UK egg production: sunny side up or still scrambled?
popularity. Are producers witnessing the dawning of a golden age,
or is the current trend just a flash in the frying pan? Anthony
Fletcher reports.
A new report from Mintel reveals that while volume sales have risen by 10 per cent between 1999 and 2003, value sales have increased by double this amount, some 23 per cent, due to consumers trading up to premium egg varieties.
This suggests that health scares associated with eggs are no longer the factor they once were, and that producers should be enjoying increased profits. But as Robert Newell, marketing manager for major egg producer Deans Foods tells FoodProductionDaily.com, the industry has a long way to go before it recaptures the market it enjoyed 20 years ago.
"There has definitely been a resurgence in eggs over the last two or three years; eggs are more relevant to lifestyles today, and we are advertising on television again. But we are nowhere near where we were 20 years ago."
In 1988, the then UK minister for health Edwina Currie notoriously told the British public that 50 per cent of eggs contained Salmonella. The announcement cost Currie her job, and devastated the egg industry. Newell estimates that consumption halved as a result, and is still battling to recover.
"Consumption has been increasing slightly," he said. "We estimate that average consumption is now 1.86 per person per week, not taking into account egg usage in other products."
According to Mintel figures, laying cage (battery-laid or intensively farmed) eggs still account for the majority of egg retail sales by volume in 2003. However, free-range eggs, including organic eggs, have continued to gain share.
In 2003 free-range eggs accounted for 30 per cent of egg sales by volume compared to just 24 per cent in 1998, representing a 38 per cent rise in sales since 1998.
Barn eggs have also gained ground, making up 10 per cent of sales in 2003. This is due to major retailers promoting free-range and organic eggs more than in the past, allocating a greater amount of shelf space and prominence to these egg varieties.
This change in consumer preference is having an impact on production practices. A few years ago egg production was massively in favour of caged eggs, and producers have had to adapt to changing market conditions. It has not been easy.
"Free range production is very capital intensive," said Newell. "It is very difficult to get land, and to get permission to build on it. I read somewhere that if all the caged birds became free range egg layers, we'd need two large English counties to accommodate them all."
Legislative pressures are also shaping egg production. In January 2004, EU legislation was put in place to ensure the stamping of every egg with a home address, producer code, country of origin and best before date, whether or not the producer is part of the British Lion Scheme.
While beneficial to consumers, this has proved expensive formany egg producers and fatal to some smaller outlets.
Further legislation could be on its way. An EU directive proposing to introduce legislation by 2012 will give laying birds twice the space that is provided in non-EU countries. Such a measure could force some of the smaller producers out of the market, and push prices up as a result of higher production costs. "It is not clear yet what will happen in 2012," said Newell.
There is already a great deal of consolidation in the UK egg production market, with the industry dominated by two major UK egg producers: Deans Foods and Stonegate Farmers. Between the two of them, they supply nearly three quarters of eggs to the retail market.
Deans Foods became a more prominent player within the market, after the company assumed responsibility for the packing and marketing of eggs that were previously distributed by Devon-based Freshlay Foods. Compliance with EU regulations could see more small-sized enterprises swallowed up.
On the other hand, if eggs can be guaranteed to be safer, increasing sales are likely to continue. For the time being, retail egg market is expected to continue growing by 1.3 per cent in volume terms with a higher value growth due to consumers trading up to premium brands.
