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The average American eats almost 300 eggs per year. But how much do you know about where they come from? What actually makes an egg organic? And could better eggs be better for you?
Host Greg Schonefeld is your resident Egghead and digs into topics like egg nutrition, cage-free farming and what it takes to build an egg empire. From egg-onomics to chicken genetics, Eggheads crack open the unexpectedly fascinating world of eggs.
Greg Schonefeld:
Hey there, it's Greg Schonefeld, and welcome back to another episode of Eggheads. A real quick thank you to all who have listened along so far. For those who have subscribed, there's a lot more to come. And hey, we're always looking for new guests to invite on the show, so if you're a certified egghead, please get in touch. We'd love to connect with you and hear your story. Okay, now onto the show.
Jason Jones:
Pasture-raised was something that was more common to hear at that farmer's market, and it may have applied to anything where it was just an outdoor-centric kind of grazing lifestyle. I remember we were asking ourselves like, "Hey, what do we want to try to grab hold of and define and pioneer and be known for?" Free-range we felt already had a definition around it that we wanted to go farther than that, and so we took the term pasture-raised and because we felt it was open for definition, we tried to start defining that.
Greg Schonefeld:
Vital Farms launched in 2007 just outside of Austin, Texas on a 27 acre farm with only a few thousand birds. Today, they're one of the most recognizable egg brands in grocery stores. Not to mention they're valued at 1.9 billion. Why? You may ask. How did they get so big in such a short period of time? Well, Vital Farms entirely revolutionized what an egg can mean, and in this episode, I sit down with one of the key figures behind their success.
Our next guest is a passionate entrepreneur dedicated to the innovation side of our food industry. His strengths lie in conceptualizing disruptive brands and products. That, and driving really, really impressive growth. As the founding president of Vital Farms, he helped the company rocket to over 24,000 stores nationwide. That's why when I say Vital Farms, you're probably already picturing the carton on the shelf.
Jason Jones:
I'm Jason Jones, based in Austin, Texas, former founding president of Vital Farms Inc.
Greg Schonefeld:
What makes Vital Farms unique is their pioneering approach to pasture-raised eggs. And don't worry, we're going to talk about what pasture-raised eggs means. Starting from humble beginnings at local farmer's markets, Vital Farms challenged the norms of commercial farming and redefined what customers expect from an egg, all the way down to the color of its yolk. Their innovative marketing strategies focus on the humane treatment of farm animals and sustainable farming practices, which has built a deep trust with their consumers and for over 15 years, Vital Farms has shown nothing but consistency.
So how? How did Vital Farms define a new standard for an egg? As we've discussed in previous episodes, there dare many ways to produce an egg. What makes their eggs premium and able to be sold at a higher price point, something which had not been done to their scale of success in the egg world? Let's jump in and find out.
Jason Jones:
I was a relatively newly minted MBA and so that was not the obvious choice for a career move. I left a stable Fortune 50 job to do this, but I was really excited to do it. So we ended up forming an S Corp in July of 2009 and that became Vital Farms Inc. My wife and I, we cashed out our retirement pension programs, 401(k)s at penalty to form the working capital for the company and we joined forces with Matt and Catherine and it was off to the races.
Greg Schonefeld:
So you weren't a chicken guy at this time, you weren't an egg guy and this was your first entrepreneurial leap as well?
Jason Jones:
Not really. It was probably the most all in moment though for sure, and I approach I suppose my career and business interests really from the consumer side. I try to view things from that lens, consider myself a marketer, so I was able to really visualize the narrative for the brand and that's where a lot of my focus went. While we were learning about what it meant to raise chickens, what it meant to do it in a really novel way that honestly it turns the industrial style production on its head in many regards, and probably for those reasons it was good that we weren't seasoned egg people or farmers in that regard. We couldn't have imagined how hard it would be and what we set out to do first as we would try to scale and meet customer demand because what we learned very early is that people would pay a premium for an egg that they perceived in the way we were describing. So we had to scale it, but also we needed to define what it meant to pasture raise an egg.
