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Retail growth of free range eggs stalls

The retail growth of free range eggs has stalled, according to figures produced at the Egg and Poultry Industry Conference.



Whilst free range has continued to drive growth in the retail egg market over the last 12 months, figures for September show free range growth stalled and fell back slightly, according to Andrew Joret, deputy chairman of the British Egg Industry Council.

"In the retail market – which is about half of the eggs we eat – but, of course, the most valuable half of the eggs we eat – free range has still been driving the growth. In the last 52 weeks the free range sector was up nine per cent year-on-year. However, and this is perhaps a warning to us, what we are now seeing is free range growth starting to slow," he said. "In fact, in the last four-week period of September, for the first time in donkey’s years, we actually have free range going backwards by one or two per cent."

Andrew, who is technical director of Noble Foods, wondered whether the tough economic climate for consumers was having some effect. "Why is this? We are not really sure. Definitely there has been a lot of aggressive cage promotion, which has stolen share from free range. But is it another thing? Is it, perhaps, that households are just feeling the pinch," he said. "It could be just people saying, ’I can’t afford this, I’m going to trade down’."

Andrew said he had always assumed that those who bought cage eggs and those who bought free range eggs were completely separate consumers. But there was a significant number of people who bought different eggs according to how they were going to use them. They may buy free range to eat for breakfast, but cage if they were going to bake. "To them it’s not a big step to say, ’I am not going to buy free range at all, I’m just going to buy cage.’ It is a trend we need to watch."

Andrew said the figures showed that whilst free range growth had been slowing, cage had been picking up - the latest 12-week measure showed cage up by nine per cent, although he said he thought the stall in free range growth was temporary. "I think we will be back to free range growth. It may not be as much as it has been - in recent years it has been growing at 10 per cent year-on-year – but I still think there is more to come from free range," said Andrew, who said it was important to increase the overall consumption of eggs.

Consumption in the United Kingdom was growing, he said, although it was still below the European Union average. There was still a lot more to do. The UK was a net importer of both shell egg and egg products. In 2010 the country was 81 per cent self-sufficient. Of the imported egg, 56 per cent was in the shell. Up to May this year the UK was 90 per cent self-sufficient, with imports equally split between shell egg and egg product. The shell egg was mainly Spanish and went via wholesalers into corner shops. Shell egg also came into the country to go for processing and egg already processed went to manufacturers. "Our challenge is to displace profitably those imports."

The UK egg industry was now extremely well invested, he said. In 2008 there were about 150 farms producing cage eggs. There would be about 75 in 2012, but they would be larger and most would have been completed within the last two years. They were state-of-the art and low cost operations. The majority of free range units had been completed within the last five years. The free range sector was also very well equipped.

The current year had been a terrible one for the UK egg industry, he said. There had been some overlap in production in switching from conventional cage to enriched colony, but the biggest cause of the problems the industry had experienced this year had resulted from the overgrowth of free range. The UK flock size increased from 32 million birds in 2009 to a peak of 37 million birds towards the end of 2010. "It is no surprise that we ran into market issues." He said the industry needed to control free range expansion or it could happen again in future.
Andrew said that whenever the industry had a bad year there were always accusations of profiteering either by retailers or packers. However, whilst general food inflation was running at about six per cent, there had been deflation in retail egg prices. "That knocks the lie a bit that someone has been exploiting the oversupply situation. The consumer has been getting a good deal because prices have gone down."

He said that although they only accounted for a small percentage of the market, discounters had taken advantage of the oversupply, done some "very juicy deals" and that had influenced the bigger retailers. "The good news is that some of these juicy deals are coming to a close."

Andrew said he sensed that the market was about to turn in favour of egg producers.