Barn eggs still have a valid role to play in the UK market for Tesco despite other supermarkets’ pledges to move to only free-range.
Like many retailers, Tesco is moving away from colony cage eggs, but it said consumers needed another option at a lower price point and they may use barn eggs to ‘trade down’ as the post-Covid-19 recession hits.
Speaking at a Potters Poultry virtual event, Tesco agricultural manager John Kirkpatrick said it was an interesting time for eggs in the UK, and entry level demand was a key part of the market, alongside organic and free-range.
He said: “Barn will be our entry tier, free-range our core and organic and speciality our higher tier.”
Tesco is currently the number one UK egg retailer.
Room to grow
He said: “There is room to grow. Iceland over-index on eggs, they are focused on colony eggs. It will be interesting to see where they go.”
Covid-19 was expected to lead people to trade downwards, as recession encouraged consumers to be more cautious about spending.
Customers have traded up to higher tier products, such as free-range and organic. But in previous recessions, premium products have suffered.
Mr Kirkpatrick said: “The challenge will be maintaining [the higher tier spend] into recession.”
But with consumers looking for convenience, health and value, eggs had a lot to offer. Mr Kirkpatrick highlighted opportunities in creating more added value products, such as microwave and meal pots.
He added: “It is where the market needs to go.”
He highlighted the value of long-term relationships with suppliers, adding Tesco could leverage its size and scale to remove volatility from the supply chain, leaving producers to concentrate on ‘safety, quality and efficiency’.
With eggs destined for foodservice being shifted into the retail sector during lockdown, Tesco had also been selling white-shelled eggs.
Mr Kirkpatrick said customers had responded very well to white-shelled eggs and the retailer was now looking at including them in its offer going forward.
Olivia Potter, director of Potters Poultry, added there was now the demand for white egg layers.
She added: “For new entrants looking to come in, the biggest challenge is planning permission and environmental permits.”
Egg producers in the US were following the trends laid out in the UK as they converted to a more free-range system.
Currently the US market was only 25 per cent cage-free, said Dan Wood, of Potters Poultry’s US business.
He said: “They want it to be 65 per cent in a short space of time. We have kind of already been through that in the UK. Hopefully with our experience we can help that.”
But he said the barn egg market was ‘alive and well’ in the US.
Mr Wood added: “There is far better consumer awareness of that market. The UK are trying to reeducate the consumer what a barn egg system is.
“We face similar challenges, but we are a little bit behind where you are in the UK.”