Egg Prices Soar, but Grocers Absorb the Pain
Wholesale Egg Prices Hit Record High
Egg prices continue to rise, with wholesale prices reaching $8.15 per dozen, a level not seen since 1985. This surge is primarily due to an avian flu outbreak that has decimated laying hen populations across the country.
Grocers Subside Egg Costs to Maintain Shopper Loyalty
Despite the rising wholesale prices, supermarkets are absorbing the increased costs to keep eggs an affordable staple. Retail prices for a dozen large Grade A eggs are averaging $4.95, significantly lower than the wholesale cost.
Loss Leader Strategy Maintained
Eggs and milk remain "loss leaders," products priced below wholesale to attract customers into stores. They are often stocked at the back of stores, forcing shoppers to navigate through aisles filled with other potential purchases.
Promotions, Loyalty Programs, and Stockpiling
To counter the rising egg prices, retailers are employing various strategies. Promotions and discounts on eggs are being reduced or eliminated. Loyalty programs offer discounts and incentives to encourage customers to spend more and maintain loyalty. Some stores are limiting egg purchases to prevent stockpiling and keep shelves stocked.
Easter Demand Concerns
Egg demand typically spikes during the Easter season. With prices already at record highs, there are concerns that further increases may dampen demand. However, consumers' willingness to pay for eggs remains at $3-$5 per dozen, which may mitigate the impact on consumption.
Long-Term Supply Challenges
Rebuilding laying hen flocks takes months, even if the avian flu outbreak subsides. With current supply levels well below demand, prices are likely to remain elevated. Egg analysts warn that the supply gap is becoming increasingly apparent and may pose challenges in meeting future demand.