The egg industry is facing several global challenges, according to former ALDI board member Johann Morwald. He told the audience at the International Egg Commission meeting in Vienna that non-governmental organizations (NGOs) "raise questions about the conditions under which hens are kept, whether or not the eggs are properly labeled (for instance cage-raised eggs labeled as organic eggs), the systematic killing of male chicks and other practices.”
ALDI is one of the largest food retailers in the world and has been particularly successful with its “hard discount” strategy in Central Europe. The company has experienced rapid growth and it is now a major food retailer in the U.S., U.K. and Australia. Morwald said that, in many countries, housing standards for hens have already been established. Killing of male layer chicks will be banned in Germany in the future, and he said that the global egg industry has to “get rid of killing of males.”
Speaking to U.S. egg producers, Morwald said the U.S. industry still has the opportunity to set its own standards, and it has to do it now. He said the egg industry has to communicate better and engage the media, but that it has to set standards.
Eggs are essential
Morwald commented that clever marketers now present bottled water to consumers as “the elixir of life.” He said that because of all of the nutritional benefits of eggs - the protein content, lots of essential amino acids and vitamins - eggs are just as essential to human life as water is. Egg producers have a great nutritional story to tell consumers, and he said the industry needs to do a better job of marketing the benefits of eggs.
Recession creates bargain hunters
Professor David Hughes, Imperial College of London, said the recession that started with the global financial crisis in 2007-08 has had an impact on grocery retailers. In the U.K., savvy value shopping is in vogue. He said that prior to the recession, this concern for low prices would have been considered “cheap.”
People are reducing trips to superstores and buying less when they go,” Hughes told the audience at the International Egg Commission meeting. This impact has been seen in the U.S. and the U.K. What he called “hard discount” retailers like ALDI are gaining market share. He said high-end retailers are also doing somewhat surprisingly well; it is stores in the middle that are losing market share.
Hughes said ALDI is gaining market share in the U.K. at the expense of big-box chains ASDA Stores Ltd. and Tesco. This same trend is happening in the U.S.; he said Wal-Mart has seen sales declines in the U.S. in three of the past six years and discount "dollar stores" have gained market share.
Convenience is big still, even for cost conscious shoppers, according to Hughes. He said that meal deals, where all of the items that you need to prepare a complete meal are in one place, are big. “This creates a challenge for the egg industry. Where does the egg fit in a meal deal?” he asked.
What about Amazon?
Hughes said that the segments of grocery retailing that are growing are e-commerce, convenience and hard discount. The biggest food retailer in the world is still Wal-Mart, but Hughes asked, “Will they still be the largest retailer in 2025? Who knows? It could be Amazon.” Particularly in the U.S., Hughes said that Amazon is moving into selling fresh food and general groceries. He said that, by 2017, Planet Retail, a retail consulting firm, projects that Amazon will be the No. 2 grocery retailer in the U.S., behind only Wal-Mart.
There is what Hughes called an accelerated move into price transparency in the U.K. retail food market. Tesco and ASDA are using technology to show how their prices compare with the competition. Tesco calculates what your basket of groceries would have cost at ASDA and gives you a voucher for your next shopping trip if you would have paid less shopping at ASDA. ASDA has countered by doing the same comparison, but giving you the lower price on that visit.