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The price of eggs has surged recently, creating a significant challenge for consumers and businesses alike, particularly as the Easter holiday approaches.
Companies that produce Easter egg dye kits are preparing for potential challenges if the current egg shortage isn’t resolved before the holiday on April 20. For many of these businesses, sales of egg dye kits represent a large portion of their yearly income, and a drop in sales could severely affect their financial health.
“I anticipate a decrease in sales,” stated Ashley Phelps, the founder and CEO of Color Kitchen, a company known for its plant-based baking decorations. “It remains uncertain, but the outlook isn’t promising.”
According to global commodity data firm Expana, wholesale egg prices have reached unprecedented levels, hitting $8.58 per dozen due to an outbreak of avian influenza affecting bird populations. Over 52 million egg-laying hens have perished, resulting in a national flock level that is alarmingly low at just 280 million, remarked Ryan Hojnowski, a market analyst at Expana.
As a consequence of these rising prices, consumer demand has softened, with retail egg prices averaging around $6 per dozen or more. Many retailers are also enforcing purchase limits, which restricts the number of egg cartons customers can buy, further complicating the situation.
The combination of high prices and limited availability may significantly impact egg sales for Easter, which in turn could lead to reduced demand for dye kits.
Natural Earth Paint, known for their natural art supplies, usually sells between 40,000 and 50,000 egg dye kits during the Easter season. However, Leah Fanning, the company’s founder, revealed that they have only received orders for about 7,000 kits this year.
“This represents a substantial decrease,” Fanning noted, with many retailers blaming the egg shortage for reduced orders.
She added that egg dye kits have been Natural Earth Paint’s top-selling product for over a decade, crucial to their operations in its formative years. Although most sales are typically made through retail locations, Fanning expressed hope that online sales might surge in the weeks leading up to Easter.
A supermarket in New York City displayed signs limiting egg purchases to one carton per customer in response to the supply crisis.
Occasionally, businesses like Color Kitchen find themselves in a precarious situation. Their Easter-themed products represent 20% of total sales and outperform their Christmas offerings. Phelps mentioned that retailers generally place orders months in advance of Easter; however, caution surrounding inflation has led to fewer products being ordered this year.
“Another concern is if grocery stores cannot sell their inventory, we could incur chargebacks for products sold at discounted prices to facilitate clearance,” Phelps explained. “The consequences could be damaging if products already distributed do not sell.” She noted that approximately 75% of Color Kitchen’s sales arise from shelf sales, with the remaining 25% coming from direct consumer purchases.
Navigating the Market
Despite the challenges, some companies project positive business this Easter, given the additional three weeks of sales compared to previous years.
Hey Buddy Hey Pal, known for the Eggmazing Egg Decorator that allows children to color eggs, derives 85% to 90% of its annual revenue from Easter sales. Co-founder Curtis McGill reported that last year the company achieved $14 million in sales, a 22% increase over the previous year. Although orders have declined this year, the business still anticipates an 18% increase in revenue, aiming to sell between 600,000 and 700,000 egg decorators.
Even with soaring egg prices, some manufacturers remain confident that egg decorating will not be overlooked by families, even if they choose to use fewer eggs.
Paas, a leader in the dye kit market, foresees a reduction in the number of eggs decorated, but consumers will still engage in the tradition. “It’s such a cherished tradition,” remarked Joe Ens, CEO of Signature Brands, which owns the esteemed Paas brand.
A recent survey of 120 consumers conducted by the company found that a remarkable 94% intend to decorate eggs this Easter. “This tradition is remarkably economical, making it one of the most affordable family activities during the holidays,” Ens added.
Paas expects to sell over 10 million kits this year, marking one of their strongest sales performances to date.
Arts and crafts retailer Michaels is noticing a trend, with consumers opting for egg-themed products. The company reported that 43% of its Easter sales this year have been for craft eggs and related items, with one particular kit designed to replicate traditional egg-decorating selling nearly three times faster than expected.
Additionally, Hey Buddy Hey Pal is observing a shift as some families may choose wooden eggs over real ones. While typically more expensive, these alternatives offer longevity, allowing families to enjoy their creations well beyond the holiday.
McGill cautioned, “A lot could change as we approach the holiday. There remains the possibility of continued avian flu outbreaks affecting egg farms.” He noted, “The situation could deteriorate before it improves, but for now, we can only wait and see until April 20 arrives.”
Source
www.cnbc.com