Greg Schonefeld:
For me, especially at that time, it seems like such a bold move. I mean this is before the cage-free wave, you're talking, you said 2008, 2009, so now cage-free is taking off, and I realize Vital is something different, it's pasture-raised. But very ahead of the curve there and like you said, needed that premium price. How did you know you could get that or how did you know you could make it all work?
Jason Jones:
Early sales efforts proved that our initial customer base was kind of the farmer's market crowd, Whole Foods shopper. They were okay paying more for something they perceived as better in some ways, and so that was really what gave us permission to go expand the business and we started with at the very early stages, probably a few dozen chickens, but on our farm and we were our own production base for a little while. We would max out at two or 3000 chickens given our space constraints.
And so that's not a ton of dozens, but we could always sell them and initial attempts to scale, we did that in central Texas, which we pivoted not too far into the journey because when your birds are outside a lot, more exposed to the natural environment, climatic conditions, it turns out central Texas can be really hot and really dry. It turns out the birds can be finicky and we needed green stuff out in the fields for them to eat and there were a couple of drought years back in that era that were really not kind to us, so we shifted our production base over time to more kind of poultry centric parts of the country and for us initially that was Northwest Arkansas, but what we were able to do was take a risk in putting down more production because we were confident we could sell those eggs once they showed up.
Greg Schonefeld:
Maybe it'd be useful for some of our listeners just to define pasture-raised and what that means.
Jason Jones:
I'm not sure if people were talking much about cage-free. To your point, at that time there were conventional eggs, there were organic eggs, and that's more a function of the feed input. There are some aspects of lifestyle the organic standard deals with, but it was a free-range claim. It wasn't anything you really saw when grocery stores, to my recollection, maybe sparsely more of a kind of local play.
But pasture-raised was something that was more common to hear at that farmer's market and it may have applied to broiler chickens or sheep or anything where it was just an outdoor centric kind of grazing lifestyle. We were asking ourselves like, "Hey, what do we want to try to grab hold of and define and pioneer and be known for?" Free-range, we felt already had a definition around it that we wanted to go farther than that, and so we took the term pasture-raised and set about because we felt it was open for definition, we tried to start defining that.
And not in an overly heady way, but describing what we meant by it to our consumers and really for us that was we had a variety of different housing situations in the early days. Mobile chicken units, MCUs, which was a cotton trailer with a roof and nesting boxes on the inside that we could drag around. We figured out a way to use fixed housing with pastures defined around the periphery of that, but during the daylight hours the animal was primarily outside and this was year round in our view. For us, we never thought we would be able to make this claim if we were based in Minnesota, because February is not a good time to be on a pasture if you're a four pound laying hen.
Greg Schonefeld:
Yeah, maybe doesn't fit the animal welfare thing right? Outside in the snow.
Jason Jones:
It is interesting. They can handle cold better than people would think it. It's probably more the heat that can be a problem when you're talking central Texas in July. But no, certainly the reason to be outside is to forage as well as vitamin D and exercise, you could say that, but it was to obtain a varied diet. We always provided an industry-standard grain-based ration, so we're not replacing that, but we are providing basically supplemental nutrition in a varied format because what's growing depends on the time of year, it depends on your microclimate and the part of the country and other efforts that you're putting out in order to potentially grow foliage for them to forage and they will eat. I mean some people didn't think they eat grass, but they absolutely do.
Greg Schonefeld:
I didn't know that.
Jason Jones:
Along with whatever else is growing. I mean on our initial farm during a certain time of year we would have mustard greens growing and that actually impacted the egg taste interestingly, but wildflowers, whatever critters they find, you don't want to be a grasshopper or a worm or anything in a pasture with several hundred chickens, I can tell you, but they are omnivores.
But those were the things that our pasture-raised standard centered around and we came to put definition around the space requirement. In our case, we actually leveraged an existing European standard, if I'm not mistaken, and that spoke to... It was working backward from hectares I believe, but it amounted to 108 square feet per bird and that was in total, they weren't on that at any given time. That was the total allotment of outdoor space per bird and we would deploy rotational grazing throughout a number of weeks or months because they will eat that green stuff down and it needs time to recover.
