Vital Farms emphasizes maintaining its brand after IPO

Part of maintaining its independence and mission in upholding the brand in which the customer has come to know.

(Vital Farms)
(Vital Farms)

During Jefferies Virtual West Coast Consumer Conference on November 16, Vital Farms' Russell Diez-Canseco, chief executive officer, and Jason Dale, chief financial officer and chief operating officer, talked about the operation's brand and how it will play a role in its future as a public company.

In just 13 years, Vital Farms has become the second-largest egg brand in the U.S. and the biggest egg brand of pasture-raised eggs, with an 80% share of that market, which is the fastest-growing market within the egg sector.

Vital Farms began its first day as a publicly traded company on July 31. Canseco explained that the decision to do so was due to a desire to partly retain its independence even as it needed to create liquidity opportunities for early investors. "We took on a handful of growth capital VC (venture capital) and PE (private equity) investors, none of whom have a majority stake in our company but all of whom had to put the money back, and so our best path forward to maintain our independence and be able to stay to true to our mission, but also create that liquidity opportunity, came from an IPO (initial public offering) and joining the public markets," Canseco said.

Maintaining the brand

Part of maintaining its independence and mission in upholding the brand in which the customer has come to know.

When asked how Vital Farms plans to keep its niche and competitive dynamic within the pasture-raised egg market, Canseco said the following: "There is still a lot of confusion about food claims, especially in eggs, around animal welfare claims and other claims that are made on packages. I would assert that the competitive set or the landscape is broader than just pasture raised. Yeah, we dominate pasture-raised. The reality is starting back in 2015 we attracted followers, both branded and private label, and several of our largest retail customers have a private pasture-raised egg, so that kind of competitive pressure started showing up about five years ago. It doesn't seem to have created much of a headwind for our growth and none of those competitors seem to have achieved anywhere near the size or growth trajectory as we are in the categories in which we play."

Canseco believes the reason for this is partly due to the notation that the Vital Farms brand brings products to the market that look a lot like commodities. "The people that bring those kinds of commodities to market without the brand don't seem to be getting the kind of traction that we are," he said.

Potential to expand the brand

For shell eggs, the brand will continue to focus on meaningfully impacting outcomes for small family farms. "Initially, that value will accrete to the farmer but over time we fully believe the things we are doing on the farm are going to help us reduce the cost structure of the eggs we're pulling off those farms and ultimately allow us to accrete to gross margin there," said Dale.

He added that Vital Farms is a growth company and that it will continue to invest in infrastructure to support its operational growth targets.

"The carrying cost for us and being a public company is pretty extreme. I fully expect that as we stay on target to get to that gross market accretion target in the future that we will start to get scale benefits," Dale said.

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