How Ovolab became Mexico’s largest cage-free egg company

The learning curve may have been steep, but Mexico’s Ovolab is now firmly established in the local cage-free market.

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Gallinamia is the company’s new consumer-focused cage-free egg brand. (Ovolab)
Gallinamia is the company’s new consumer-focused cage-free egg brand. (Ovolab)

Ovolab is Mexico’s largest cage-free egg producer verified by U.S. certification organization Certified Humane, allowing it to stand out from the competition.  

Cage-free egg production is still a relatively new business area in Mexico and, as in many other Latin American countries, the market for cage-free eggs is small. So why did Ovovab, formed in 2015, opt for this small market segment? 

“Six years ago we began to observe the trend for cage-free eggs in Europe and we knew that it would come to the Americas," said Rebeca Gutiérrez, Ovolab CEO.

Gradual journey

While the company may now be firmly established in the consumer and business-to-business channels, Gutiérrez said Ovolab initially began with a small test flock of 8,000 brown layers, floor-raised, that started lay at 16 weeks.

“The learning curve was very difficult, because we didn’t know what the actual production cost was," she said.

This was not the only difficulty, and a number of other issues had to be considered, for example the impact of the local climate.

The company is based about an hour and half’s drive from Mexico City. Due to the altitude of central Mexico, which is 2,200 m above sea level, temperatures can increase from 2° C in the early morning to 30° C in the afternoon, which has a consequent impact on layer feed and water requirements.

Additionally, floor-raised hens need greater care in terms of husbandry and welfare, and the company opted for 100% vegetarian diets.

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Rebeca Gutiérrez, Ovolab CEO, explains that the company spotted a trend in Europe for cage-free eggs and knew that demand would grow in the Americas. | (Ovolab)

Staffing levels also needed to change. While only one person per 10,000 hens is needed on a traditional farm without automation, with cage-free production this number rises to 2.5-3, which increases the cost of producing an egg considerably.

Forced molting cannot be implemented as it would violate welfare requirements.

In short, Gutiérrez notes that there are three main elements that need to be kept in focus: animal welfare, cost consciousness and generating customer awareness of the added value of cage-free eggs.

Changing demand

Fortunately, during the first two years the company worked with cage-free layers, the market began to change in Mexico, with several multinational brands such as the Alsea restaurant chain, Bimbo Bakeries, biscuit company Gamesa and food producer McCormick, announcing a shift to sourcing cage-free eggs.

In response to this growing demand, Ovolab grew its flock incrementally to reach today’s level of 120,000 birds.

“Today, we have 120,000 layers in floor production," Gutiérrez said. "Ovolab is thus the largest company in Mexico registered as a producer of cage-free eggs and certified by Certified Humane."

While the company may have mastered cage-free egg production, within the market, difficulties remain, particularly the lack of official standards.

Need for regulation 

Only a few companies actually produce cage-free eggs, however, there would appear to be more brands of cage-free eggs in Mexican supermarkets than traditional eggs.

Gutiérrez was a member of the stalled committee preparing the Mexican Official Standard for cage-free eggs.

“It has been very difficult to agree with the big producers, as they always comparing the cost advantage of traditional eggs over cage-free eggs," Gutiérrez said “They cannot be compared. There is a market for the two types of product, and customers can decide what they want; we cannot stick to only one concept." 

Because of this lack of standards, Ovolab decided to seek verifications and certification from entities such as Humane Society International (HIS) and Certified Humane.

“HSI verifies but cannot certify. It visits the farms and then communicates with companies that want to purchase cage-free eggs," Gutierrez said.

HSI, which has international credibility, along with Certified Humane, support the company by offering consumer assurance.

Certified Humane, however, does offer certification.

“It takes about four months to be certified. But the organization leads you by the hand through the various requirements and it’s worth it because it gives you credibility," Gutierrez said.

Ovalab has recently been certified by Certified Humane and is the only company in Mexico to have been recognized by it and by the HIS.

On farm

Stocking densities on Ovolab farms are 7 hens/m2, including nests, feeders and drinkers. Each bird consumes 120-125 g of feed and there are two nests for every 10 birds.

The company operates farms with two different production systems. Some birds are floor raised while others are raised on slats. Initially, use of slats was questioned due to cost. But the company analyzed the difference in the percentage of clean eggs produced and decided not to reject slat production.

While some eggs are now sold directly through supermarkets, 80% of eggs are sold under contact with a local company that processes them into dried egg for use in bakeries or mayonnaise production. 

It is from dried egg producers where demand is particularly strong.

“There is a lot of pressure because, by 2025, some food producers, hotels and restaurants will no longer be able to use caged eggs," Gutierrez said.

Ovolab markets the brand, Gallinas Libres Naturalmente Sanas, or naturally healthy free hens, which is applied to bulk eggs sold in boxes of 360.

It has a second brand planned. Gallinamia, or my hen, will be sold in boxes of 12, 18 or in bulk. Once launched, this brand will be aimed at householders and younger generations. 

To further resonate with younger consumers, and to build trust and transparency, the Gallinamia brand will soon adopt QR codes, with details of where eggs were produced.

 

The changing Mexican egg market

Mexico is the largest consumer of eggs in the world. Last year, each Mexican consumed 23.7 kg of eggs – or 377 eggs – and consumption continues to grow.

Interest is growing in cage-free eggs in the country, although the market remains small. According to data from the National Poultry Producers’ Association (UNA) there are 167.3 million laying hens in the country, but only 6% of output is from floor-reared hens.

Given the country’s high egg consumption it would be almost impossible for all eggs to be from floor-raised hens – there simply would not be enough space. However, as pressure from various sources mounts on the industry to produce more cage-free eggs, the sector will need to expand significantly.

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