Since Happy Egg Co.'s launch in October 2012, the company has scaled from 500 stores to 6,500, including Walmarts in the U.S. The brand, under parent company Noble Foods, produces eggs from humanely raised hens and uses completely recyclable packaging. This fall, it will launch a new product—organic, humanely raised eggs—at Costco stores in the Bay Area.
Chief Operating Officer David Wagstaff spoke with New Hope to discuss what attracts major retailers to the brand and the logistics of rapid upscaling.
How did you attract such a large retailer as Walmart, and what do you think made you attractive to them?
David Wagstaff: We felt the egg category was lacking innovation—dull packaging, poor quality packaging, signage, weak category management. We felt that by being innovative and bringing a different brand—a real brand—to the market, we could not only engage with shoppers but also help retailers grow category egg sales and encourage shoppers to trade up from basic commodity into specialty egg.
With Walmart specifically, we've found they actually do like to try to work with their shopper base to get people to buy good-quality products. Walmart was set up—and is still set up to a degree—to train shoppers into commodity, and only to buy the lowest-priced products. We actually have an opportunity to educate consumers, because their shopper base is changing in the United States, and to offer their shopper base a wider range of products. Happy Egg filled that gap immediately—so much so that Walmart does see us now as more of a [consumer packaged goods] company than an egg company, because we're offering category advice, we're bringing innovation, we're looking at supply chain and we're doing many different things associated with selling high-quality products.
You moved from 500 stores to more than 6,000 in the U.S. Can you walk me through how you scaled logistically to meet such a large demand so quickly?
DW: Our parent company in the UK has been in business since [the 1920s], so they have a lot of experience working with egg planning and production planning. The two owners that I report to at Noble Foods gave me the opportunity to invest ahead in production to make sure that we had supply ready for what we thought was a surge in demand.
We're working about a year out all the time, so it's 12 months out in terms of planning. We're looking to now double production from where we are today. We have that plan in place right through to November 2016 to double our production. We have farms lined up, the chicks are all booked in, etc.
It requires confidence, not only in how shoppers are behaving, but also in your retailer customer base and in your ability to market a brand of a high quality product.
What have been the biggest logistical obstacles in moving with confidence?
DW: We're now the only national free-range egg brand, and the United States is a big country. We have to actually open up additional processing plants in order to reach our customers, and that's quite a big step for a business that's starting up. How do you make sure you get the right quality of products to your customer in good shape and at a reasonable cost?
You've talked about specifically scaling up the product and farms, but has the packaging posed any problems?
DW: Packaging has posed problems. We have to import our packaging from Denmark. We can't buy the quality of the colored carton we have now in the United States, because none of the packaging manufacturers can or will make it for us because they deem it too complex and too difficult. Working out the flow of packaging with our growth track has been initially quite challenging. We've now got it pretty much nailed, but in the first 18 months when we were growing so quickly, having containers on the water all the time—packaging was an initial challenge.
For our readers that may also be looking to scale up, what would your advice be?
DW: The challenge in the egg industry around the world is always about supply and demand, and I guess it's having the confidence to look at forward trends. We believe that the United States' egg category is going to change the same way that European egg categories changed over the last 15 to 20 years, and that's a shift away from commodity to more specialty items. Shoppers demand to know more about where their product comes from. I think many of our competitors—which is good for us by the way—don't have the confidence or the belief that people will pay more for their eggs, and I can see the market becoming more branded. Again through experience, because we've seen it in many other markets and many other categories—a more branded, creating more value, becoming more involved in terms of the mix in-store. Because eggs do have a massive importance in terms of shopper footfall, in terms of how many people come and shop in your store.
Editor's note: This interview has been condensed and edited.