SUNNY SIDE UP 2005

Tom Zind

Today's egg category is breaking more than shells. Displays are filled with a record-setting number of new options, ranging from organic and free-range, to shell-dated and value-added.

Dairy department managers see eggs in a new light, thanks to aggressive efforts by producers and commodity groups like the American Egg Board to rehabilitate and reposition eggs as healthy for consumers and wealthy for retailers. Eggs increasingly are seen as a product that's not only profitable, but also one with powerful tentacles that can help other parts of the store by spurring purchases of companion products.

"Eggs were always sold cheap. There wasn't much product differentiation, and they weren't very profitable for retailers," said James Wisner, president of Wisner Marketing Group, which develops marketing programs for the American Egg Board, Park Ridge, Ill. "But retailers are really starting to catch on to the possibilities they present and the different things they can do to help them break out of that commodity mold."

Topping the list of tactics is increasing variety within the category. With the advent of such specialty products as nutritionally enhanced and free-range eggs, boosting variety through differentiation has become easier. Combine that with an expanding array of package sizes and types, brand positioning, and even eggshell stickering and stamping, and retailers are suddenly discovering eggs can have a personality.

Pittsburgh-based Giant Eagle, operator of some 220 stores, has worked to build its egg business by looking beyond the traditional one-dozen pack of white eggs. Dairy director Paul Moran said the chain offers the widest variety of eggs and egg-related products possible. The lineup includes an emerging national brand, Egglands Best; a pasteurized-in-the-shell product from Davidson Pasteurized; nutritionally enhanced eggs under the Gold Circle Omega 3 brand; and natural, organic and cage-free eggs sold under the Organic Valley and Giant Eagle Nature's Basket labels. All are merchandised alongside the traditional commodity egg products.

"The demand for these premium egg products is strong and continues to grow, currently representing about 16% of total egg sales," Moran said.

Among its recommendations for maximizing egg sales, AEB lists about a dozen core products that make up an average store's optimal variety mix. They include counts ranging from a half-dozen to 18 to five dozen; and white and brown varieties and sizes ranging from jumbo to medium. Additionally, the mix includes nutrient-enhanced, organic and artificial egg products.

A recommended case set featuring these items would position top sellers like 12- and 18-count large at the beginning and end of the traffic flow. Higher gross margin items would be placed at eye level. Extra space would be allocated to high-growth items specific to the retailer's market.

Package size variety is a particularly useful merchandising strategy at stores in the Chandler, Ariz.-based Food City chain, a division of Bashas'. The 60-store chain has begun stocking the egg case with more large-count packs, most notably a five-dozen unit.

Dale Schloss, dairy category manager with the chain, said 20-count and 60-count packs are popular with Hispanic customers, who make up the biggest single demographic for the chain. With larger-than-average families to shop for, and a proclivity to cook more traditional meals at home, the typical Hispanic customer is a big egg buyer that wants to buy in bulk.

"Five dozen is a common purchase for many of our shoppers, but most stores find their best-selling item is the overwrapped 20-pack of eggs," Schloss said. "We try to keep the price of the 60-count large pack around the $5 mark. But lately, we've been able to take advantage of the glut of mediums on the market, and price that pack at below $4, and occasionally as low as $2.99 on ad."

AEB touts such price promotions as a central part of any successful egg merchandising program. Wisner cited recent board research showing that regularly putting eggs on ad results in incremental sales and doesn't simply shift sales forward from succeeding weeks, dashing some of the conventional wisdom about the true value of promoting a commodity like eggs.

"We've found in our research that the week after the sale, egg sales are modestly higher than what might have been forecast. The volume never drops below the normally forecast volume," Wisner said. "What this says is that when people have eggs around, they use them. People will buy eggs on sale and stockpile them."

A key egg supplier to Food City and other stores operated by Bashas' said he's been working to supply many of the 144 stores in the chain with the volume needed to support aggressive price promotions.

"At times, some stores will have two ads running at the same time: one on a large dozen, the other on an extra-large 18-pack," said Clint Hickman, vice president of sales for Hickman's Egg Ranch, Phoenix. "In the 18 months since we've been on this big ad program with them, they say they're up 12% in volume. They attribute it to the promotions. Encompassing different pack and egg sizes, the promos have the effect of encouraging everyone to grab something from the egg case."

