The price of eggs surge then drops as panic buying ebbs. But will higher demand be the “new normal”?
Compared with the same period in 2019, dollar sales of fresh eggs jumped 5.0% while volume shot up 8.9% during the 12 weeks ended March 22, according to Chicago-based market research firm IRI (iriworldwide.com). But those 12 weeks included the start of an unprecedented surge in demand that had producers adding shifts, hiring more workers, and bringing on new farms.
Prior to the coronavirus pandemic, the category was in a very different place. In fact, for the 12 weeks ended Feb. 23, dollar sales were down 5.9% and volume was off 1.6%.
“The demand for eggs right now is unheard of,” says Sotheary Hom, marketing manager at Denver-based NestFresh (nestfresh.com).
The surge reversed 10 months of low prices for commodity eggs, the result of an oversupply that can be traced back to an earlier outbreak, avian flu. That pandemic wiped out more than 50 million birds in U.S. poultry flocks between 2014 and 2016, created a sharp increase in egg prices, and eventually led to an oversupply as producers reacted to higher prices.
“Honestly, we’ve been living through the ramifications of that for the last three years,” says Paul Turbeville, vp of marketing at Pete and Gerry’s Organics (peteandgerrys.com), Monroe, N.H. The price reductions that resulted were about to drive some producers out of business, he adds. But then everything changed.
Grade A or better large white eggs went from an average of $1.06 per dozen the week of Feb. 28 to March 5 to $3 a dozen by April 3 to 9, according to the U.S.
Department of Agriculture. Ironically, demand began to subside as Easter approached. Although prices fell back to a projected 95 cents per dozen for the week of April 10 to 16, producers say the normal Easter egg bump was largely subsumed by the coronavirus spike.
THE NEW NORMAL?
Despite the leveling off, the “new normal” will likely mean higher sales because people are staying at home and using more eggs, says Marc Dresner, director of marketing and communications for the American Egg Board (AEB), Chicago. Consumers are preparing three meals a day at home, seven days a week, plus snacks, he explains. “People are also stress baking, and that, too, calls for eggs.”
The upshot is higher-than-expected volume over a year ago and for the near future. “Over time, we expect the market to stabilize, but at a higher level than previously anticipated,” confirms Matthew Sherman, chief marketing officer at Handsome Brook Farm (handsomebrookfarm.com), Franklin, N.Y.
Turbeville agrees that retail demand will stay high as long as people are cooped up. “A lot of people are not used to cooking, and they’re probably doing a lot of it now,” he says. Their shopping patterns have changed, too, as they stock up during less frequent trips. It’s easy to go through two dozen eggs a week if the family is at home, he says.
LONG HOURS, TIGHTER SAFETY
In response to the surge, Pete and Gerry’s began running long shifts – three or four hours longer a day, plus weekends. It also stepped up sanitizing equipment and installed “tons” of hand-washing stations. The biggest worry, says Turbeville, is ensuring that no one with symptoms comes into work.
“Raising the standard” on safety and supply was also at the top of the list for Happy Egg Co. (happyegg.com), Rogers, Ark. CEO Dan Arnsperger says that includes raising quality standards and monitoring local, national and international mandates to ensure the safety of the company’s people and products. Plus, Happy Egg recently added more than a dozen family farms to its supply chain of 50 farms.
Transportation is a worry for producers, too. “Our primary challenge, as with many businesses, is navigating a logistics and transportation system that is being strained,” says Sherman of Handsome Brook.
Demand for eggs put stress on the entire food supply chain, says NestFresh’s Hom. “It has also been a challenge to get packaging printed and manufactured quickly enough to serve our retail outlets.” NestFresh added 50 employees, upping its workforce 10%, and added shifts to meet demand, she notes.
George Weaver IV, marketing and brand specialist at Nature’s Yoke (naturesyoke.com), says that when demand first shot up in March, the New Holland, Pa.- based company made emergency deliveries to family stores in its hometown and filled the normal orders – and then some – for its long-time customers up and down the East Coast. It also donated more than 60,000 eggs for egg sandwiches for health care workers in Baltimore. While Weaver expects “reaction buying” to flatten out within a couple of weeks, orders were still up 300% over normal in mid-April.
Organic Valley (organicvalley.coop), La Farge, Wis., went into “allocation mode” when panic buying hit and was unable to fill all the demand during the height of the surge, reports David Bruce, egg pool general manager. “We expect the trend to eat at home more will continue, and people will be extra focused on products they see as good for their health. So we expect demand to be stronger than it was prior to current events,” he says.
PRICING SHIFTS MAY FAVOR SPECIALTY EGGS
With the price of commodity eggs rising in response to short supply, says Hom, “We expect the tighter price gap between commodity and specialty eggs to encourage many consumers to spend more for specialty items.”
Handsome Brook Farm also sees a narrowing price gap benefiting the organic market. “We expect commodity egg prices to remain higher for the next several months as demand outstrips current supply,” explains Sherman. “We think that is a good thing for the specialty category as the narrower price differential will make the trade-up easier for consumers. Those unwilling to spend an extra $4 for more sustainable and humane eggs may have less of an objection to spending an extra $1 to $2,” he says.
Consumers who may be cutting back on other animal proteins will see eggs as a positive alternative, continues Sherman. At 60 cents per egg, the per-serving cost for a specialty product is still a bargain compared with other sustainable animal protein products, he explains.
NEW TO THE MARKET
While some producers have put new product launches and packaging upgrades on hold until the egg market stabilizes, others are moving ahead:
- NestFresh is launching EGG POP!, hard cooked, cagefree eggs on bamboo skewers that come with a dip or dry seasoning. Available in Sriracha Ranch, Deviled Egg, Hot Wing and Ranch flavors, the snacks come in two-egg packs that offer 11 grams of protein per serving.
- Nature’s Yoke will shift from post-consumer recycled plastic egg cartons to 100% post-consumer paper cartons. The move will reduce the number of plastic cartons used in the egg industry by nearly 4.6 million annually.
- Handsome Brook Farms is rebranding. New cartons coming out this spring feature green pastures, blue skies, and a bright yellow sun and emphasize the word “Handsome” to describe the company’s commitment to humane hen care.
- Pete and Gerry’s will introduce sous vide egg bites in June under the Nellie’s brand. The vacuum-packaged product will be the first certified humane egg bite on the market. The sous vide cooking method, popularized at Starbuck’s, ensures smooth texture.
- Organic Valley will launch 100% organic, free-range Egg Bites in three flavors: Uncured Ham & Swiss, Sausage & Pepper Jack, Feta & Chive. Each two-bite, 4-ounce package delivers 14 to 16 grams of protein and less than 250 calories. The company is also rebranding and relaunching its certified organic, free-range Omega-3 eggs as Organic Valley Smart Eggs. Each serving contains 225mg of Omega 3s, three times more than standard brown eggs. Expected to begin shipping in July, large and extra large Smart Eggs will be available by the dozen and half-dozen.
Sales in supermarkets, drugstores, mass merchants, military commissaries and select club and dollar stores combined for the 12 weeks ended March 22, according to Chicago-based market research firm IRI (iriworldwide.com). Percent change is versus the same period a year ago.
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