Egg Prices Soar, Retailers Absorb Costs to Avoid Consumer Backlash

Wholesale Egg Prices Shatter Records

Egg prices have skyrocketed to unprecedented levels, with wholesale prices reaching $8.15 per dozen, marking the highest level since 1985. This price increase is primarily attributed to an outbreak of avian flu that has decimated laying hen flocks across the country.

Grocers Hesitant to Pass on Full Costs

Despite the surge in wholesale prices, grocery stores are reluctant to pass on their entire costs to consumers. They are seeking to maintain egg affordability to avoid alienating shoppers and losing market share.

Loss Leaders and Promotions

Grocers are employing various strategies to absorb the increased costs without driving away customers. They are using loss leaders such as eggs and milk to attract shoppers into stores and limit discounting and promotions.

Stockpiling and Loyalty Rewards

Egg shortages are a concern for retailers as empty shelves can lead to shopper frustration and lost credibility. To mitigate this, some chains have implemented limits on egg purchases and offered loyalty programs that reward customers with discounted eggs in exchange for patronage.

Continued Price Increases Forecast

Avian flu infections continue to spread, resulting in the loss of over 20.5 million laying hens. This supply gap is expected to drive egg prices even higher in the coming months, particularly during the peak Easter season.

Consumer Resistance

Despite the price increases, consumers remain hesitant to pay exorbitant prices for eggs. A recent survey found that two-thirds of shoppers are unwilling to pay more than $5 per dozen. This consumer resistance may eventually temper demand.

Industry Outlook

Rebuilding laying hen flocks takes several months, and the ongoing avian flu outbreak continues to pose a challenge to the industry. While egg demand remains strong in the United States, it remains to be seen how long retailers can sustain their price-absorbing strategies and whether consumer resistance will ultimately impact demand.