Up until only recently, getting consumers to pick anything up from the egg case was a challenge. Viewed by many as a fattening, cholesterol-filled food, the egg was seen as something to be avoided. Yet, efforts by the egg industry to not just dispel many mistaken conceptions, but also point out the egg's many actual nutritional benefits, have begun to pay dividends.

Don McNamara, executive director of The Egg Nutrition Center, Washington, said recent studies have acquitted eggs as a major contributor to heart disease. Although eggs contain cholesterol, the content has been downplayed because studies have shown that saturated fat, not dietary cholesterol, is the main culprit in raising serum cholesterol levels, he said.

"Long-term egg consumption doesn't affect the blood vessels' function -- their ability to expand and contract," McNamara said.

Having made progress on dispelling what it characterizes as a myth about the bad health effects of eggs, the industry has moved from defense to offense on the health front. The industry is playing up new evidence showing eggs contain many healthful nutritional components. From lutein to choline to protein, eggs are now being viewed as a core part of a healthy diet.

So far, though, it's unclear how widespread retailer efforts are to play the egg up as a newfound health food.

While saying it's generally committed to communicating the health benefits of all food in its stores, Giant Eagle said it hasn't developed a strategy for eggs.

"To date, we have not focused our promotions/displays fully on nutritional information, but we continue to examine vehicles in which to communicate some of the health benefits of eggs to customers where appropriate," Moran said.

Food City's Schloss, meanwhile, said his stores' customers may be less interested in learning about the egg's nutritional profile. "While it may be true that our customers are becoming more health-conscious, the first-generation Hispanic immigrant consumer still just likes to eat what tastes good. Eggs fit that desire," he said.

Hickman said fortified eggs -- those with heightened levels of nutrients like omega-3 fatty acids and lutein achieved through changes in hens' diets -- could be a big part of the industry's future.

"It's something we're looking at, in particular because we supply the Sun City retirement community with eggs," he said. "It's something that residents there might respond to."

Over Easy

Play the word association game with eggs and the word "convenient" probably wouldn't come to mind.

Nevertheless, the egg industry is trying to convince both consumers and retailers that eggs can be quick and easy to prepare and eat. From touting the egg as the basis of a healthful meal to encouraging retailers to make eggs easier to pick up in the store, the egg industry is trying to counter the perception of its product as out of step with the "grab and go" times.

The American Egg Board concedes it has a steep hill to climb in that regard. The AEB's research revealed that inconvenience is the primary reason consumers don't make eggs more frequently. According to the board's research, consumers cited the relative convenience of other breakfast foods, preparation time, the challenge of eating eggs on the run and clean-up time as among the top reasons for not eating more.

AEB's "Think Fast, Think Eggs" promotional campaign is aimed squarely at changing those perceptions. The campaign goes on the offensive, comparing the nutritional benefits of eggs to other convenience foods, and their capacity to be the key building block in a healthy meal such as an omelet.

"Eggs are a catalyst item," said Jim Wisner, president of Libertyville, Ill.-based Wisner Marketing Group, which handles AEB's promotional work. "They can drive sales of items like breakfast meats, produce items, cheese, salsa and orange juice."

For retailers, that translates into more opportunities for cross-promotional merchandising and perhaps signs playing up the egg's role in well-rounded meals. It also can mean selectively expanding the availability of eggs outside the dairy case.

"A number of retailers are putting in quick pick-up locations for eggs in other areas of the store to encourage impulse sales," Wisner said.

But the idea of providing additional refrigerated display space is still daunting to many retailers.

"Secondary displays pose some challenges with respect to refrigeration requirements," said Paul Moran, dairy director for Giant Eagle Supermarkets, Pittsburgh.

But AEB's numbers make a case for using secondary locations. The AEB found merchandising eggs at the checkout area boosted sales units by 5%, while a produce department location boosted volume by 4%. A produce item tie-in boosted sales by 7%, according to the AEB.