Greg Schonefeld:
I didn't know if it was a funny question, but are predators something to consider? I mean, I don't know. Aren't there even birds that fly overhead that are potential predators or out in the fields? Is that a real threat to this or not?
Jason Jones:
It's just part of nature and when you're leaning into that, you're definitely bringing those elements into the equation. I'm speaking more to the early days where the local red tail hawk was not our friend, nor were the owls at night, particularly crafty those owls. But anything from ground-based bobcat, possum, raccoon, everything likes chicken all the way up to humans. We had issues with human predators at one time.
Greg Schonefeld:
Wow.
Jason Jones:
Yeah, we were basically an urban farm where we initially started and so people could come through. And anyhow, the company is well beyond that at this point. Very sophisticated and controls for all of those things. It's kind of state-of-the-art. My approach to the industry and largely the world is one of consumer perception and I will say we always went to great lengths to actually be doing what we would put on a carton or something we would claim to a customer, either on a website or in an email if they had questions for us, whether it was an 877 number we had and we would get all manner of questions and we would answer every single one of them with the truth. And I think that's a big part of why Vital is a really trusted food brand today.
Greg Schonefeld:
That's an important point, especially in the food industry. When buying eggs, most consumers just see white or brown shells and rely on the promises scribbled all over the cartons. Grade-A, organic, cage-free, certified humane raised and handled, USDA organic. So beyond the label claims, establishing trust is key and as Jason explains, being transparent with customers builds that loyalty over time if executed consistently.
I'm really curious about the farmer's market you mentioned in the early days. And that's probably something, I mean it was probably to Vital Farms' advantage to be small at that time because otherwise a big egg company's probably not selling much to the farmer's markets, but did you get feedback from people that way that was helpful to building your operations?
Jason Jones:
There is no substitute for interacting directly with your customers. It's also a sign of that's absolutely how small we were. We would produce a handful of cases and I mean single cases a week in the early days, and so we had some local customers, a coffee shop or a high-end restaurant with someone who really cared about sourcing locally and at the highest quality level they could. So we would deliver a case at a time to restaurants in town and we would sell at a farmer's market or two.
Matter of fact, I did that myself. I would work however many hours, 60, 70 hours a week on the business and then get up on Saturday morning and go grab some eggs from the farmer or our little distribution center we had and go sell at the market in order to pay the mortgage. I looked at that as some cash every Saturday that I really needed. We were, again, quite humble. We weren't VC backed or anything like that for many years.
But no, that farmer's market experience, it was a 10 by 10 tent and standing on pavement in a mall or wherever the thing was set up and let's see, I probably could sell in a four-hour farmer's market nine to one. I could sell on a really good one, probably over 15, maybe approaching 20 single cases. So I figure a couple of hundred dozen, I mean that's a lot of interactions and sometimes that was a line and you were just doing business, but a lot of times you would have conversations and that would inform me what was on people's minds, what we needed to communicate, what skepticism was out there. And rightly so. Just walk through the grocery store and there's a lot competing for your attention and there's a lot of claims that's translated these days to a lot of claims about what's not in there.
Some products are just merit badges of everything they don't have and leaves you wondering what the hell is in this thing.
Greg Schonefeld:
Yeah, like gluten-free eggs.
Jason Jones:
Yeah, exactly. Veg fed. We are not feeding our chickens ground beef, newsflash, in case you're wondering, although again, they are omnivores. But that was super informative and I tried to translate that experience and transparency to the grocery experience. You can look at our egg cartons even to this day, 15 years down the road and they try to use that touch point very effectively to educate and to build trust.
And another way we tried to tackle that because we wanted people to be able to trust we were doing what we say we were doing and the first way that shows up is in the experience they have. Cracking the egg into the pan, looking at the texture of it, the color of the yolk is a signature calling card for us and we're going for a very certain experience.
It's almost like handing your customer a rubric, a grading sheet by which to grade you. We would come out and say, "Our yolks should not be pale and yellow. They should be rich, dark and orange." And that is a sign that we're doing what we say we do on the farms with these animals every day, not just keeping them outside but having meaningful green stuff with carotenoids in it that give you that color. And we were worse at being consistent with that deliverable in the early days when we were in a drought and there just wasn't as much grass out there or whatever else could be growing. And we've solved for all of those things by experience and scale.
