Christmas pull tightens egg market

The gloom surrounding the egg market has lifted in the run-up to Christmas but it may only be temporary, warn the packers.

As packers build stocks for the expected seasonal demand the surplus that was overhanging the market and dragging prices down has been cleared leading to an improvement in the wholesale trade.

But David Tromans, managing director of Deans Foods, is warning that early next year could see difficult trading conditions.

“The first half of January retailers will be restocking and it is likely to be the end of the month before things settle down again,” said Mr Tromans, “but February could be a tough month for the egg market.”

Price competition between retailers is reported to be hotting-up and there are signs that this may lead to aggressive purchasing policies with packers unlikely to escape unscathed.


And while cold winter weather will help demand for eggs, if the packers are relying on the ’Atkins effect’ to continue boosting sales then they may be disappointed. The much-publicised diet—which was credited last year with an increase in egg consumption—is on the wane.

In America more than half the followers of the high-protein, low-carbohydrate regime have abandoned it and there are signs that the same is happening here. At its height of popularity it was estimated that two per cent of Britons were disciples of the diet but now nutritionists believe that figure has fallen dramatically. The Sunday Times quoted one housewife who has abandoned the diet as saying: “Eating bacon and eggs all the time on the Atkins diet did get boring and it did give me headaches”.

“There’s no doubt that retail sales have slipped back in the second half of this year,” said Mr Tromans, “and in conjunction with an increased bird base it has led to a weakened egg market.”

And in a dig at producers who use the increased demand at this time of year to sell eggs outside the terms of their contract, Mr Tromans commented: “The fact that we get less eggs in the run-up to Christmas only to receive more in January doesn’t make managing the seasonal variation in demand any easier.

“Our forecasts are reasonably accurate and this reduction in supply volumes is very noticeable. Whilst producers may well try and pass it off as the result of a disease problem, in most instances we are more inclined to view it as a breach of contract.”

Mr Tromans said it was a problem that occurred across all egg sectors and was not unique to free range.

Stonegate also confirm good retail uptake in the period leading up to Christmas but commercial director Nick Rogers predicts difficult times ahead.


“The Christmas effect is a short-term one and it could be a very different picture during the first half of next year,” Mr Rogers told the Ranger.

“For the last twelve months Stonegate's position has been one of caution with regards to expansion in the free range sector. I hope I'm proved wrong but I believe we are very close to a situation of over-supply.”

Read on to learn how a new TV advertising campaign plans to reverse the current decline in egg sales.

Back on the box

Amanda Cryer of the British Egg Information Service reveals how a new TV advertising campaign intends to get egg sales back on track.

Following a period of two years with only limited TV advertising, Lion Quality eggs will be back on TV with a heavyweight campaign in 2005. The ‘Make A Meal Out Of Anything’ campaign launches on 10th January 2005 and will run on GMTV and satellite channels across the UK for eight months.

And, for the first time, the British Egg Industry Council, who are funding the campaign, will also be running a regional TV test with an even higher weight campaign.

The series of four TV executions, first introduced in 2002, feature everyday situations showing that with just a handful of ingredients in the fridge, eggs can make a quick, healthy and convenient meal out of anything. The campaign will continue to target housewives with children and around 80 per cent of housewives will see the ads an average of 17 times.

The TV ads are the highlight of a £4 million package to support Lion Quality eggs in 2005, under the umbrella theme ‘Fast food. And good for you.’ which has been used since the launch of the new Lion campaign in 1999. Other activity in 2005 will include campaigns to promote modern egg recipes and positive health messages through the editorial media; POS support; a revamp of the Lion Quality eggs website; the annual Crack an Egg Month and British Egg Week publicity drives; new research into cholesterol and slimming with eggs; continuing activity to reach health professionals and schools; and a new advertising campaign to reach caterers.

In the last two years, a series of hard-working PR campaigns has seen some notable successes, including the recent British Egg Week omelette campaign which helped address the decline in the egg market in October.

However, it is clear that to deliver a regular, guaranteed and consistent promotional message, TV advertising is required—and we can prove it!

The decline in egg sales was masked in 2003 by the ‘Atkins effect’, but 2004 returned to ‘normal’. A lightweight TV advertising campaign at the beginning of the year helped maintain sales but since then—apart from October—the market has been showing a decline of around 3 per cent.

Detailed analysis of 2004 egg sales has shown that at the beginning of the year sales among heavy viewers of the TV ads rose by a staggering 10 per cent. Unfortunately there were relatively few heavy viewers so their additional purchases were offset by a decline in sales among medium, light and non-viewers of the ads. This has confirmed that, while the TV ads themselves are extremely effective, there is a ‘tipping point’ for egg purchase that comes only when the ads are viewed a certain number of occasions. What we don’t currently know is exactly what the critical number is—but we do know that this year’s campaign did not reach those levels.

This contrasts with 2002, when the spend of £3 million resulted in everyone who was exposed to the ads—heavy, medium or light viewers of the relevant TV stations—increasing their egg consumption. This year’s additional investment is targeted to deliver proportionally more benefit and stimulate consumers to reassess eggs.

For the first time, the BEIC will also run a regional test to look at what impact running a much higher weight campaign would have. The test in the Central region, which covers 16 per cent of the UK population, will give a real insight into purchasing levels at the equivalent of a £4.2 million national spend, which will deliver 90 per cent of housewives with children seeing the ad an average of a whopping 32 times.

The campaign in Central will run through to November and will feature advertising on ITV and Channel 4 as well as the established mix of GMTV and satellite channels. Detailed analysis of sales in the Central region will enable BEIC to compare the effects with that of the national campaign.

A key question that arises out of all this is why should advertising matter to free range producers? While the free range market has certainly shown growth, this is as a result of a changing mix with consumers trading up from cage and barn. There has to be a limit to how long this can last and the key to sustained growth for free range eggs will be from increased interest in using eggs in contemporary meals.

The increased spend of the new campaign will benefit the entire market and all packers and producers should look to capitalise—do so and it could well be fast food and very good for you!