Cage-free commitments are climbing as major players in both the retail and food service space announce their plans to transition to using only cage-free eggs.
Most recently, Target Corp. announced its plan to fully transition to cage-free eggs by 2025. The company joins the growing list of food manufacturers making the switch, including ConAgra Foods, Mondelez, Nestle, General Mills, The Campbell Soup Co. and The Kellogg Co. Even grocery retailer Costco has hopped on board.
The list of restaurants making the transition is even more substantial. McDonald’s, Burger King, Starbucks, Taco Bell, Dunkin’ Donuts, Wendy’s, Panera Bread, Denny’s, Quiznos, Einstein Bros. Bagels, Caribou Coffee Co., Taco John’s and Peet’s Coffee have all announced their plans to switch.
This transition trend stems from consumer demand, as consumers increasingly want to know where their food comes from and are concerned about animal welfare, said Darren Seifer, food and beverage industry analyst at The NPD Group.
“Consumers aren’t just passive users of food and beverage products anymore,” Mr. Seifer said. “They want to know more about how that food got to the shelf. They’re more interested in knowing how the animal was treated before it was slaughtered, what kind of feeding processes were used on that chicken. When we talk about cage-free eggs, it’s all part of that same wanting to know what happened down the chain before the food actually got to the consumer. Consumers are shopping more with a cause in mind, so when they go to a restaurant or a grocery store, they want to feel good about buying products that are in line with their values and causes they support.”
But these cage-free conversions won’t be quick. Most of the companies have set 2020 or 2025 as their goal for fully transitioning to cage-free eggs. Chad Gregory, president and chief executive officer of United Egg Producers, said most consumers don’t understand why the switch takes so long.
“You can’t really just flip a switch and overnight or in the next couple weeks go from a conventional cage farm to a cage-free farm,” Mr. Gregory said. “It’s all new equipment. The money needs to be secured for it, so the farm will have to get loans. They’ll have to order equipment. There’s only about five or six equipment companies in the entire world that make these systems. It’s not like just your local Ace Hardware down the street. Most of them are located in Europe, so the egg producer has to get the money, figure out which system they want to build, order the system, the system then has to be crunched out and metal bent and all the things that have to go into making one of these new cage-free farms. Then all that has to be put on a ship and shipped to the U.S. and then actually built. It’s a tremendous amount of time. It will take years and years and years for one company to switch from one system to another.”
Shifting to cage-free eggs won’t be cheap or easy for the companies, either. The price for building a cage-free farm as opposed to a conventional caged facility is at least double, if not more.
“There’s a tremendous amount of expense that goes into building these new cage-free facilities,” Mr. Gregory said. “There’s a huge cost difference between conventional cage produced eggs and cage-free produced eggs. For the equipment alone, it costs about $15 per bird in a conventional caged egg produced house, so if you have a million bird egg farm, it would be about $15 million to build that egg farm. On a cage-free farm, it’s anywhere between $30 and $35 per bird. So if you wanted to build the same million bird egg farm, it’s now going to be $35 million. Not to mention the increased cost in labor. Everything is exponentially increased in man power, labor, technology and efficiency.”
Despite the expense and effort, the cage-free trend shows no signs of slowing down, Mr. Seifer said.
“When we look at fads, they usually come in for a couple years, make their splash, then they start to teeter out,” he said. “I haven’t noticed that with cage-free, that this is something that’s teetering out in any way, especially since we now have some more high-profile restaurants that are announcing that they’re switching to cage-free eggs so it’s bringing more headlines to the issue and more people are talking about it. I think every time this happens, more consumers become aware of it and some people start to research it, so I think for now we’re going to continue see this.”
While the demand for cage-free is growing rapidly, Mr. Gregory said he doesn’t believe the egg market will ever convert to completely cage-free.
“Right now you could walk into any grocery store in the entire country and stand in front of that egg case and any shopper can buy whatever egg they want,” Mr. Gregory said. “Every grocery store has cage-free eggs, organic eggs, omega-3 eggs and they also have conventional cage eggs, and they’re all different prices. So they can stand in front of that egg case and say, ‘Which carton of eggs fits my social needs the best? Which carton of eggs fits my economic situation at home the best?’ Every egg on that shelf was produced humanely, according to science. I think there always will be grocery stores out there that sell and market to a particular client that just wants affordable food. I do think the percentages and trend will continue to grow and grow, but I don’t think it will be 100% for many years to come, if ever.”