Are cage-free egg sales hitting a ceiling?

Cage-free eggs might be one of the most fascinating categories in the retail food store to watch over the next few years.

During the past 52 weeks, cage-free eggs have reached sales of $702 million in the U.S. (Terrence O'Keefe)
During the past 52 weeks, cage-free eggs have reached sales of $702 million in the U.S. (Terrence O'Keefe)

Cage-free eggs might be one of the most fascinating categories in the retail food store to watch over the next few years. In 2007, cage-free eggs hit the spotlight in the United States as animal welfare activists successfully convinced some foodservice chains to switch from conventional to cage-free eggs. 

Foodservice chains, food processors, and even governments changed regulation and created plans for a long-term switch to cage-free eggs by 2025 or earlier. By 2017, more than 300 foodservice and retail food store chains had promised to switch. Given this blizzard of support for cage-free eggs, it’s helpful to step back and see how important it is to consumers.

Where are cage-free egg sales today?

Looking at the U.S. retail landscape, cage-free eggs (not including organic) make up about 13% of retail fresh-egg sales in U.S. supermarkets, supercenters and other outlets such as dollar, discount and convenience stores. During the past 52 weeks, cage-free eggs have reached sales of $702 million, increasing 3%, while total fresh-egg sales have decreased 6.3% to $5.5 billion.

Falling prices are contributing to sales declines as higher-than-expected supplies of conventional eggs have pushed prices lower. This is a positive trend for cage-free eggs, but volume tells a different story. Cage-free egg volume only increased 1.1% while total egg volume increased 2% due to low prices attracting more supermarket feature pricing and encouraging consumers to buy more at lower prices. The good news is that cage-free eggs have retained their shelf price premium while conventional egg prices have fallen due to supply and demand.

Iri Us Conventional Egg Sales Compared To Cage Free

Of the $5.5 billion in U.S. egg sales, cage-free eggs make up about 13% of retail sales.

Price gaps between cage-free and conventional eggs have held constant during the past year. Price gaps average $1.70 to $1.80 over the past year at retail, which is a substantial premium for consumers to pay for frequently promoted products. Branded cage-free price gaps to conventional can be substantially higher. 

The relatively flat sales of cage-free eggs over the past few years indicates that the product is likely reaching some ceiling that will have slower, incremental growth moving forward. Cage-free eggs have nearly reached national distribution, so the absolute number of households that will choose to pay a premium for the eggs is likely already buying them.

Are cage-free eggs helping to drive sales in other categories?

Many manufacturers, such as Nestle and Best Foods have made commitments to use cage-free eggs in their ingredients over the next few years, and some have already implemented the change.

If cage-free eggs sales continue to grow, it’s reasonable to expect that growth will continue in other categories. Using IRI Worldwide sales data and Label Insight Inc. attribution, here are three categories where cage-free eggs have a prominent number of items:

Cage Free Share Of Product Sales

If cage-free eggs continue to grow, it’s reasonable to expect that growth will continue in other categories, such as mayonnaise, ice cream/sherbet and cookies.

  • Mayonnaise: This was one of the first categories to see a change, and items with cage-free eggs as an ingredient comprise $932 million of a $1.8 billion category in annual sales and are 55% of the mayonnaise category. What’s surprising is that mayonnaise products with cage-free eggs as an ingredient are declining 2.2%, while the total category is only declining .8% over the past 52 weeks. It’s likely not accurate to say cage-free eggs are causing the decline, but it’s clear that cage-free eggs are not helping these items to grow.
  • Ice cream/sherbet: Cage-free eggs are in items that comprise 9% of total ice cream/sherbet retail sales. Most of these items are in the super-premium segment, which continues to grow faster than ice cream overall. Items with cage-free eggs as an ingredient are growing at .8% over the past year compared with the category, which dropped 2.2%. While ice cream items with cage-free eggs are outperforming the category, it’s not by much. Neither the share nor the sales growth is inspiring.
  • Cookies: This is another category of real size to consider. Items with cage-free eggs are $121 million and comprise 1.5% of the overall cookie category. Cookies with cage-free eggs are growing at 2.5% over the past year, compared with the category growing at 2.9%. 

There are a total of 15 other meaningful categories, and results are similar. At a midpoint between the deluge of companies creating plans to shift to cage-free eggs in response to animal welfare activism, it’s not clear that consumers are driving this shift as category share and sales trends appear to have slowed or hit a ceiling. There will always be some consumers that actively support cage-free eggs, so the category won’t fade away, but it’s not evident that sales will increase drastically soon.

Looking ahead: Can cage-free eggs break through the growth ceiling?

If consumer demand has hit a ceiling, then the next catalyst of growth for cage-free eggs will have to come from a source that is not fully consumer-driven. 

Governmental regulation could intensify and increase consumer demand for cage-free eggs. In 2012, the European Union banned battery cages for egg production and started down the path to cage-free eggs by 2025. Cage-free eggs will be the primary choice in the EU because of regulatory decisions. Similarly, in the U.S., California, Oregon and Washington have all passed laws mandating the sale of cage-free eggs by 2023-25, depending on the state. These examples may cause other state governments to enact similar laws which would accelerate cage-free demand.

Similarly, McDonald’s, Walmart and large supermarket chains, such as Kroger, Ahold-Delhaize and Albertsons, all have the power to shift demand. Major changes in procurement outside of normal consumer demand could cause cage-free eggs to move and have made public commitments on cage-free egg support.   

With cage-free egg consumer demand growth on pause, these two sources will create the next wave of growth.

 

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