The outbreak of highly pathogenic avian influenza that swept through the Upper Midwest this spring resulted in the loss of around 8 million of Rembrandt Foods’ hens. Rembrandt had grown from an idea on a business school paper to one of the world’s largest egg products companies in just 14 years. The company was the third largest egg producer in the U.S. in the February 2015 Egg Industry Top Egg Company survey, with 14.5 million hens housed on December 31, 2014. Expansion projects in the pipeline would bring the company’s hen numbers up to 23 million head by 2017. Then avian flu changed the company’s trajectory.

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The avian flu outbreak that swept through the Upper Midwest this spring caused the loss of 8 million of Rembrandt Foods’ birds.

Coping with shortage of eggs

Rembrandt was designed from the ground up as an inline egg-breaking company. All of its eggs are broken into egg products, and losing over half of its hens meant a shortage of eggs. The company has been working with its customers to find a way through this extraordinary event.

Because of the long production cycles for layers, the lost hens won’t be completely replaced in production until 2017. Rembrandt is importing shell eggs globally to be broken at the company’s plants to produce egg products on its own lines, but this can only replace a fraction of the avian flu-caused volume loss.

Rembrandt has shifted the focus of its research and development efforts from finding new uses for eggs to finding ways to make its egg products go farther. For instance, enzyme-modified egg yolk can extend the functional properties of the yolk so that 30 percent less yolk product is needed to provide the same level of emulsification in products like salad dressings. After testing dozens of additives with dried egg products, Mindi McKibbin, new product development manager, Rembrandt Foods, said they identified a wheat protein that can added to dried egg white to create a proprietary extension in certain applications.

McKibbin said Rembrandt has also investigated ingredients that can be mixed with egg products by overseas egg processors to allow for importation of more egg products to meet customer needs, since the regulations for importation of some of these mixtures are not the same as for the egg products alone. Rembrandt has developed a liquid shelf-stable mayonnaise base which can be produced in Europe and shipped to the U.S., because it contains less than 50 percent egg yolk by volume. Other examples of meeting customer needs with egg products from Europe include adding flour, sugar and other ingredients to dried egg powder or adding 50 percent sugar to liquid egg to make a shelf-stable product. She stressed that these applications are usually customer specific.

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Rembrandt Foods’ new pilot plant has helped research and development scientists come up with new products -- even ones that help extend functional properties of eggs during the avian flu-caused shortage.

Building a global market for egg products

Jonathan Spurway, marketing vice president, Rembrandt Foods, said that, historically, there hasn’t been a lot of international trade in eggs and egg products, because of a lot of regulatory interference and trade barriers.

“The avian influenza situation has brought forward a scenario where global trade is going to be part of the solution for at least the next couple of years,” Spurway said. “Our expectation is that we will develop a globally traded portfolio of egg products. We aren’t just in this for the U.S. (market), we are in this for the global trade opportunity.”

Increased global trade for egg products in the future likely will be driven by multinational food companies and foodservice outlets that want to be supplied with the same ingredients worldwide. This may provide an opportunity for egg products companies to expand distribution globally along with their customers’ overseas expansion.

Future growth includes cage-free eggs

In spite of the very real setback caused by the avian influenza outbreak of 2015, Rembrandt Foods is committed to continue growing and to transform itself into a value-added egg ingredients supplier, according to Spurway. He said the expansion projects on the drawing board before avian flu hit are still being pursued. He said these investments include pullet rearing, layer complexes and processing capabilities. As a result of the avian influenza outbreak, Rembrandt Foods is looking at geographical separation to provide additional business continuity options for its customers.

Rembrandt Foods has a specialty egg business and Spurway said that the company had around 11 percent of its hens, nearly 1.6 million head, housed cage free prior to the flu outbreak. Some of the birds lost to avian flu were on a cage-free farm, but these were starting to be repopulated in August.

When asked about what he sees as the future for cage-free production in the U.S., Spurway said, “This is no longer a niche market. This is a trend and it continues to grow and get bigger and bigger.” He cited the large number of restaurant chains and some international food companies that have made cage-free egg pledges of one kind or another as driving the growth of egg products produced from hens housed cage free.

“We have a very substantial cage-free growth plan,” Spurway said. “Cage free is seen as one of our core businesses. There is a segment of consumers that will continue to drive this growth, and I can see 20 to 25 percent of the U.S. flock being cage free within the next 10 years, and that is coming off from 5 to 7 percent today.”

He said Rembrandt’s future investment in birds will be aligned to cage-free business.

“However, globally, I think that there is always going to be conventionally produced eggs, because of the lower cost of production,” he said.