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Dive Brief:
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Cal-Maine, the largest egg producer in the U.S., said it will acquire breakfast foods maker Echo Lake Foods for $258 million as the company looks to offer consumers more than just cartons of eggs.
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Burlington, Wisconsin-based Echo Lake Foods manufactures ready-to-eat egg products in addition to breakfast foods like waffles, pancakes, scrambled eggs, frozen cooked omelets and more.
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Cal-Maine said the transaction allows it to access the “growing and highly stable value-added food portion of the egg category.” Last September, Cal-Maine entered a joint venture with egg wrap maker Crepini in a bid to expand its portfolio.
Dive Insight:
As egg prices remain volatile, Cal-Maine is looking to grow its presence in processed foods and other spaces considered more financially stable.
“Our shell egg business will remain the core of Cal-Maine Foods, but we are excited to diversify our product mix, reduce financial volatility and add another growth opportunity to the Company with the proposed Echo Lake Foods transaction,” Sherman Miller, Cal-Maine president and CEO, said in a statement.
The Echo Lake purchase stands to expand Cal-Maine's customer base outside the grocery store and to quick-service restaurants and other foodservice customers. Kathy Brodhagen, current chief executive officer of Echo Lake Foods, will join Cal-Maine's senior management team as president of Echo Lake Foods.
“This transaction represents an exciting growth opportunity and important inflection point for Cal-Maine Foods, advancing our strategy to expand and diversify our product portfolio and customer mix,” Miller said.
Sky-high egg prices have sent Cal-Maine’s profits soaring, with net sales in the third quarter doubling over the same period last year. Although consumer egg demand overall has begun to dip, Cal-Maine sold a record 331.4 million dozen shell eggs in the third quarter, a 10.2% increase, in part due to recent acquisitions.
Devastating bird flu outbreaks have wiped out chicken flocks and pushed egg prices to record highs. Cal-Maine has faced scrutiny over prices, and is participating in a Department of Justice investigation into the higher consumer costs.
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