Free-range eggs are taking market share from cage eggs.
Melbourne, Australia (PRWEB) May 06, 2014
Improved public perceptions of the health benefits of eggs have driven growth in the Egg Farming industry over the past five years. Marketing efforts to reverse consumer associations of eggs with high cholesterol levels have finally managed to stimulate per capita egg consumption, which is expected to increase at an annualised 1.0% over the five years through 2013-14. Moreover, the renewed popularity of cooking shows in Australia has encouraged people to cook with eggs and egg products. Demand for free-range eggs in particular has boomed, as consumers take animal welfare issues into consideration when purchasing food items. Consequently, industry revenue is expected to increase at an annualised 3.5% over the five years through 2013-14, to reach $575.6 million. However, this growth figure is inflated by rapid revenue growth in 2010-11 on the back of a recovery in production following years of poor output. Growth is forecast to be a more modest 0.8% in 2013-14.
Despite revenue growth, some cracks have appeared in the industry over the past five years. These have included fluctuating purchase costs due to volatile feed prices. Wheat feed prices have changed dramatically over the past five years, jumping up or down in any given year by more than 10.0%. Furthermore, issues surrounding labelling and production methods have plagued the industry. IBISWorld industry analyst Brooke Tonkin states “Australia does not have a national, legally binding standard for the production of free-range eggs. This means that some producers can label their products as free-range eggs according to one definition, while another body would have the producer label their products as barn-laid eggs.” This has caused confusion among consumers and reduced price premiums for genuine free-range egg producers. Despite this, the outlook for the industry appears bright, with the industry expected to continue to grow over the next five years, albeit modestly. Players will continue to consolidate, to improve productivity and boost profit levels. A key way they will achieve this is through increased large farms, where economies of scale are greater than smaller counterparts. According to Tonkin, Farmgate prices and industry revenue will benefit from the growing share of higher value free-range eggs demanded by consumers at the expense of cage eggs.
The Egg Farming industry is highly concentrated. The largest players in the industry are vertically integrated, with controlling interest or exclusive supply arrangements with a large number of smaller farms. Consequently, these large players have a significant hold on the industry. In 2005, the Australian Competition and Consumer Commission declined to allow a joint venture between Pace Farms and Farm Pride, two of the largest egg producers, as it considered that it would substantially lessen competition in the market. This industry’s largest players include Sunny Queen, Alimfresh and Farm Pride Foods. For more information, visit IBISWorld’s Egg Farming report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies in this industry farm poultry for production of eggs and hatch egg breed chicks.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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