Eggs-istential Crisis At The Grocery Store

0:04Welcome to the CPG Week podcast by BevNet and Nosh, your source for the latest food and beverage industry news. I'm Monica Watrous, managing editor of NOSH, here with my co-hosts Brad Avery and Lucas Southard. If you're enjoying the show, please subscribe on your listening platform of choice. On the podcast today, we're discussing the price of eggs. But first, Van Holten is teaming up with Warheads Candy to create a sour blue raspberry pickle. Lucas, chew or spew? you know you just mentioning warheads makes my mouth like water from like childhood of like knowing when you're unwrapping it that like it's gonna be so sour you're gonna get that pucker uh i'll go with chew why not i loved warheads as a kid i can't say i have had one in 20 years but in pickle form but yeah and i love pickles so why not i mean it will it will probably be spew worthy but I would at least chew first are warheads not as sour now as they were when we were kids or is it just my changing taste buds because I remember as a kid they were almost unbearable at times but now I actually had some recently and they were manageable they're still pretty sour I don't know if they changed the formula or if it is just I'm older now and so I I can't take it.

1:29But it was interesting that I was almost bracing myself for pain. Well, that's what I'm saying is like I can feel my mouth like the saliva building because the anticipation of what it is. What drove you to grab a warhead in your 30s now? My mom got some and was like, here, do you want warheads? What drove your mom to have warheads in the house? Yeah, it was Christmas. I mean, you haven't answered it. Are you chewing or spewing on this? I'm going to spew, but not for the sour, because I do love a sour pickle, but more for what I imagine is the candy artificial flavoring that's probably in this pickle.

2:07That doesn't sound very appealing to me. It is a weird mix. My hot take is that pickles should taste like pickles, and no one can convince me otherwise. So I'm spewing. How do you feel about spicy pickles, though? Because that's not really a pickle. It's like a spicy pickle. Pass. gorillas makes a great spicy yeah see i'm all about the spicy i'm not a spicy well i'm just not a spicy person in general spice me up yeah okay fair enough the spice must flow so so one for chew and two for spews on the warheads pickles wow i think this is a first that i am the one that is all for it i'm the positivity here i thought for sure you would you would be disgusted by it no i i don't know maybe it's just the the idea of a pickle and uh fond memories of blowing out my taste buds with warheads as a child.

2:57I don't know. It just seems like I'd give it a go. I'd probably hate it, but I'd give it a go. I just always say the opposite of what Lucas says. I've noticed that. Don't do what Donnie don't does. Don't give away our strategy, Brad. Well, speaking of appalling things to see at a grocery store, I just bought eggs over the weekend, and I think I spent like$7. Now, granted, I get bougie eggs. Like I get the cage free organic pasture raised kind. But I think I'm going to have to start like maybe downgrading to just the normal eggs. What's going on with egg prices, Brad? They're too damn high. Tell us more.

3:35This isn't news to anyone who goes grocery shopping anytime in the last couple of months. But, you know. No, the price of eggs is continuing to rise after a sharp spike during the inflation wave of 2022. which, if you remember, the price of eggs was a big topic during the presidential election and has long been a point of contention for consumers. It's continuing to rise. This time, one of the lead causes is avian flu, that is, attacking chicken populations. According to the Bureau of Labor Statistics, the cost of a dozen grade A large eggs hit an average of 415 in December. That's up from 251 the year before.

4:16So a pretty big spike. Business Insider actually ran an article recently with an alarming headline, eggs may be expensive forever. Eggs-pensive? Yeah. The egg puns can just abound. I mean, I wrote about how bird flu was impacting egg prices in May 2022. So it was actually one of the first stories I did here at NOSH. It was called egg-celerated pricing in the poultry market, causing problems for CBG companies. And at the time, the average price of a dozen eggs was hovering around$2.60 per dozen. So how far we've come, right? It's definitely not gone down. And if anything, it's gone significantly up since then.

4:59Well, and grocery stores are paying even more than what you see on the shelf tag for the consumer-facing price because eggs are considered loss leaders. It's what gets consumers in the store, and ideally they spend more money on other higher margin products. But grocery stores are definitely feeling it as are restaurants, and certainly any manufacturers are using eggs in their formulations. So the Business Insider piece, too, also cited some data from Serkana. The cost of large eggs among smaller retailers was$5.31 a dozen, and although they may be cheaper in certain retailers, the prices are unlikely to come back down anytime soon.

5:41Here's a quote here. The acute causes of this price spike, a drop in supply, a jump in demand, point to long-term structural issues that might stick around. When I was reporting on this back in May 2022, I talked to a couple of different brands that don't sell eggs directly, but use eggs in their formulations. And I learned that it's pretty common to hedge, as with anything, and buy a lot of stock when you know prices are going up. But it doesn't seem like there's any idea that these prices are going to come back down. So hedging for CPG brands that use eggs in their production or have that be one of the pillars of their brands and their products are really just going to have to eat these costs.

6:23And that will eventually flow downhill to consumers at the grocery store. Another factor that is making eggs more expensive are cage-free requirements that are in certain states like California and Massachusetts. You also have to consider what the knock-on effect is going to be. Once again, consumers are feeling their wallets tighten. And what do they cut in turn? Eggs are a household staple for most people. and whether people stop buying eggs and change their diets or they cut something else from their baskets, there's going to be ripple effects. And we can probably see this inflation impact other areas of the store as a result.

