Below is the egg market comments printed monthly in the Ranger

Like many other food commodity sectors feeling the impact of the slower economy, the egg market continues to see volume decline, albeit the drop-off in sales has slowed to -0.5% in the 4 week period to 13 July 2008.  However, volume for the past 12 months is still growing at the modest rate of +0.7% which is a solid performance bearing in mind the market value has soared by 25.8% fuelled mainly by inflation and the strong performance of Free Range eggs.  

Cage value growth has slowed but the strong underlying performance of Asda, Lidl & Aldi reflect the clear trend that consumers are reevaluating where they shop for basic food items and choosing to spend more money in these outlets.

Organic eggs have had their poorest performance in the last 4 week period to 13 July but promotions on both Free Range and Organic are likely to see this situation improve in the coming weeks. 

The market is now looking forward to the growth in sales we traditionally see as families return from holidays and also catering establishments start building stock as workplace canteens return to their normal routine.

Overall availability in the market is described as good for each product type.

It is very easy to see how all the recent press about  recession and rampant food inflation has started to take its toll on the Egg category. TNS figures to 15th June ‘08 do confirm that there has been a slight slowing down of the overall market to 1% volume growth for the 52 week period.  However, it does appear to be polarizing in two very clear directions - Free Range and Value eggs are growing while Standard Cage, Barn and Organic Eggs are declining.

The continued growth of free range shows just how resilient this market is to the recent downturn, with the June data showing an extremely positive +10% growth for free range in the 4 weeks – this is the fifth successive month of double digit growth for this sector.  This growth is being somewhat helped by promotions which the retailers are running to stimulate general sales of eggs. However it is still an incredibly buoyant segment of the market given the current climate. When compared against some other main commodity food sectors, eggs do seem to be holding up well and there is a hope that as consumers work with ‘tighter budgets’, they may turn to Eggs as a nutritious yet great value protein. Earlier in the month, there was some great TV coverage for Eggs as a great value alternative for light meals.

The slight downturn in overall sales has resulted in short term surpluses which makes this a very challenging period for the industry. The next few months will be critical for the market as there is unlikely to be any downturn in our costs of production, in fact quite the contrary as costs continue to rise.  Free Range availability is considered to be good with Cage Barn & Organic all in plentiful supply. 

“The market is seeing a slight slow down in sales following an incredibly buoyant period from January to March.  Considering the obvious causes, there is little doubt that the warmer weather and the usual post Easter slowdown has had an effect.  If you then add to this the third market price increase in 9 months at a time when consumers are feeling the impact of overall rising prices for food, fuel etc, it is not surprising that volume has taken a slight downturn.

TNS (4 weeks to 18 May 2008) shows the market down -2.4% versus the same period in 2007.  Free Range continues to perform exceptionally well with volume +12% for the latest 4 week period – the impact of Jamie Oliver’s January programme seems to be having a longer term effect which must confirm that a number of previous cage egg buyers have moved to Free Range. However there is a worrying decline in Organic as it continues to face inflationary pressure on the costs of production.  The current Organic surplus is certainly a burden for the market and we are unlikely to see any Organic expansion for the foreseeable future. 

Supply of all egg types is described as plentiful but we have seen the inter company traded market increase in recent weeks as the market finds equilibrium following the post Easter surpluses.  Look out for possible retail promotions in the coming weeks as retailers finally get the opportunity to stimulate volume after a sustained period where the market has been too tight to allow much promotion activity.  Lets hope this activity drives consumers to both purchasing more eggs and using more eggs in cooking as they are still the best value protein”.

Not surprisingly the market in the 4 week period to 20 April 2008 (TNS) showed the first volume decline we have seen for some time.  Bearing in mind we are comparing a non Easter period in 2008 with an Easter period in 2007, what is surprising, is that the market was so stable at only 0.5% down year on year.  Free Range continues to show strong growth with cage value also just ahead of last year.  Barn and Organic sales are down reflecting their rather ‘shakey’ performance of the past few months.

Whatever TNS says, all packers would agree that the last few weeks have seen stocks growing with supplies being described as plentiful on all product types.  The Pig and Poultry fair highlighted just how buoyant the market is at the moment with lots of interest in Free Range expansion.  Planning for the Free Range growth is a tricky dilemma for our market – currently we have some surplus but few would argue that the growth we are seeing on Free Range Eggs will continue.   We need be in a strong place as a market to meet the growth of Free Range Eggs and ensure British product continues to dominate our retail fixtures.

The recent strong growth on Free Range and Organic Eggs continues to gather pace.  Sales for the 4 weeks to 23 March 08 (Source : TNS) for all eggs is a healthy +1.5% volume growth which is a terrific performance alongside unprecedented value growth of 30.4%.  This value growth is partly as a result of the growth on higher value Free Range and Organic eggs but of course al Undoubtedly, the colder weather and early Easter have helped sales remain strong. However, on a cautionary note more recent packing  centre figures have seen slower sales which is likely to result in lower growth for April 08 especially as we will be comparing to April 07 which included Easter last year .  The strong sales in the run up to Easter certainly meant that market stocks were extremely tight with a few minor shortages reported in a couple of retail accounts.     This was the first complete 4 week period since Jamie’s Fowl Dinners programme in January and whilst it may be too early to claim this programme has changed the trends in the industry, it is clear to see it that it has led to a change in shopper behaviour which can only be good news for the growth of free range and organic eggs.

Strong sales and rising costs are a potent combination for any market and egg producers of all production types will need to see appropriate movement as feed costs continue to build.  BFREPA have met with industry leaders to make their case for a significant increase.  Feed inflation continues to outstrip even the most pessimistic views from last autumn.  If the market is to continue to meet consumers increasing demand for eggs, then producers will need to be making sustainable returns which allow them to invest more in future production and expansion.
Availability on all egg types looks adequate but there are certainly signs that free range eggs will be in even stronger demand across the Easter period.

Free Range off to a flying start in 2008

There is little doubt that retailers have seen a significant increase in Free Range and Organic egg sales since Jamie Oliver's programme in January.   Interestingly Free Range poultry sales seem to have peaked  immediately after the programme and then returned to near normal very quickly(due to the many special offers which continue on lower value product), whilst the effect on eggs seems to be more prolonged.  Most retailers are reporting double digit decline on cage sales whilst free range and organic egg sales have risen by similar levels.  The picture on Barn is less clear but sales appear to be holding up following a period of long term decline. The programme has prompted shoppers to reappraise their egg choice and this is exactly what is happening. It has also raised the awareness of different egg types across the manufacturing sector, with many big users reviewing the specification of eggs within their products Pancake day sales have been very buoyant as consumers flock to the egg fixture.  In recent years Pancake Day records the highest number of shoppers buying eggs, even higher than Easter and Christmas!!!  
This surge in sales was further increased by some very strong promotional activity on Free Range in Asda, Morrisons and Sainsburys.

February has been a major month of change for one retailer. The Co- operative with their 3,500 stores removed caged eggs from their stores and are now selling only free range and organic eggs whilst claiming to be the largest retailer in the UK to only sell free range eggs.  Other retailers will undoubtedly be reviewing their strategies in the light of such moves.  This can only mean continued long term growth from the free range egg sector.