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EGGS PROVED ‘EGG-CEPTIONALLY’ RESILIENT IN ’23

The egg category volume picked up in the closing months of 2023 as prices continued their downward trend from 2022 highs.

Total fresh egg dollar sales dropped 28.5% (versus the same period a year ago) during the 12 weeks ended Dec. 3, as commodity prices continued to moderate from 2022’s historic highs. As a result, unit sales were down just 0.5% during the same period, according to Chicago- based market research firm Circana. And volume is on the rise (+4.3% in the shell eggs subcategory).

“I like to look at volume more so than price, especially with all the wild price fluctuations we had last year, [because it’s] really looking at how many eggs consumers purchased,” says

Mike Hostetler, vp of consumer insights at the American Egg Board, Chicago. “Over the course of last year, it was fairly flat versus the year before. But the year was kind of a tale of two halves. In the first part of 2023, we were lagging behind 2022. From August and September on, we’ve been above 2022. The last three or four months or so of 2023 have been the strong- est that we’ve seen since at least 2019.”

THE PRICE WAS RIGHT

As one of the more price-elastic food categories sold in grocery stores, eggs typically see only modest changes in consumption levels during periods when consumers have to pay more. However, that doesn’t mean the category is immune to inflationary pressures. U.S. Department of Agriculture (USDA) data and projections show that Americans ate an average of 279 eggs in 2022 when prices spiked to all-time highs. The USDA projects that consumption rose to 285.7 eggs per person last year. The only year with a higher per capita number going back to 2012 was 2019. Eight of the past 12 years have seen increases in per-person consumption.

‘The last three or four months or so of 2023 have been the strongest that we’ve seen since at least 2019.’

“Prices coming down has helped. When we talked to consumers in the first part of last year, all they could talk about was the high price of eggs. As we got toward the end of the year, they recognized that they’d seen the prices of eggs come down. So that’s part of it,” reports Hostetler, who says attributes such as nutrition and protein are among the top reasons consumers give for buying eggs.

Store brand eggs have definitely benefitted from consumers engaged in price shopping, with units and volume outpacing the total category on both 12- and 52-week year-against comparisons. Although private label dollars fell 33.4% during the 12 weeks ended Dec. 3, units rose 4.6% while volume jumped 10.5%.

Niche products such as Utopihen’s pasture-raised duck eggs and soy-free eggs help drive bigger baskets.

PRODUCERS SAY ‘NO’ TO ’22 BIRD FLU REDUX

2022’s historic high prices have largely been attributed to the culling of millions of birds nationwide necessitated by bird flu outbreaks in wild, backyard and commercial flocks across the nation.

Egg farmers were largely successful in limiting serious outbreaks in 2023, although concerns were somewhat renewed when a new strain of the flu appeared in the fall, leading to 11.5 million egg-laying birds being euthanized in December, according to the Department of Agriculture. Inventories of shell eggs fell 2% as a result, and egg prices rose 8.9% in December. However, they were still 24% lower than the same month in 2022.

But egg producers enter 2024 more confident in their ability to protect their flocks based on past lessons learned and biosecurity safeguards subsequently put in place. “U.S. farms maintain the highest level of biosecurity of any kind of poultry farms on the planet,” says Marc Dresner, director of integrated communications at the American Egg Board. “That being said, there is no foolproof solution for bird flu. [But] the industry continues to get even more sophisticated about keeping wild birds, which are the carriers and spreaders of the disease, away from their farms.”

Dresner points to USDA figures that show there are 368.2 million egg-laying hens in the U.S. as a sign that even sporadic outbreaks are unlikely to have a profound impact on supply. “Farm-to-farm spread through shared services has been all but entirely eliminated,” he says. “We don’t have any incidents that we can point to of [flu] being carried from farm to farm. That’s a huge win for us and biosecurity.”

CONVENTIONAL WISDOM DOESN’T ALWAYS APPLY

Conventional eggs made up 71.2% of equivalent shell egg volume in 2023 (through Dec. 2), according to numbers supplied by the American Egg Board. However, the segment saw its volume fall 2.0% against the same period the year prior and 12.2% on a two-year comparison.

To meet the needs of consumers seeking the lowest cost per dozen, Egg Innovations launches 30- and 60-count cartons of its Blue Sky Family Farms and Helpful Hens eggs.

Cage-free eggs, which account for 19.1% of shell egg volume, experienced solid growth last year, with a one-year volume comparison showing a 6.6% gain — and a whopping 62.7% over two years.

Free-range eggs, representing 6.3% of the total volume, registered a 10.7% drop from 2022 levels and a 2.0% decline from the year prior. But pasture-raised eggs saw their share of shell eggs grow to 3.4% over the past two years, posting one- and two-year volume gains of 32.5% and 74.1%, respectively.

“Consumers are realizing the importance of pasture-raised farming principles and are voting with their wallets,” says George Weaver IV, customer and employee relations manager at New Holland, Pa.-based Westfield Egg Farm, which produces the Utopihen and Nature’s Yoke brands. “As states continue to move toward banning caged hens, you will see a continued rise in specialty eggs as well as large egg manufacturers starting to offer specialty eggs to diversify their portfolios,” says Weaver.