Greg Schonefeld:
In fact, Vital Farms invited third-party programs like Humane Farm Animal Care to develop their own standards and judge them by it. Independent verification from food safety audits to biosecurity measures ensures that they met the high standards they promised.
So you talked a little bit about the aesthetics just now, the yolk color, those kinds of things. Was that some of the early feedback you received at the farmer's markets? That that was something important?
Jason Jones:
A hundred percent. From the early days when we would get comments like, "Hey, this is like an egg that I remember from my grandma's backyard when she had chickens and would feed them table scraps or whatever." That was very high praise for us, and it's what we were always going for. Again, it was harder for us to achieve in the early days when we were more scrappy, but there's literally an egg yolk color fan. We didn't develop it. It's pretty obscure, but it's a thing that exists. It's like a color wheel from yellow up to deep orange and we were always going for an A on that. You're asking somebody to pay two or three X what they're used to. You better follow it up, people will try it. And we made the, I think product stand out through let's say crafty labeling and design and brand identity stuff as well as the claims.
To be fair, it was a somewhat stagnant part of the store. There hadn't been a ton of innovation there and this is one of the things that got me excited and our whole team excited that we could attack the space and carve out a place for ourselves, but people will try it once. If you don't follow through with the experience they're after or you're telling them they should get when they've made that kind of investment, they'll come after you. And so the consumer has a pretty high bar and I think it's a testament to how hard everyone, all of the internal stakeholders, of course the team, but it's really all about the farmers and the support staff on the employee side too who make sure that happens because it's not an accident.
Greg Schonefeld:
Well, that's a really great point and probably something I took a little bit for granted there. I can speak to my own experience buying Vital Farms eggs that the consistency of the color of the egg and it's a really beautiful color and then the consistency of say the shell as well. That has been my experience, and like you said, when you're selling at a premium price, get it right. If you give one experience where it doesn't feel premium, people might be looking to the next price point on the shelf.
Jason Jones:
A hundred percent. There's certainly options for them and it's an increasingly competitive set with a lot of claims going on. It can be confusing and so yeah, you might get one shot, you probably won't get two. We have tightened up the variability. I tell you, we were all over the place in the early years, but really proud of the product and experience that hopefully people are getting.
Greg Schonefeld:
Vital Farms eggs can cost anywhere from $6 to $10 a dozen, which is multiple times the national average. A quick search on Reddit reveals a host of consumers who are avid non-believers and are quite vocal about their stance. To be fair, when it comes to products, any products, there's always two sides of the coin. For those opposed to paying up to $10 for a dozen eggs, the claims of superior health benefits and ethical production methods aren't enough to sway their purchasing decisions. However, this price point reflects the cost associated with maintaining high standards of animal welfare, sustainability, and quality that Vital Farms is committed to.
These standards include pasture-raised hens, transparent farming practices, and independent third-party certifications. The pasture-raised standard requires 108 square feet per bird. That alone requires more land, which has to be reflected in the price. Despite their impressive growth and loyal customer base, Vital Farms' market share still accounts for only about 5% of US retail egg sales. This highlights both the challenge and opportunity that lie ahead. The challenge is in convincing more consumers that their egg is differentiated, both in its quality and the farming practices associated with it. The opportunity is the potential for continued growth if they can continue to reach people with their messaging. And like any good disruptive product, it's a reminder that redefining any industry requires not only innovation but also a commitment to staying the course, even in the face of skepticism.
Jason Jones:
Most egg producers, it requires a certain scale, and that means you're focused on that exercise of quality production and husbandry and there's milling operations and distribution and bringing eggs in and processing, grading, getting them out to where they need to go. That's quite enough to focus on. Having a brand, which is, I didn't realize this at the time, but what we were doing was branding a commodity. A lot of the branded products you'll see in the store, let's say you're walking through your Whole Foods or Kroger or wherever a lot of the staples are, they feel like commodities. As opposed to let's say a more processed, a bag of chips go down the chip aisle or the craft beer aisle. I mean there's a lot of marketing going on. Traditionally that hadn't been leaned into I think in a lot of the dairy set, the broader dairy set is where your eggs are in that cooler section toward the back.
