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| 1. How have
eggs performed over the last year and in the most recent quarter
and what do you attribute these performances to? |
Over the past year the egg category performed extraordinarily
well, registering dollar sales increases of over 20%. Although,
much of this gain was driven by egg prices rising from their
depressed levels of the past few years, per capita consumption
again showed growth for the 9th consecutive year. The egg
category is being driven by a number of factors:
- There is a better understanding on the
part of consumers regarding myths about the differences
between dietary cholesterol and blood cholesterol. Research
has continually demonstrated that it is primarily saturated
fats and trans fats that elevate blood cholesterol levels,
not dietary cholesterol.
- Protein-based diet plans such as Atkins
and South Beach have become very popular, and eggs are an
ideal choice for individuals following these plans.
- Recent research has highlighted the special
nutritional role that eggs can play in reducing the risk
of age-related macular degeneration and how choline and
folate found in eggs are particularly important for expectant
mothers.
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| 2.
How does the cost of eggs today compare with a year ago and
what has caused this change? |
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Egg costs increased fairly significantly during the last quarter
of 2003. This was the result primarily of reduced flocks and
continuing increases in demand. Since that time, however,
pricing has abated and costs are again approaching the norms
of the past few years.
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| 3.
What are consumers looking for from egg and egg substitute products? |
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More than anything, consumers are looking for freshness. In
store, this is communicated not only by code dating, but by
the overall appearance and cleanliness of the egg display
in the store. As a food product, consumers are looking for
items that are relatively low in calories and contain a range
of nutritional benefits that exist in few other foods. Eggs
fit the bill.
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| 4.
What have been major changes in the Egg and Egg Substitute categories
in the last year or two? |
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Over the past few years, retailers have begun to appreciate
the sales impact and profits that are generated in the egg
category. Retail gross margins have grown to the point that
eggs are not only one of the most profitable refrigerated
categories, but one of the most profitable categories in the
entire store. Increases in ongoing gross margins have enabled
retailers to become more aggressive in their promotional efforts.
In a study conducted for the American Egg Board we discovered
that egg promotions do not “steal” business from
future sales. In short, if people buy more eggs they use more
eggs.
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| 5.
What do you think will be the major changes in the next year
or two? |
Consumer demand will continue to grow spurred by increased interest
in health, wellness, and nutrition. The specialty egg segment,
particularly natural and organic, should continue its rapid
rate of growth. These subcategories are particularly popular
with younger consumers and are helping to increase the popularity
of eggs.
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| 6.
Have retailers been devoting more spaces to eggs and egg substitutes? |
Overall, what we have seen is a measure of stability compared
to the amount of space devoted to the egg category at retail.
For many years, retailers had been cutting back somewhat as
they looked to accommodate many of the new product categories
being introduced in the refrigerated area. Where we do see additional
space being given to the egg category is in the form of out-of-department
display coolers placed at checkout and in the produce area,
or in front of the store where consumers can get quick pickup
items. Sales tests suggest that all of the volume that comes
from these remote locations is incremental. With few exceptions,
eggs generate more profit per stock-keeping unit than any other
refrigerated category. Eggs are probably under-spaced relative
to sales at most retailers.
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| 7.
What types of promotions work best at increasing sales of eggs
and egg substitutes? |
These vary significantly by market and by retailer. Certainly,
“buy one, get one” (BOGO) promotions have been quite
popular. Because eggs generate sales in so many other categories,
we anticipate there will be more cross-merchandising in the
future than we’ve seen in the past. Tie-in promotions with
eggs and produce appear to be very successful, increasing sales
of both eggs and related items such as produce (for omelets),
cheese, and spices.
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| 8.
What can retailers do to increase sales of eggs and egg substitutes? |
There are several things that retailers can do:
- Promote frequently. Because people use
more when they buy more, it is really difficult to over
promote the category.
- Maintain a full variety and supporting
the specialty egg category to capture the new category growth.
- Cross-merchandise eggs with other items.
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