Cal-Maine: Egg industry consolidation will continue

Cal-Maine Foods executives said that the egg industry will continue its longtime trend of consolidation, but the rate of consolidation remains somewhat of an unknown.

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Photo by Andrea Gantz
Photo by Andrea Gantz

Cal-Maine Foods executives said that the egg industry will continue its longtime trend of consolidation, but the rate of consolidation remains somewhat of an unknown.

Dolph Baker and Tim Dawson, who are respectively the chief executive officer and chief financial officer of Cal-Maine Foods, the world’s largest egg producer, addressed industry consolidation on June 6 while participating in the Stephens Spring Investment Conference.

Cal-Maine Foods has been active in the industry consolidation, as Baker stated the company had grown primarily through acquisitions. The company has completed 20 acquisitions through the years, with the most recent being Dixie Egg and Happy Hen.

Dawson said he felt the industry consolidation would continue, although he didn’t foresee any “significant acceleration” to the rate of consolidation.

“The industry has been consolidating for decades now, and I anticipate that consolidation to continue. But something that would make just a real change in that rate of consolidation, I guess if the down market were to continue longer than we think it should, then that could happen, but we just really don’t see anything that would create significant increase in that consolidation,” said Dawson.

Earlier in June, one planned egg industry consolidation was announced, as Dutt & Wagner of Virginia revealed it had reached an agreement to acquire substantially all the assets of Parker & Reichman, relating to their commercial production, processing, distribution and sale of shell eggs business.

Baker said that while Cal-Maine Foods does not “chase” acquisitions, he added that the company wants to continue to look for opportunities to acquire companies that appear to be a good fit, and that he foresees Cal-Maine should have “a few good opportunities in the next year or two.”

Cage-free egg commitments and impact on industry consolidation

When asked if increased demand for specialty eggs and cage-free eggs brought on by grocers, restaurants and foodservice companies pledging to source only cage-free eggs could lead to more consolidation, Baker said it was possible.

“That’s got few years to roll out as well,” Dawson added. “The story’s not yet written as to how exactly that plays out.”

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