Consumer interest in dietary health will keep demand for eggs stable through 2018.
Los Angeles, CA (PRWEB) October 05, 2013
The Chicken Egg Production industry has benefited from increased demand during the past five years as industry associations advertised the health benefits of eggs. This strategy helped dispel negative perceptions that some health-conscious consumers had about eggs; as a result, a growing number of consumers increased purchases of eggs and products that contained eggs. Consequently, increased demand from consumers drove downstream demand from food manufacturers and food service establishments. Over the five years to 2013, IBISWorld expects industry revenue to grow at an average rate of 6.0% per year to total $12.8 billion. Accoring to IBISWorld Industry Analyst Jeffrey Cohen, “Recoveries in consumer spending and an increase in the price of eggs are expected to boost revenue 6.0% from 2012 to 2013.”
The price of feed, a major source of food for laying hens, has increased during the past five years, hampering profitability; however, the industry's major players were able to successfully pass these costs onto downstream buyers in the form of higher prices. In addition, new animal welfare guidelines have required farmers to increase the space provided for cage hens. Farmers have installed new cages to comply with these regulations, causing a dent in profit margins. While making these upgrades, operators also installed technology to improve production efficiency. “As a result of these trends, profit margins declined,” says Cohen. Declines in profit have driven several companies out of the industry and, as a result, the number of enterprises has declined at an annualized rate of 0.6% to 6,148 during the five years to 2013.
Over the five years to 2018, projected increases in egg prices will likely drive modest revenue growth. Furthermore, population growth and expected increases in egg consumption will increase demand for eggs. An anticipated slowdown in the rise of feed prices and the replacement of old cages with newer, more efficient ones will benefit production rates and profitability. Also, during the next five years, regulations regarding the welfare of chickens are expected to tighten, causing more companies to exit the industry. Overall, revenue is expected to increase in the five years to 2018.
The Chicken Egg Production industry has a low level of concentration. The major companies include Michael Foods, Cal-Maine Foods and Land O’Lakes. Historically, many small operators have characterized the industry, but, like other agricultural industries, egg production is consolidating into fewer, larger facilities. Specifically, integration into larger companies has increased concentration during the past five years. For example, producer-packer integration is becoming a common characteristic of the industry given asset specificity (i.e. the industry mainly produces eggs) and a smaller number of egg packers. In addition, as the industry moves toward large-scale production, smaller operators that do not become contract growers for corporate producers will be unable to compete with larger businesses that typically achieve lower per-unit costs due to their intensive laying operations.
For more information, visit IBISWorld’s Chicken Egg Production in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
The Chicken Egg Production industry primarily raises chickens for egg production. The eggs produced may be sold for use as table eggs or hatching eggs.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.