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News and analysis on the global poultry
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Peter High
on May 3, 2007

Invest in brand for premium prices

Editor's Note: Articles on the next several pages are reports from the recent International Egg Commission conference in London.

To supermarkets, the egg category is a commodity and unless the egg industry does something about this, nothing will change. That's the view of Peter High, High Marketing Ltd., New Zealand, who spoke at the recent International Egg Commission conference in London.

"Our customers, consumers and competitors have become more sophisticated (on branding) over the years, but in general, our industry has been left behind," he said.

Egg producers all over the world have spent large sums of money on equipment, he said, but virtually nothing on establishing a brand, which, if treated properly, would secure them a profitable business and everlasting success.

High said that the first step to achieving brand success is to be an innovator; there is a need for egg companies to distinguish their products from their competitors. "If you don't, then price will always be the purchasing factor," he added.

Supermarket customers need to be convinced that eggs are different. But the consumer struggles to differentiate among eggs, which is understandable, High said, because in general, producer/marketers have never really tried to do this.

In the supermarket, the consumer scans approximately 11.5 products per second and if there is little difference in the appearance of packaging over competitors, then the egg purchase becomes a commodity buy.

"Packaging is important," he said. "Research has proven that people will identify with color first before brand or logo." High continued, "fortunately we now have packaging that can help us achieve this." However, he stressed that it is never enough to have only a visual point of difference. "This only amounts to you owning a label and not a brand," he added.

"While a label will attract the consumer, a brand will keep the consumer," he asserted. To move from a label to a brand, a product has to be perceived to be better by the consumer. "The product must perform in reality or perception, to achieve repeat sales," he said. For example, research in Australia has shown that yolk color is perceived as an indication of egg quality.

"As the flavor of an egg can be influenced by the chickens' feed, are there possibilities to produce a savory flavored egg, or a sweeter tasting egg?" he asked. "We have gourmet tomatoes, mushrooms and potatoes, why not gourmet eggs? Why not sell your small eggs at a premium price under a gourmet brand?"

A large number of shoppers do not buy the cheapest cage eggs in the store, he said, so egg marketers should fragment their offerings.

Consumers are influenced by emotion to varying degrees, High said. This emotive influence could be based on many things such as animal welfare (kind to animals), quality (a trusted performer), environment (kind to the planet), versatile (many applications), healthy (good for me and my family).

Regarding free-range eggs, he said that the people who buy them tend to be middle-class to wealthy. They believe that the free-range egg is healthier because the hens are happier or that the eggs are of better quality. Obviously, these shoppers can afford the higher prices and are generally those who care about the environment and the well being of their families, he said.

These customers do not need convincing about the merits of free range, and his advice is that the industry should embrace the concept, brand it, market it and make some money. "If there is an oversupply, then market even harder and grow the market," he added.

‘Haute Convenience'

"We are not in the egg business, we are in ‘haute convenience', the fast moving egg goods business, said Rene Boender, of Great Opportunities, the Netherlands. "We need to outsmart the food competition and, most importantly, better understand business to business relationship and the eventual consumer," he said.

An egg-marketing audit has revealed that eggs are losing their momentum, he said, and yet it also showed that people love eggs. "We are working in the ‘get-ready market' and now, faster growing ‘on-the-move market', as people don't cook any more," he said.

Among his ideas for giving eggs a new momentum are:

Promoting the fact that top athletes maintain that they need eggs to get in the right shape,

Produce an egg (candy) bar that would be better and healthier than a candy and could be sold at petrol stations,

Use a color code as a branding device,

Promote eggs with added health,

Launch an annual worldwide Top Chef's Egg Recipe Award.

He pointed out that women increasingly decide when, where and what to buy. He added that women (and the new men) were cash rich but time poor'. So, they would exchange money for time, which allows the industry to market products that save time at a premium.

Branding Opportunities are Not Without Challenges

Marketing of eggs is likely to change as much in the next 10 years as it had in the past 10 in the United States, said Beth Schnell, Sparboe Farms, Litchfield, Minn. In 1987, there were 2,500 U.S. egg companies owning 75,000 or more layers and there was no attempt to brand eggs nationally, individual companies' branding success being limited to local markets, she said.

Looking at branding in 2007 she said that two key factors had changed everything. The first was consolidation in the industry. Just 260 companies have flocks of more than 75,000, of which 11 have over 5 million birds. And second is the introduction of specialty eggs such as Omega-3, organic, and cage-free.

However, in 2006, private label/store brands still had a retail market share of over 76%. Of the 53 largest markets in the United States, only 10 had branded eggs with a more than 10% market share. The larger pack sizes (18 eggs per carton or more) were the key to the branded market share in eight of these 10.

Only two companies have successfully developed market shares of over 10% with 12-egg packs leading the way. Larger-sized eggs dominated the branded sectors in the Super Center and Club Store markets, in particular 18- and 60-egg packs.

While Land O'Lakes introduced branded eggs nationally some six years ago they currently have only a 0.7% share of the supermarket sector, she said. However, recent years have witnessed successful marketing of specialty eggs with Eggland's Best, currently having a market share of 4%, and Horizon and Organic Valley also marketing nationally. These specialty eggs included: organic, cage free, Omega-3, lutein, free range, vegetarian diet, hormone free, no antibiotics, pasteurized and combinations of these, such as cage-free, organic brown with Omega-3.

There are also a number of regional producer brands such as her company, Hillandale, and Manhard.

A factor which has aided branding is an increase in the availability of different pack types which now include foam, fiber, clear plastic, corrugated sleeves, overwrap and boxed.

In 2006, supermarkets accounted for 72.8% of retail egg sales, Super Centers 13.9%, Club Stores 6.7% and others, 6.6%.

Regarding egg size, 74.2% were large, 11.2% extra large, 8% medium and 6.3% jumbo.

In terms of pack size, 61.3% of eggs were purchased retail in 12-egg cartons, 28.1% in 18-egg packs, 5.5% in 30-egg, 1.9% in 60-egg containers, with just 1.7% in 6-egg packs.

However, she said the most successful food brands that were household names in the United States had not only a long heritage, but had spent billions of dollars on promotion.

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