What we did was bring a more, the term is CPGs, consumer packaged goods, heavily branded products. We brought that approach to a staple commodity category and it's not easy because we can't just have an Amazon page and ship eggs directly to people. I mean, there's ways you can get eggs delivered now. In the early days that wasn't viable. You had to go through a channel partner that oftentimes could include two or three links before the consumer touched it, varying aspects of distribution and fulfillment to get it to that grocery shelf.
And so yeah, a lot of times all you might have is your package and we tried to do the best job we could and be innovative with our packaging and I think that still shows today. But yeah, we also would present a face and touch points beyond that, largely online, with consumers because we felt like we had a lot to tell them.
And so we've, I guess in that sense been a direct to consumer, at least from an educational standpoint, company from the jump because we had so many messages. We would also try to maximize the physical touch point, the carton, a lot of egg cartons are still just a pulp. If they're not styrofoam, they're a pulp with a kind of crappy label applied that's all wavy and is only ever going to look so good. We had an exclusive back in probably like 2013 or '14, something like that with the more cereal box top where it's printed directly on, the surfaces are more flat and consistent and it ends up expanding your real estate, which is a big part of that again, branded CPG game anywhere in the store or even really online now.
But we would maximize all of that space, even include the little newsletter, the Vital Times that we've done from the beginning as another part of the experience onto which we can just layer a lot of the same messaging, but talking about welfare and our standards and what you should expect from our version of a, in theory, commodity product that we actually want to be experienced quite differently from the norm. How do you build on the fact that what we believe is fact is that an egg is not an egg? Because in the minds of most consumers, probably even still today, it's either white or brown. And it's kind of a nuanced discussion you're having and one that takes years and years of follow up and consistency of experience.
And that just speaks to even back in let's say 2009, the level of education that existed in the consumer space. There was enough of it for us to glom onto. There had been documentaries and books from people like Michael Pollan written about our food system asking the question, where does our food come from? And that's just only built over the last decade or more. That's where all the growth basically has been in the food space. It's in that more natural and organic, perceived as better for you space and we timed it right.
We were also based in a great place here in Austin where you have this kind of forward-looking consumer. Not quite like West Coast, but you have Whole Foods based here as well as other great phenomenal retailers right down the road. But it was a supportive market. The timing was good and we were able to build enough of a critical mass to just continue to expand and thrive. And it goes on today, growth rate is still really high. It's not triple digits like it was in the early days, but we get credit for being a growth story still today.
Greg Schonefeld:
I'm sure not an easy road to hoe, but you did it and that's an inspiration.
Jason Jones:
I give the consumer most of the credit. We try to have a positive message as opposed to going around and saying, "Well, ours are better and these are bad because of these reasons." Life is short and I think it's great that people have a choice when they go to a place in the grocery store like that. They can get something that's more of a value proposition and then we are there to fill that premium part of the set. But I think it can all be done in a positive way and should be when best done and hopefully that's how people feel by encountering the brand today.
Greg Schonefeld:
I think that's a great point, and we see that with most things in our life. We're not stuck with the Model T. We have a lot of different vehicle choices out there, and it's cool to be able to have that spectrum and egg and you can see that there's demand for that. You see all different kinds of eggs on the shelf these days, which is proof that there's a differentiation in what people want and it's great that the market's been able to provide that. So now you've moved on from Vital Farms and curious what you've been up to since then and what you're up to now?
Jason Jones:
Yeah, so I ran pretty much every function of the company for several years, six or seven, in part because we were so scrappy as I've described. We started taking on outside investment and have been able to over time bring in more talent and for me that looked like in 2016, rotated out of the day-to-day, had been able to bring on some folks who in a lot of ways were way better than me at certain things and able to carry it forward. There were a lot of things that got professionalized, moved off my laptop and made into more of a process, for everybody's benefit.
