Noble Foods-owned The Happy Egg Co., a UK-based free-range egg supplier, entered the US market in 2012 and its products are now stocked in 6,500 stores throughout the country. The business plans to ride on growing interest in free-range egg production to expand rapidly in the market. Katy Askew spoke to chief marketing officer Jenni Danby to find out more.
Established by Noble Foods in 2009, The Happy Egg Co. is now one of the UK’s largest free-range brands. The business entered the US in 2012 and it is expanding rapidly in the market, CMO Jenni Danby told just-food at the Natural Products Expo West trade show in California earlier this month.
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“We reached a US$30m brand value [in the US] this year. We expect this growth trajectory to continue,” Danby suggests.
The US is witnessing rapid growth in interest around cage-free eggs. Retailers, food manufacturers and foodservice operators are seeking out cage-free egg supplies in response to rising consumer awareness of animal welfare and quality concerns in conventional egg production.
Food industry majors including Kraft Heinz, Mars Inc, ConAgra Foods, Nestle and General Mills have all pledged to move their production to a cage-free footing, citing consumer demand as a reason for the shift.
Danby says The Happy Egg Co. has also noted a significant shift that has gathered steam over the past year. “When we entered [the US in 2012] caged eggs accounted for around 95% of the market. Today, caged eggs are less than 85% of sales.”
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By GlobalDataHowever, Danby suggests The Happy Egg Co. branded eggs are a “completely different free-range standard” in the market. Unlike cage-free eggs The Happy Egg Co. hens are allowed outside in pastures every day. According to the Humane Society, this contrasts to cage-free production where “most cage-free hens live in very large flocks that can consist of many thousands of hens who never go outside”. The Happy Egg Co. hens are also allotted 21.8 square feet of space per bird, significantly more than the industry standard for cage-free eggs.
Danby says there is a lack of understanding among US consumers of the difference between cage-free and free-range production. “They think cage-free means hens are roaming around outside. That is why cage-free has done so well. It is a little bit ambiguous… Labelling regulations are quite lose. You see lots of cage-free eggs with pictures of hens outside in nature. But that is not the reality. It is very confusing for consumers. We have come in with a completely different standard and… we are working to communicate that. We are trying to show transparency as to precisely what goes on on our farms.”
Despite this ambiguity, Danby says free-range egg sales have gained momentum in the US. “We have seen 69% year-on-year growth in free-range. Free-range has been the segment that has grown the most over the last 12 months.”
The trend for increasing consumer interest in how food is produced feeds in to The Happy Egg Co.’s efforts to “educate” consumers about free range production. “The consumer demand to know where food is coming from and how animals are treated is really growing. It is exactly what we saw in Europe in the 1990s,” Danby observes.
While Noble Foods’ The Happy Egg Co. business generates the majority of its revenue in its domestic UK market, the business is growing fastest in the US – albeit from a smaller base. “For the brand, growth is fastest here in the US. It is really down to the shift in the marketplace and consumer demand that we are seeing,” Danby reveals.
According to Danby, the company expects to have “close to one million birds” in its US flocks by “this time next year” and anticipates operating 60 farms in the country.
By investing in establishing its own flocks Noble Foods aims to ensure standards, as well as guarantee supply at a time when egg farmers are struggling to meet demand for cage-free and free-range eggs. “It is about having the confidence to put down our own flocks. You work six- to 12-months out to put down new product. We pride ourselves in terms of our supply chain – 99.7% of our contracts are met. We don’t commit to a contract unless we know we can fill it. That is what makes us a trusted partner in a time of short supply,” Danby says.
While The Happy Egg Co. brand delivers animal welfare standards that are well above many of its major competitors in the higher-welfare cage-free space, the group’s offering is nevertheless “mass market”, Danby insists. The company is stocked at 6,500 stores across the US, including at 2,000 Walmarts as well as at supermarkets including Kroger, Safeway and Albertsons and club stores like Costco. “Our mission is to make a humane egg available to everybody at an affordable price.” The Happy Egg Co. eggs are priced at $5-5.50 for a pack of 12 eggs.
Noble’s The Happy Egg Co. brand competes on price because Noble Foods is able to transfer its knowledge about on-farm and supply chain efficiency gained in the UK with its US business and farmer suppliers, Danby suggests. She concedes it costs more to produce free-range eggs but says that there are efficiencies to be had. “A lot of it is about the route-to-market, packing as close to the customer as possible. We have packing on the east and west coasts.”
Another factor impacting the price competitiveness of Noble Foods’ free-range eggs is the impact of avian influenza on the wider egg industry in the US. “AI has caused a lot of turmoil in conventional egg pricing, which narrowed the price difference between commodity eggs and free-range eggs. This has made it more accessible and less of a jump for consumers to switch to free-range eggs,” Danby observes. She adds the business believes this change in consumption will be maintained if and when egg pricing normalises.
Noble also sees an opportunity to grow its foodservice business in the US, Danby says, where the company already supplies companies like the San Francisco Soup Co. and has a foodservice distributor.
Again, foodservice operators are making commitments to use cage-free eggs – with the likes of McDonald’s making the conversion – and Danby expects the company will benefit from this trend. “It is an area where we are looking to develop,” she confirms. “[Foodservice companies] have made a series of commitments to go cage-free and its not going to be long before someone makes the next step to free-range.”
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