the American Egg Board and other industry data providers. If these trends continue, the specialty segment will generate almost all category growth and represent 50% of the total egg category by 2025. By comparison, the conventional egg market has barely kept up with population growth.
Let’s drill down a little deeper. Recent innovations in aviary systems now allow producers to create consolidated cage-free complexes on a scale comparable to traditional caged facilities. Several large producers have pledged that they will not produce any more caged facilities.
But will these complexes meet consumers’ expectations? After all, the hens will remain indoors their entire lives. I spoke to my friends at Pete and Gerry’s about this, and they believe that over the long run the only eggs which will meet consumers expectations are those produced on a smaller scale on farms where the hens are able to go outside on grass.
We’ve seen this before in egg markets in other countries. The United Kingdom egg market underwent a similar transition in the 1990s and consumers eventually rejected cage-free style production in favor of free-range and pasture-raised eggs.
There are lots of subtle consumer trends still evolving here, and you can’t be an expert on everything. But this much I can tell you: To max out your competitive sales and profitability, you must pay close attention to the specialty egg market.
Let’s consider one trend that is sneaking up on retailers in many markets. The price gap between conventional eggs and specialty eggs is shrinking. That’s already triggered some switching to the only slightly more expensive specialty eggs. And from what I’ve seen, once a customer makes that switch, they tend to stay there.
For this reason, you’d be wise to have good variety in both conventional and specialty eggs, in both branded and private label. Consumers do tend to follow egg prices pretty closely, so you’ll have to be careful that your pricing is competitive.
If you aren’t already, you should be promoting conventional and specialty eggs every week in your ad. Don’t forget hard-boiled eggs. These sell well by themselves, but during key holidays their sales can easily triple because people like them for the convenience they provide.
You don’t have to go deep on your promotion of specialty eggs — just 20- or 30-cents off should do the trick. Make sure you have good signage — especially if you are promoting local eggs. That gets ignored all too often.
Put your specialty eggs first in the traffic flow. Let customers see them first so they can make price comparisons, and see that the difference isn’t as much as they might have expected. And make sure your planograms put potential meal deal combinations nearby. Eggs can be the centerpiece of a great meal deal, if you tie in bacon, eggs, biscuits, juice, bagels, cream cheese and other breakfast items.
PRICE ‘EM RIGHT!
Finally — and this one’s hard to believe — don’t fall into a pricing trap that I see all too often. Make sure the price per egg in an 18-count carton is lower than it is in a 12-count carton. With unit pricing on the shelves, I guarantee you that consumers will notice!