By producing a nutritionally superior egg before consumers even demanded it, Eggland’s Best became the leading specialty egg producer.

When Eggland’s Best food scientists hatched the idea of producing a nutritionally superior egg 15 years ago, they knew they were on the cusp of revolutionizing the egg industry, recalls President and CEO Charles Lanktree. In 1992, when Eggland’s Best brought its low-fat, low-cholesterol shell eggs to market, egg consumption had dwindled to near record lows with concerns over the health implications of cholesterol-rich foods.

“The egg business back in the 1970s and ’80s wasn’t the best business you would want to be in,” Lanktree recalls. “Consumption declined from about 360 eggs per person per year to about 234 eggs. The reason it went down was based on the two C’s: cholesterol and convenience.”

By creating the Eggland’s Best brand, the King of Prussia, Pa.-based company set out to change that, he says. “We’ve attacked both the health portion and the taste portion. Eggs are a truly wonderful food,” declares Lanktree, who joined the company in 1990 with experience in the consumer packaged goods market working for companies such as Beachnut and Nestlé.

The company was launched in 1988 under C.R. Eggs Inc., and took interest in the feeding principles used in Japan to produce a nutritionally superior egg known as the Hikari egg, which had been sold in that country since 1977. In 1989, C.R. Eggs purchased rights to the egg and substantially modified the feed formula to meet requirements in the United States. That same year, the company began the process of signing up egg producers as franchisees. In 1990, the company began selling nutritionally enhanced eggs under the brand Heartland’s Best. 

But bringing the product to market was a hard egg to crack initially, and each market had to be entered slowly and one at a time because of budget constraints and the newness of the product, Lanktree explains. “Financially, we struggled; this took some years of suffering before we brought things together and started concentrating on the consumer,” he remembers. In 1991, the company underwent a rebranding effort, focusing mainly on the consumer and changed its name to Eggland’s Best.

Once the eggs rolled into the mainstream about five years after the product launched, the company watched its revenues increase by double-digits for 10 consecutive years. Now celebrating its 15th year in business, Lanktree estimates those percentages will keep rising, “if we don’t shoot ourselves in the foot and we don’t forget the customer.

“The thing that [15 years] most means is that we have a very good product that’s been able to stand the test of time,” Lanktree says. “Most products tested in supermarkets don’t make it. We’ve not only made it, but we’ve experienced double-digit increases in sales growth for 123 consecutive months.”

Sales growth hasn’t been pennies in the bucket, either, according to Lanktree. Each year, its revenues have grown between 15 and 25 percent. “It’s been phenomenal growth and most of that growth is based on the products selling more and more,” he adds. “We’ve been told that no other company has achieved this [type of growth] before in the food sector.”

The Incredible Egg
Until recently, nutritionally enhanced foods were considered a niche market. Today, many shoppers demand more healthy selections at the grocery store, and in many situations shoppers can easily find a food retailer that sells some organic or nutritionally enhanced foods.

In many cases – literally, the egg cases – the Eggland’s Best brand and a few other specialty egg products are what consumers come face to face with at grocery stores. The American Egg Board (AEB) estimates that specialty eggs now account for an increasing proportion of all shell egg sales and are often placed prominently at eye-level in egg cases. “We’re talking about a category where over 90 percent of households are purchasing product every two weeks,” Lanktree adds. “In the first quarter of [2007], generic egg sales were down 3.4 percent and Eggland’s is up 22.8 percent.”

The egg industry classifies specialty eggs by several categories, including cage-free or free-roaming, free-range, organic, vegetarian and nutrient-enhanced. Eggland’s Best nutrient-enhanced eggs are certified kosher and are available in cage-free, organic and its original brand varieties.

Nutritional enhancements are ushering in a new generation of egg consumers. AEB research data shows that specialty egg sales grew by 24 percent in 2004, and have grown at a rate of no less than 20 percent per year since then.

The situation resembles the time-honored question: What came first – the chicken or the egg? Or, in the case of Eggland’s Best, what came first – the idea of creating a nutritionally enhanced egg or consumer demand for such? Lanktree believes it was the later. “How did I know that there was going to be a demand for this product? The consumer told me so,” he says.

According to Hilary Thesmar, senior research scientist with the Egg Nutrition Center, the introduction of the nutritionally superior egg has increased egg consumption as a whole. “It gives consumers an alternative product,” she notes. Thesmar says the specialty egg segment is a “growing market, representing between 5 and 10 percent of the retail egg market,” and one that is rising at a faster rate than traditional eggs. 

Equally unique, according to Thesmar, is the branded egg. Instead of buying only store-brand eggs, consumers now have more selection, which speaks to the variety they request and spurs competition.

“Eggland’s Best started [the trend] ... they were the first to really do that,” she adds. Thesmar predicts specialty egg production will increase in coming months.

“More producers are entering this market as a way to set their eggs apart from the competition,” she says.

Although Lanktree describes Eggland’s Best as the “first in the market” to conceptualize and produce nutritionally enhanced and specialty eggs on a national scope, the competition is now growing as consumer demand increases.

 “We’ve just done more research and looked at this from a consumer approach, and yes, we have had copycats, but we’re happy to report that none of them are close to being national in scope,” he says.