We had had three kids and moved a couple of times and had a lot of life going on while we were growing this business, which was just everything we could do to keep up with. So I was happy to be able to take a little bit of time off just to kind of reset and catch my breath, get all of my gray hair cut and that's where I earned it. But I did a little bit of reflection there. I was like, "Okay, what do you want to do next with a lot of your waking hours?" And I had really grown to love this space. The barriers are low. I'm kind of a early stage and innovation driven guy and there's plenty of room for that in the food and kind of broader ag tech space. And so I kind of chose to hang around in the industry.
I've done some things related to green tech and things like that, but primarily I consider myself a consumer professional. I have done a lot of other executive stints at companies like Aspire Food Group, which is really novel in terms of let's say livestock production. We are an indoor insect farm.
Greg Schonefeld:
Oh, wow.
Jason Jones:
That today we have the largest cricket production facility in the world except in London Ontario, and that's primarily pointed to the pet food market as an alternate super high-quality protein source. We need more forms of protein and there is one pool of it from which humans and other organisms pull, and we just need more good quality options as we've seen in the plant-based movement and all of this. So that's an answer to that challenge globally.
But I've helped a lot of other founders and entrepreneurs try to scale their businesses and hold on through the growth years. These days, I've seen pretty much every category in the grocery, broader food and beverage space. I do a lot of advisory work. I'm on a few boards of companies that are compelling and who I feel are making meaningful change and also have a good chance out there. Because it's a highly competitive space and Austin, it turns out, has been a really great place to be based to do that. It's really a hotbed of consumer innovation, young companies. I just like the energy in this scene and there's a lot of resources here to take advantage of. I'm on the board of a networking community called Naturally Austin that's meant to be a resource for largely founders of consumer products. We try to be a resource for the next set coming through and provide a lot of the help that, gosh, I wish we had had 15 years ago, but it's an exciting place to live in multiple senses.
Greg Schonefeld:
Vital Farms redefined what an egg can be. Setting a new standard in the industry, much like a Ferrari is not just a car. Vital Farms, founder and chief executive Matt O'Hayer once said, "Our job is to show people that an egg is not just an egg." I think it's pretty incredible what Vital Farms has done. Today, it seems natural. You can go to the grocery store and find a variety of egg options. You can find store brand, you can find something like Eggland's Best, which is a branded conventional egg known for its shell quality. You can find cage-free and you can find something like Vital Farms, which is pasture-raised. As we established with Brian Moscogiuri in episode three, eggs are known as an affordable protein. People tend to be sensitive about egg prices. It's talked about in the news that the price of eggs goes from $3 to $4 for a dozen eggs.
Yet here is Vital Farms charging about double that, sometimes more. And they've been able to grow from selling at farmer's markets to a significant egg brand seen on shelves across the US. It was a bold bet, especially at a time before the cage-free wave. More and more people care about where their food comes from. Vital was able to leverage that to build a premium egg company. As Jason plainly notes, Vital Farms eggs aren't for everyone. The majority of households depend on the commodity eggs at a few dollars a dozen as an affordable source of protein. It's amazing what the broader egg market has been able to do to deliver such a great protein source at an affordable price. But it's also great to have the variety of choice that Vital helps spark and provide.
And what a great story. From farmer's markets to billion-dollar company in less than 20 years, while offering a revolutionary concept for raising hens and pastures at a commercial scale. It's a great example of just how interesting the egg world can be, and I want to thank Jason for coming on and sharing his inside perspective.
Make sure you subscribe and tune in next time so you don't miss out on other great egg facts and stories. Find us on Apple, Spotify, LinkedIn and Instagram to make sure you're a bonafide egghead and please offer feedback where you have it. Just as Jason noted the importance of connection at the farmer's market, we want to hear from consumers of our content. I do have one more question for you, Jason. How do you like your eggs prepared?
Jason Jones:
I think it's really hard to beat a poached egg. I can go over easy, but I think I'd have to say poached. Runny.
Greg Schonefeld:
Ooh, I like that. Do you do that yourself?
Jason Jones:
I can. I prefer to outsource it.
Greg Schonefeld:
You're a businessman. Yeah.
Jason Jones:
Yeah.