Scottish egg producer attacks happy egg discounting

Scottish egg producer John Campbell has launched an attack on Noble Foods for heavily discounting its new happy egg co brand.

But Noble says its marketing strategy is designed to encourage more consumers to switch to free range.

Noble launched the brand this year with the support of a big PR campaign. Press and television advertising is being used to promote the happy egg co as a brand with higher than normal standards of animal welfare. The company budgeted to spend up to £2 million on television advertising.

The eggs went on sale in supermarkets priced at £1.78 for six large eggs and £1.58 for six medium eggs, but have been heavily discounted in both Tesco and Asda stores. Both large and medium eggs can be bought for one pound for half a dozen, and John Campbell says the discounting can only have an adverse effect on the free range egg market as a whole.

"In my opinion it turns the market upside down," he said. "How can anyone continue to discount at that sort of level. It must affect other sales," said John, whose Peebles-based Glenrath Eggs is Scotland’s biggest egg producer. Glenrath Eggs made pre-tax profit of £7.3 million in the year to May 31 2008 – an increase on the previous year’s £3.9 million profit. However, John Campbell fears that heavy discounting by Noble could hit the free range market for producers.

He pointed out that whilst large happy egg co eggs were being sold at £1.00 for half a dozen in Tesco and Asda, other large free range eggs were on sale at £1.58 for six. Cage eggs were on sale at 88p for six. He said that because the cage eggs were sold as mixed sizes, the happy egg co eggs were effectively cheaper. Consumers were paying just 12p more for six large free range eggs. "I don’t see how the industry can carry on doing that," he said.

He said the discounting on the happy egg co brand was ruining the whole market. "The discounting started just before Easter and it is still running. It is causing huge problems. It is absolute madness."

John said Noble was trying to use its size to dominate the market. "It is quite clear in my opinion that they want the whole of the high street taken by this brand, but I don’t see how anyone can continue discounting like this."

However, Noble’s head of brand marketing, Rob Newell, believes the strategy will bring long term benefits for the free range sector. "The happy egg co brand aims to further encourage consumers to ’make the switch’ to free range eggs," he said.

"One of the key challenges with any new brand is to encourage consumers to try the product and become loyal to it. The recent TV campaign and retailer promotional activity are intended to grow sales over the long term at the full recommended retail selling price.

"Our company believes passionately that the free range egg category has significant long term growth potential. The launch and substantial support package for the happy egg co brand demonstrates our long term commitment and represents a significant financial investment on our part."

Noble chief executive Peter Thornton has previously told producers that developing the new brand could take three years.

At last year’s BFREPA conference, he said, "In the next two to three years I hope we can cement a premium in the category and start to distribute value better around the supply chain." He said free range eggs were in danger of becoming a commodity like cage eggs. There was a danger that they could lose their value-added position and the industry needed to find ways of retaining and building value.

John Campbell says that Noble’s current strategy has happy egg co eggs competing on price with value eggs rather than selling at the value-added end of the market.