A Marketing Cry: Don't Fence Them In
By ALEX MARKELS
DENVER -- WHEN it comes to the family business, Jack Osborne and his daughter, Cyd Szymanski, are putting the chicken before the egg.
Deploring what Ms. Szymanski calls concentration camp growing conditions on factory egg farms, she, her father and her brother are marketing eggs gathered from uncaged hens. As it happens, that has plunged her into a rivalry with her uncle, Hollis Osborne; he heads Moark L.L.C., one of the nation's largest egg producers, now owned in part by Land O'Lakes.
With the rest of the industry hurt by overproduction, the family's egg distributor, Colorado Natural Eggs, is profiting by focusing less on economies of scale and by giving chickens room to roam.
Outside Longmont, 35 miles north of here, Jack Osborne, 69, stood in his kitchen - lined with wallpaper and knickknacks depicting his favorite fowl - raised his hands and cut a 6-by-8-inch cube into the air. It's inhumane to put a chicken in a cage this small, he said with a grimace. You can't even lift your wings.
Raised on a Missouri chicken farm, Mr. Osborne said he became frustrated as the business that he and his brother, Hollis, started in the 1950's grew into a huge operation that stuffed more and more chickens into cramped cages. He said he was convinced that a more humane approach could still make a profit, and in the late 1970's was among the first to advocate larger cages. Then he came up with a different idea: cage-free hens.
Hollis thought I was plumb nuts, Mr. Osborne recalled. He said, `Aw, there's no market for that.'
So he quit and headed for Colorado, where he founded his cage-free operation in 1991, recruiting his daughter to sell the eggs to natural-food stores.
The business, based here, was slow to take off. But he and Ms. Szymanski, 45, an animal-welfare advocate with a knack for marketing, soon made inroads with supermarket chains like Albertsons and Kroger, which placed their Nest Fresh brand next to eggs supplied by Moark, which says it has $400 million in annual revenue.
Until recently, though, the two businesses were not really rivals. Cage free eggs, at around $2.79 a dozen, typically cost more than twice as much as other eggs; in the past, they were bought mostly by dedicated natural-foods shoppers. But after a potent media campaign by animal-rights groups about the growing conditions of farm animals, some buying habits started to change.
Americans are becoming more focused on issues that affect food quality, and the treatment of farm animals is a big part of that, said John Zogby, president of Zogby International, a pollster in Utica, N.Y. In a May survey, it found that nearly 65 percent of Americans support federal laws to protect farm animals from inhumane procedures.
Since People for the Ethical Treatment of Animals raised consumer consciousness in the late 90's with its campaigns to push McDonald's, Safeway and other chains to buy products according to its animal-welfare guidelines, Colorado Natural said its sales have grown more than 20 percent annually, to about $4 million last year.
DRIVING door to door in an Audi station wagon with a license plate reading EGGLADY, Ms. Szymanski now markets eggs to a half-dozen supermarket chains in the Rocky Mountain states. Although phobic about the birds after a childhood surrounded by their incessant pecking (now, she likes to be around the eggs, but not the chickens), she champions their welfare. They're intelligent, sentient, social animals, she said, standing in front of her company's processing factory here, under a sign reading Eggs With a Conscience.
Part of my mission is to publicize the industry's track record of cruelty and the pain caged operations inflict on these animals.
For some time, traditional producers have been beset by health concerns over cholesterol in eggs and forsaken by busy consumers who have turned to quicker breakfast foods. The industry has not had a cohesive marketing effort since the incredible edible egg campaign began more than two decades ago.
Hard times have forced thousands of small farmers out of the business, pushing the remainder to build ever-bigger farms, sometimes housing millions of chickens each.
Yet the specialty category - including cage-free and organic eggs, as well as eggs fortified with supplements like omega-3 fatty acids, which have various health benefits - has grown fivefold since 1997. While that is still only about 5 percent of the market, cage-free is the fastest-growing segment, and it's got the highest margins, said Donald D. Bell, an industry economist at the University of California at Riverside.
That is mostly because of a three-year glut of caged hens, pushing farm prices below producers' break-even point. Although cage-free eggs are more expensive to hatch, their high profit margins - from 15 to 25 cents a dozen - more than make up the difference. If there's any money to be made in the egg business these days, it's in these specialty eggs, Mr. Bell said.
That fact has not been lost on big producers like Moark, which has responded by introducing cage-free and other specialty varieties. Since teaming up with Land O'Lakes, the giant dairy co-op, in 1999, it has introduced All Natural Farm Fresh eggs under the Land O'Lakes label. The eggs are from caged hens fed with what the company calls a whole-grain diet free of antibiotics. It's becoming a big seller, especially in the Northeast, said Paul Osborne, Hollis's son, who is Moark's vice president for marketing and a spokesman for the company.
The All Natural brand has also made inroads in Colorado, where Ms. Szymanski said some grocers pulled her most profitable eggs, the extra-large and jumbo cage-free varieties, off of shelves last year to make room for it. My cousin promised me he wouldn't compete with us because we're family, Ms. Szymanski said recently. But he knocked out my two highest-margin items.
Even worse, Ms. Szymanski contends that Land O'Lakes priced its eggs just below her Nest Fresh brand and used similar wording on the packaging.
Land O'Lakes has got this great name and reputation, but that egg isn't any more `natural' than a regular egg, she said.
Industry experts say Land O'Lakes All Natural eggs are little different from standard eggs. They use the same corn, soybeans and vitamin feed mix, said Dean Hughson, an egg industry consultant. They're basically selling a regular egg with a fancy carton.
Paul Osborne disputes that. We feed the hens a different way and put only younger hens on the feed, he said. So the best-quality egg goes into that carton.
He says the eggs, as he promised, do not compete directly with Colorado Natural's. Yet he said the growing popularity of cage-free eggs was making it increasingly difficult to maintain that promise. I don't sell cage-free eggs in Denver, but I am selling them in other areas, he said. As demand grows, we'll produce more, although I personally think it will remain a niche market.
Jack Osborne says that is just the sort of talk he used to hear from Paul's father, Hollis. Jack points to Europe, where animal-rights groups have persuaded legislators to pass some laws banning caged chickens. The same thing will happen here, he said. It may take a little longer. But American consumers aren't so different from the folks over in Europe. They prefer to buy farm eggs, not `harm' eggs.
OPENING the door to the chicken house at his ranch near Longmont, he proudly points to a flock of 14,000 egg-layers milling about the barn. See? They got sunlight and natural air, and they've still got their beaks, he said, adding that many farmers cut off the beaks to keep chickens from pecking one another. Have you ever seen a chicken with its beak cut off? It's a darn awful sight.
Worried that consumer sentiment could force mandatory changes in the United States, the United Egg Producers, a trade group, is promoting adherence to new voluntary standards that, among other things, would increase cage space.
We're committed to giving our hens more space, Paul Osborne said. He added that all of Moark's 14 million hens would be covered under the guidelines.
Jack Osborne recalls similar promises producers made to the Humane Society of the United States in the early 1980's. Then egg prices went back up and everyone forgot about it, he said. Hopefully, this time, consumers will know a fox when they see one.
For Colorado Natural, there is reason for optimism. Last month, King Soopers supermarkets replaced Land O'Lakes All Natural eggs with Colorado Natural's newest cage-free variety, featuring an omega-3 supplement. Asked the reason for the change, a grocery clerk said demand for the Land O'Lakes eggs wasn't so hot.
Copyright 2002 The New York Times Company