“Consumers are continuing to ask for our niche eggs: Pasture Raised Soy Free eggs, Pasture Raised Duck Eggs, and Omega-3 Free Range eggs,” he adds. “It’s these lower movers that will drive an overall higher basket value per consumer in the stores. Retailers that want to attract the natural consumer need to have at least one niche SKU to elevate their egg set.”

“Pasture-raised shell eggs and processed eggs consistently lead the egg growth category in all segments — 30% to 50% each month, quarter, and year,” adds John Brunnquell, president and CEO of Egg Innovations, Inc., Warsaw, Ind. “It would be higher if more supply was available. As an example, one retailer recently introduced pasture-raised into its egg set, and they are already running three times the volume expect- ed with its consumer base.”\

Brunnquell says the more educated consumers become about egg segments, the more likely they will buy free-range and pasture-raised eggs. So retailers should do all they can to boost their knowledge. “Cage-free is becoming the new commodity as consumers become more aware that these laying hens are just in a bigger cage,” he adds.

BIGGER IS SOMETIMES BETTER

Consumers increased their purchases of 24-, 30- and 60-count eggs in 2023 as sales of dozens and 18-counts declined. Sixty-counts saw the biggest year-over-year increase, jumping 33%; followed by 24-counts, up 20.2%; and 30-counts, up 5.3%. Standard dozens fell 4.3% and 18-counts were down 4.7%.

As a result, Egg Innovations has launched 30-count and 60-count egg overwrap products under its Blue Sky Family Farms and Helpful Hens regenerative farmed eggs brands. Brunnquell says the new items are “great for families, providing the highest quality product at a lower cost per dozen.”

What about egg substitutes and egg white substitutes? The former saw dollars, units and volume tumble double digits while the latter eked out a 0.8% dollar gain in the face of unit and volume losses. However, that has not dampened the enthusiasm of brands that still see a significant market opportunity, particularly in the area of eggless substitutes.

Hema Reddy, founder and CEO of Austin, Texas-based Crafty Counter, maker of WunderEggs, a plant-based alternative to hard-boiled eggs, says price can be a factor for consumers.

“What’s happening in the financial landscape does affect the spending potential of customers. There’s a lot of people trying them, but if they want to try them again, price becomes an issue. For example, if they were sold at $5.99 or $4.99, they would be flying off the shelves. When they are listed at $7.99 to $8.99…that’s a little harder to get a large amount of sales.”

‘As states continue to move towards the banning of caged hens, you will see a continued rise in specialty eggs as well as large egg manufacturers starting to offer ‘specialty’ eggs to diversify their portfolio.’

Reddy says that even at higher prices, her startup has seen strong demand at chains such as Wegmans and Whole Foods. Crafty Counter is still in funding rounds and is looking to broaden its product line and fund sales promotional activity as it builds resources, she adds.

EDUCATE, DEMONSTRATE, COMMUNICATE & DIFFERENTIATE

Egg category managers have opportunities to strategically manage the business to connect with shoppers on a deeper level and positively impact the customer experience. It all starts with education. Product descriptors for eggs continue to evolve with new “cage-free” legislation being introduced in states across the country and the launch of specialty eggs aligned with the regenerative agricultural movement. Retailers can make use of printed and/or digital content supplied by individual egg producers or the American Egg Board, or they can create their own to help customers make buying decisions that align with their purchasing decision-making tree.

“Consumers don’t fully understand all the different types of eggs, or they may not know the difference between a cage-free and a free-range egg,” says Hostetler. “I think there is a lot of confusion and misinformation about the role those segments play in the industry. [Knowing] just gives consumers options. They look at the benefits in terms of perceived animal welfare or sustainability or whatever benefits they see as valuable and they’re willing to pay for.”

Demonstration is another key to growing sales. Eggs may be the most versatile food in the grocery store with a variety of preparation options. However, many consumers do not fully understand how eggs can broaden their culinary horizons. Grocers can make the most of this opportunity by sampling products with recipe ingredients or providing cooking instruction in stores and online. This could be particularly helpful for consumers who love cuisines — such as Asian or Latin American — that frequently feature eggs and among younger consumers, who do not currently consume eggs at the same rates as their elders.

Communication is also important. Consumers continue to buy eggs even as prices rise, but that doesn’t mean they’re happy about it. The egg shortage and higher prices in 2022, which resulted from farm-to-farm bird flu contamination, reinforced the need for grocers to assure customers about product safety and offer an explanation for price increases.

Finally, the emergence of specialty eggs and continuing interest in plant-based egg substitutes offers retailers an opportunity to differentiate without a wholesale revamp of their shelf sets. Grocers need to evaluate suppliers, often smaller brands, that offer unique alternatives to mainstream items and also have the necessary human and financial resources to support their retail partners going forward.

George Anderson

George Anderson

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