7:06Grocery inflation is something we've been tracking for the last couple of years. And while it has seemingly moderated, this is a topic that we checked in with a number of industry experts at the beginning of the year to get their take on whether prices were going to continue to climb, especially in light of some of the policies and actions that we're anticipating under the Trump administration. Yeah, many people I had talked to or reached out to for our trend report said basically just that, that grocery prices for standard items are probably going to stabilize, but they're not going to go down.

7:46So one of the co-founders of Keychain, Jordan Wentz, said,

8:05We saw avian influenza or highly pathogenic avian influenza, HP AI, taking over the egg market back in 2015. But that was over the course of one season and the market bounced back within a few years. This time around, the bird flu has consumed a larger portion of the egg-laying population. Just in the last three months, 30 million chickens were culled. That's 10 % of the nation's supply. And there's really no end in sight. Great. I know the industry is talking about vaccines for chickens to mitigate the spread of bird flu, but that's not a perfect solution. So in that Business Insider piece that you referenced, Brad, there was a quote that kind of stood out to me about vaccines, because that's usually what we think of when we're having a pandemic or an epidemic of any sort.

9:04And the quote said, quote, sometimes vaccines can actually mask things and make things worse down the road as opposed to identifying which animals are diseased, depopulating them and preventing further disease transmission. And then a separate expert said, quote, we have a lot of trade agreements that can be impacted if a country can't differentiate between infected from vaccinated animals. So in theory, vaccinating chickens doesn't necessarily solve the problem and isn't an easy solution, but it could create further problems and increase the pain at the grocery store in terms of how this all shakes down to consumer pricing.

9:44I will say in the long run, I find it hard to see how the Trump administration's policies don't worsen inflation in the long... If we consider the impact on farm workers of deportations, if we consider the impact on trade of tariffs, we just saw this flare up potential coffee tariffs effectively with the Columbia spat over the weekend. that you can take my eggs but not my coffee oh i was i was thinking about do do i need to go drop five hundred dollars on bad coffee now to to hoard before it gets uh just a cabinet full of folders for you just raid the bevnet supply i'm sure there's a lot of coffee there but yeah it's feels like these policies are not going to be conducive to lowering prices i can't predict the future, so I don't want to go on a limb there.

10:40But given what we know about how tariffs tend to work, the likely outcome is if these go into effect, grocery prices will simply continue to rise, eggs included. Yeah. And there's also an aspect that it's just not something that can be easily resolved by a president or a leader saying like, hey, we need to lower grocery prices. I mean, it reminds me also not just of the coffee comparison, but something else that's been happening in commodity prices with cocoa. And, you know, this is the cocoa high prices that we've been reporting on all year, all of last year, is based on a lot of environmental factors.

11:19It's supply chain issues. There's something that is kind of inherently part of how some of these products and these ingredients get to market. And it can't just be easily resolved. It's something that we're going to have to find ways to either get used to or deal with or not use as much. And the industry is reacting. I have talked to brands that have had to discontinue product lines that contain cocoa because the prices were just too high. It was impossible to have a path to profitability with those product lines. And we've seen some investments in alternatives. The venture capital landscape seems to have an appetite for alt cocoa products.

12:02I haven't really seen a whole lot around alt egg at this point, but I know that there are alternatives out there that are going to help reduce costs for a lot of formulators. The question is, are consumers going to balk at some kind of egg replacement when they've come to expect actual eggs in their baked foods? And those alternatives aren't necessarily cheaper at this point. There's a lot of scale that's needed to go into alt cocoa or an egg replacement that's going to make it price comparable to the everyday product that people are used to. And so, yes, long term having a cocoa-free cocoa, shall we say, or an egg replacement that doesn't come from a chicken is great.

12:51And food tech is working really hard on that. But those solutions aren't quite there yet, and they are definitely not at the same price level. And so to have that at scale that will make a difference in consumer wallets is not really reasonable to think in the short term. Just curious, how often do you guys buy eggs? Not that much, actually. They're not really something that I use all the time. I'm not a big egg-for-breakfast person. We don't bake a ton. Yeah, a lot in my house. I would say at least a dozen a week, if not more likely 18 to 24 a week. But it's a family of four, and one of my kids eats an egg sandwich for basically everyday breakfast.

13:41Oh, yeah. I eat eggs every morning for breakfast. So, I mean, there's an appeal there. It's a familiar ingredient. It's a high-protein, nutrient-dense ingredient that has been relatively affordable compared to animal protein. And it will be really interesting to see what shakes out. It is certainly an existential crisis. Nothing? Come on, that was good stuff. I was letting it breathe. Yeah, like a fine line. I was letting your joke just, you know, breathe the fresh air a little bit. I thought it would crack you up. Oh, there we go. All right. On that note, I think we should wrap it up. Here are some other notable bits of news from the week.

14:24Riding the RTD wave, HIO secures nearly$20 million in funding. Inside Superguts targeted sampling strategy. And Ferrero bulks up snacking portfolio with acquisition of Power Crunch. For these stories and more, become an insider at BevNet and Nosh.

15:08Thank you.