Lewis Bollard

When you look at the underlying production costs, it's only 19 cents difference.

And so what we see is these retailers are using this as an opportunity to get a big markup with less price-sensitive consumers and are in the process massively hampering their ability to fulfill their commitments.

By contrast, Costco went 100% cage-free.

They followed through on their promise.

And what we see is they are now selling cage-free eggs for the same price as Walmart sells its caged eggs.

So there is that competitive pressure.

Once cage-free becomes the new baseline, it does become the commodity market.

And you do see those margins competed away.

Same thing in states where they've banned the sale of caged eggs.

Cage-free eggs now cost the same thing as the caged eggs cost next door.

So you do see that competed away.

Once it becomes the commodity, it's until it reaches that point that you're seeing these crazy margins.

Like Vital Farms or Nest Fresh Eggs, like they are out front focusing on the animal welfare benefits because they're pasture raised and it looks amazing.

The fundamental problem for the large-scale companies is they have just made things less bad.

And it's still really good what they're doing.

Moving from caged to cage-free is incredible.

But I think there are two problems.

So one is their consumers already thought they weren't using caged eggs.

So if they advertise like, hey, we're cage-free now, everyone's like, what?

What were you doing all this time?