Free-range egg madness halted

29-05-2006 | |

United Kingdom supermarket price promotions that last month saw medium free range eggs slashed to Â£1 (€1.46) a dozen have come to an end.

In the UK, free-range eggs were being offered in supermarkets for less than the price of eggs from conventional systems in late April. This bizarre situation followed a further spate of price-slashing by major retailers. ASDA, one of the nation’s leading grocers, led the way in March when, as part of its ongoing ‘rollback’ campaign, it reduced the cost of a dozen store-label medium free-range eggs from £1.48 (about €2.16) to £1 (about €1.46).

Following the recent activity that had caused such uproar, Tesco was the first retailer to make a move, restoring the cost of a dozen mediums to £1.48. Asda and Sainsbury’s soon followed its lead and all three retailers brought to an end a similar promotion on large free range.

British Free Range Egg Producers Association (BFREPA) chairman Tom Vesey welcomed the move but said it was only the start of what needed to be a concerted effort by packers and retailers to get shelf prices increased further.

Packers, who fully acknowledge that producers need a price increase, have made it clear that they need more from the retailers before it can be passed back down the line. BFREPA has spelled out to retailers that unless producers see better returns then future supply levels are being put at risk.

“I believe retailers have taken on board that warning and there is a desire to get shelf prices up but no one is brave enough to make the first move for fear of being out of step with the competition,” said Vesey.

“The aspect I find most frustrating is that there is no need to treat free range eggs in this way. It’s a premium product that’s selling well on its own merits and has the potential to make a decent margin across the whole supply chain, so why discount it?”

And it is the fact that free range eggs are selling so well that leads many in the industry to firmly believe that a serious shortage is only around the corner.

Data from retail analysts TNS shows that the market grew by nearly 10 per cent last year and demand could be even stronger over the next twelve months. More prominent shelf positioning of free range along with a greater share of the egg fixture is helping to drive retail sales forward.

If demand picks up like projected Vesey estimates that one million birds extra are needed for the extra supply. But farmers earn not enough and with supermarkets discounting eggs the market is too risky to invest in new facilities. The free range association thinks that 5 pence (7.2 eurocents) a dozen is required to fully restore producer margins.

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