But they’re still buying — and many are shifting to cage-free and specialty varieties.
Avian influenza and supply chain issues continue to plague the entire egg industry. But despite an 80.5% increase in fresh egg prices during the 12 weeks ended Jan. 1 (versus the same period a year ago), unit sales fell only 1.0% while dollars shot up 78.8% to $2.85 billion across channels, according to Chicago-based market research firm IRI (iriworldwide.com).
As of Jan. 5, more than 57 million birds in 47 states have been infected by highly pathogenic avian influenza (HPAI), according to the USDA. While AI is mostly under control, it takes four to six months before replacement layers hit peak egg production, so the impact is still being felt. As a result, media attention and consumer conversations have focused on the key negative outcome: the high price of eggs.
Conventional egg prices surged 89.6% during the fourth quarter to $5.18 per unit.
Conventional egg prices surged 89.6% during the fourth quarter to $5.18 per unit, while prices for cage-free and organic eggs jumped 47.0% (to $5.34) and 20.7% (to $5.92), according to IRI. Although wholesale prices have retreated in recent weeks, “We are not seeing prices decline at retail yet,” reports John Crawford, vp of client insights at IRI.
In a recent press release, however, American Egg Board President & CEO Emily Metz assured shoppers that “America’s egg farmers are doing everything they can to keep costs down and grocery stores stocked…. But sporadic supply disruptions do impact wholesale prices. The good news is that egg farms are recovering quickly. In fact, most of the egg farms that were affected by HPAI this year have recovered and are back to producing eggs.” She adds that the USDA reports only 6% fewer hens laying eggs than normal.
Despite supply chain and pricing issues, eggs are still one of the highest-quality protein sources available, according to Metz, and “consumers know eggs are still a good value.” Still, the upheaval has led to some changes in consumer buying habits.
Egg shoppers are trading up or down, depending on the assortment in the case, reports Ted Robb, co-founder of New Barn Organics, owned by Denver-based NestFresh. “For example, a shopper who previously bought organic pasture eggs might now be purchasing non-organic pasture eggs. But at the same time, the widespread shortages and increased price of cage-free eggs has many consumers trading up to organic eggs due to the shrinking price gap and expanded selection.”
As a result, he adds, NestFresh is “actively evaluating our product portfolio and pricing structure to ensure it meets the needs of these turbulent times. There are certainly opportunities to grow, but brands need to remain highly responsive to rapid shifts in demand.”
CAGE-FREE UNITS UP 17.1% IN Q4
While dollar sales are up double-digits across the board, unit sales tell the real story. During the fourth quarter, conventional egg unit sales slid 1.1%, but unit sales of organic (+0.7%) and, especially, cage-free eggs (+17.1%) continued to grow, according to IRI. That’s partly because prices for organic and cage-free eggs did not increase as much as conventional in the fourth quarter, explains Crawford. Plus, “Consumers already paying a premium would not be as sensitive to the increased costs of their eggs.” However, retailers making the switch from conventional to cage-free eggs also played a key role.
For example, both Walgreens and CVS recently fulfilled commitments to source 100% cage-free nationally three years ahead of schedule, reports The Humane League. “These accelerated cage-free fulfillments by Walgreens and CVS are precedent-setting for the retail industry and prove there’s no reason other companies can’t, at the very least, meet their 2025 commitments to go cage-free,” says Tim Sage, corporate relations specialist at The Humane League. “By demonstrating a commitment to the ethical and humane treatment of animals in their supply chains, these retail leaders are acknowledging that confining hens in cages is inhumane and unacceptable.”
Crawford expects more cage-free egg growth this year as Cage Free Only laws went into effect on Jan. 1 in both Colorado and Washington, which join California and Massachusetts. Cage Free Only laws will go into effect in four additional states in 2024 or 2025, he adds.
DEMAND FOR ORGANIC & SPECIALTY EGGS RISES
Outside of cage-free eggs, sales of organic, pasture-raised, free-range, and other specialty eggs are also on the rise, according to manufacturers.
“Specialty eggs continue to drive the category in volume growth,” confirms Emily Hahn, senior category strategy manager at Monroe, N.H.-based Pete & Gerry’s, which sells organic free-range Certified Humane eggs. While commodity egg unit sales dropped 1.9% in the past year, according to IRI, cage-free, free-range, and pasture-raised all saw double-digit gains, says Hahn.
“While the industry is experiencing unprecedented times, [Pete & Gerry’s is] lucky to have not been impacted thus far by avian influenza due to the decentralized supply chain and biosecurity metrics we have in place,” she explains, highlighting another possible reason for specialty egg growth. “Although our small family farms have not been impacted by AI, we are still experiencing the effects due to overall tightened supply in the egg category and continued demand.”
Due to increased demand, Pete & Gerry’s is adding pasture-raised eggs in March. “Guided by emerging consumer insights and the rapidly growing pasture-raised segment, we are excited to offer a new item that prioritizes humane hen treatment and ethical and sustainable production for a distinct egg consumer psychographic,” says Hahn. Raised in accordance with Certified Humane standards of animal welfare, the new pasture-raised hens live “under sunny skies with room to roam, forage, and thrive, with 108 square feet of pasture per hen,” she adds.
Like pasture-raised eggs, organic egg sales continue to climb as well. “Consumers are still seeking USDA Certified Organic products in nearly every category, especially in club stores such as Costco,” says Robb. Non-GMO certified organic is the fastest-growing sub-segment within organic eggs, he adds.
New Barn Organics has also gotten an “extremely positive” response to its Regenerative Organic Certified eggs, launched in partnership with Whole Foods, says Robb, citing the growing importance of soil health to consumers.
Meanwhile, New Holland, Pa.-based Utopihen Farms’ Non-GMO Pasture Raised Duck Eggs “continue to be a hit within the category,” notes George Weaver IV, marketing and brand manager. “There is a population of consumers who are allergic to chicken eggs for various reasons. Plus, duck eggs are fabulous for baking as they are richer and denser than a typical chicken egg.”
“We don’t expect demand [for specialty eggs] to stop any time soon, even if economic issues mean consumers shift some of their purchases to less expensive options,” says Robb. “Consumers of all income brackets desire higher animal welfare standards for their proteins, and eggs represent a critical food for most families. So we expect another strong year of demand for specialty eggs.”
Consumers will continue to seek out specialty eggs once supply has regulated, “simply because they enjoy the quality compared to a commodity egg,” according to Whitney Fortin, vp of marketing at Rogers, Ark.-based Happy Egg Co., which recently expanded distribution of its Vitamin Plus Free Range eggs beyond Kroger.
“We continue to see more consumers trading up to Outdoor Access eggs as they learn what a truly higher-quality egg looks and tastes like,” she explains. “In states like California where caged and cage-free legislation has impacted retailers’ abilities to have non-outdoor access eggs on their shelf at all, consumers are trading up to specialty eggs and, from what we’re seeing, are pleased with the quality and difference they see.”