Consumer demand for free-range eggs edges out cage eggs

Consumers are shelling out more for free-range, barn-laid and organic eggs, as cage eggs are being edged out of cafes and supermarkets, new analysis of Australia's egg industry shows.

Free-range eggs now make up nearly a quarter of the $660 million egg industry, which produces 4 billion eggs in Australia each year, analysis from business firm IBISWorld found.

Over the five years to June, analysts expect the annual rate of production of free-range eggs to outpace the growth for cage eggs, at 15 per cent for free-range compared with only 2 per cent for cage eggs.

Production for barn-laid eggs has also grown at 35 per cent a year to 312 million eggs, and organic eggs at 50 per cent to 78 million eggs over the same period.

Shoppers motivated by ethical concerns are prepared to pay more for the extra costs of producing free-range eggs, an analyst from IBISWorld, Brooke Tonkin, says.

"Consumers are becoming more aware and concerned about origins of food ... and that has helped drive the shift towards free-range eggs as consumers have positive associations of free-range eggs," Tonkin says.

"[They also] accept that free-range eggs and other products focused on ethical production carry a price premium and consumers tend to be happy to pay that because they know they're getting a good high-quality product."

Industry and government are moving towards setting formal classifications for free-range eggs, while the Australian Competition and Consumer Commission measures if eggs are free-range using several criteria, such as how frequently chickens are able to roam outdoors.

Some parts of the supermarket industry, which is expected to sell 1.5 billion eggs this financial year, are also moving towards free-range eggs, with all Coles brand eggs now cage-free and Woolworths phasing out caged eggs by 2018.

Cafes, restaurants and fast-food outlets are also taking up the trend, with McDonald's vowing to take caged eggs off the menu, though the pace of change with food manufacturers is expected to be slower, analysts predict.