Egg-cellent Nutrition
The lure of the specialty egg in most cases is the nutritional benefits it offers. Eggland’s Best eggs are the result of the high-quality, highly controlled and patented feed mixture fed to hens. The mixture consists of all-natural, all-vegetarian ingredients without added hormones, antibiotics or steroids.

“These hens eat better than I do,” Lanktree jokes. Feed for Eggland’s laying hens includes grains, low-fat canola oil and supplements such as rice, bran, alfalfa meal, kelp and vitamin E. Standard feed on the other hand, typically contains animal fat, bone and other byproducts, recycled or processed foods and higher-fat oils.

Eggland’s branded eggs also boast a U.S. Patent and have undergone three clinical studies conducted by the Medical College of Pennsylvania. The studies proved that those participants who included 12 Eggland’s Best eggs per week in a low-fat diet showed reduced serum cholesterol levels. The results of one study appeared in The Journal of Nutrition and another in The Journal of Applied Nutrition.

Compared to a traditional egg, Eggland’s Best says its eggs contain 25 percent less saturated fat, provide 200 micrograms of lutein and 10 times more vitamin E, and contain175 milligrams of cholesterol vs. 215 milligrams in ordinary eggs. They also provide 40 percent of a person’s daily requirement of iodine, and more than 100 milligrams of omega-3 fatty acids.

But media reports praising or dismissing the health benefits of eggs have presented challenges.

“It was very difficult to become established, but we didn’t come into every market until 1998,” Lanktree recalls. “We’d take one step and then another step, gradually. It’s not easy with the tremendous quality requirements.”

Quality Takes Priority
With 57 farms in 37 states and more than eight million birds producing the Eggland’s Best-branded eggs, quality control is one of the top initiatives at the company. “We have 160 different hen houses around the country, and we receive samples of eggs from each site each week where they are processed and tested in the lab for all the things that we make claims on, like iodine, vitamin E, cholesterol, fatty acids and lutein,” says Bart Slaugh, director of quality assurance and primary scientific officer at its headquarters.

Each producer is treated as a franchisee, and is chosen based on his or her ability to meet strict quality standards on sanitation, refrigeration, safety and production. On average, 250,000 eggs are rejected daily for shell and other quality defects, and eggs that do pass the quality measurements reach the store within 24 to 48 hours of laying.

On a quarterly basis, Eggland’s Best uses an external auditing firm to randomly visit supermarkets nationwide and evaluate quality by sending the eggs to three laboratories for testing. Last year, the company ran about 58,000 tests, Lanktree estimates. “We keep a good handle on what the product is doing nutritionally by running quality tests,” Slaugh adds.

The company says it ensures the health of its flock by vaccinating hens three times during the first four months of life to protect them against salmonella and other diseases. Through its extensive auditing program, farms and processing plants are checked annually to ensure compliance with company procedures to reduce the likelihood of infection or contamination and maintain the wellbeing of its flock. Everything from the refrigeration temperatures and the sanitation of trucks to biosecurity control is checked at each facility, Slaugh notes.

“We have good confidence that the producers are sending in eggs that are representative of the products they are sending out the door,” Slaugh maintains. “Each processing plant has a resident USDA inspector, and they do the verification of whether the eggs are Grade AA and they check the shell quality for interior defects.”

Paying A Price
Such strict measures ultimately benefit the bottom line of a company like Eggland’s Best. On average, specialty eggs cost $1 more per dozen than conventional eggs. As the AEB explains, “With an average price point [$3.06] nearly three times the average price of 12-count white eggs, and a profit margin average of 34 percent, the gross profit on a specialty egg sale often exceeds the selling price of 12-count white eggs.” With an average gross profit of $1.05 per unit, specialty eggs are the fastest-growing segment of the egg case and represent one of the best opportunities where added space and items will directly lead to increased profits,” states the AEB. However, increased demand could mean lower prices for consumers.

“If more of these eggs are being sold year after year and the people that do buy them are buying more and more of them, the production costs and volume will bring the price down,” Thesmar predicts.

With a marketing strategy that targets the family-oriented consumer, Eggland’s Best has had little trouble convincing consumers its eggs are worth their price. “Our primary target audience has been women [age] 50-plus with a secondary market of women 35 to 49,” Lanktree says, noting that now the company is pursuing an even wider range of customers through its marketing campaigns.

“We’re branching out more through our Web site that targets younger and older people, we have magazine ads and TV ads and an online blog,” he says. Specifically, Eggland’s Best places its ads in epicurean, general women’s interest and health-oriented magazines.

New Developments
The company isn’t putting all of its eggs in one basket, but is instead advancing the brand through product innovation. In May, the company launched its line of hard-cooked, peeled eggs.

Tapping into consumers looking for convenience and ease of use, the eggs come packaged in a resealable pouch. The product follows on the heels of the introduction of Eggland’s brand liquid eggs, the other innovative product the company added in the last year, and is targeted specifically for foodservice operators. Both products will provide the same nutritional attributes as the core shell-egg product.

“We have an ongoing research program where we’re continually looking at products that can impact the quality and nutrition and we’re building a base of knowledge,” Slaugh says.

As for the future of the company, Lanktree says the company will continue doing much of the same, given its already stellar track record.

“It might sound a bit boring, but when you have over 10 years of double-digit sales increases, we’re going to do more of the same,” he notes. “We’ll continue to watch ourselves so that we don’t lose focus on the customers.”