Value-added commands larger presence and premiums in market
Within 3 years, specialty eggs could be as much as 20 percent of market.
Value-added or specialty eggs will continue to increase, industry experts say, as consumers increase their desire for eggs that are nutritionally enhanced or produced in certain ways.
"Today, slightly over 10 percent of eggs are specialty eggs: brown, nutritionally enhanced, cage-free, and organic," says Mark Oldenkamp, vice president, northwest operations for Valley Fresh Foods, Woodburn, Ore. Growth has been strong, he adds, "and I don't think that's done." Within three years, Oldenkamp says, specialty eggs could be 15 percent to 20 percent of the total egg market.
Noting that in Japan there are more than 300 types of specialty eggs, compared to about 100 in the United States, Oldenkamp says there is potential for greater growth in this segment of the market.
Craig Willardson, president and CEO of Moark, LLC, Chesterfield, Mo., says that value-added eggs "have found a permanent place on the store shelf, just as certain branded eggs have done. Organic is here to stay, it's just a question of where the demand level will peak and if there will be sufficient organic grains to supply that demand." Willardson adds, "The organic question will also be impacted by finding its elasticity on the shelf, at $5/dozen in many urban markets, with a forecast for scarce grain supply, consumer demand may be tested. New value-added products for eggs will likely show up in other food products, such as Omega-3 did."
"Value-added will continue to grow," says Paul Sauder, president of R.W. Sauder Inc., Lititz, Pa. One reason why, he says, "is the whole issue of health and wellness, thus some consumers want more ‘nutritionally enhanced products,' such as those with added Omega-3 and lutein, fed all vegetarian diets."
Sauder says that the market share of specialty eggs varies by region of the country. Today, he says, the New York City metropolitan market is probably 30 percent specialty eggs, while in rural parts of Pennsylvania, the percentage of specialty eggs sold is closer to 7 percent to 8 percent. Within five years, Sauder believes specialty eggs could command up to half of the egg market on both coasts, and 10 percent to 15 percent in the middle of the country.
Sauder says that two factors will contribute to how rapidly the specialty egg market grows. The first is how much disposable income consumers have available in upcoming years, since specialty eggs cost more. The second is how much influence special interest groups have on cage-free production.
Gene Gregory, president and CEO of United Egg Producers, Atlanta, estimates that cage-free and organic egg production has increased from 2 percent of the total to 5 percent today. He adds that the specialty egg sector will continue to grow, and that a segment of the population wants them for health and other reasons, regardless of price. An additional reason for the growth of specialty eggs, he adds, is their increased profitability for stores, and increased premiums for producers.
Gregory says that he does not believe it will happen, but if all production were to become cage-free egg production, demand for eggs would be reduced because some consumers can't afford to pay two to three times more for their eggs. "People tend to have a reference point for egg prices. If prices get too far out of line, they cut back," he adds.
Marcus Rust, an owner of Rose Acre Farms, Seymour, Ind., says that one reason why specialty eggs are growing so rapidly this year is that conventional eggs are so high-priced, and some stores have a fixed price for specialty eggs. Thus, the spread in price between conventional and specialty eggs has narrowed. In some cases, he says, specialty eggs are as cheap or even cheaper than conventional eggs.
Larry Seger, President of Wabash Valley Produce, Dubois, Ind., says that niche markets, such as Eggland's Best and organic, are fine and good to develop, but specialty eggs can become a "slippery slope" that can detract from the regular egg business. "We don't want consumers cutting back," he says, noting that cage-free egg prices, for instance, are considerably higher.