- Los Angeles-based private equity firm Butterfly acquired a majority stake in organic, free-range and pasture-raised egg producer Pete and Gerry’s. Financial terms of the deal were not disclosed.
- Based in Monroe, New Hampshire, Pete and Gerry’s sells eggs under a variety of labels including Pete and Gerry’s Organic, Nellie’s Free Range and Consider Pastures. The certified B Corp partners with more than 130 farms throughout the U.S. that follow the brand’s strict animal treatment and environmental sustainability standards.
- Specializing in the food sector, Butterfly uses what it describes as a “seed to fork” approach to investing in the food system. It puts funds in companies in four verticals: agriculture and aquaculture, food and beverage products, food distribution and food service.
As consumer appetites for better-for-you and environmentally savvy products continue to increase, brands like Pete and Gerry’s are stepping in to fill the demand. Sales of sustainability-marketed products represented 54.7% of the total CPG market growth from 2015-2019, even though they make up only 16.1% of the sector, according to a report from IRI and the NYU Stern Center for Sustainable Business.
Animal welfare issues are also becoming a priority for some shoppers. Roughly two-thirds of consumers surveyed in November 2018 reported if a company had a bad reputation for animal welfare, they would be less likely to buy that company’s meat, according to data collected by the Animal Welfare Institute.
Despite the growing interest in sustainability and animal welfare, however, organic eggs are still a relatively small segment of the overall market. Organic and cage-free egg-producing hens accounted for 29.3% of the total U.S. egg-laying flock, according to data from United Egg Producers. Only 6.8% of this figure represents organic eggs, while 22.5% are cage-free.
Consumers may choose conventional eggs over their organic counterparts because of the price difference between the products. They may also be confused about what organic really means. Fewer than half of consumers know what the term “pasture-raised” means, while the majority believe that “cage-free” and “free-range” mean the birds have access to the outdoors, according to a survey commissioned by pasture-raised egg producer Vital Farms. Hens in cage-free operations do not have access to the outdoors, according to Eater. Pete & Gerry's wrote in a blog post that there are no federally regulated definitions of what "free range" means, so hens in these operations can be free to roam outside — which is the company's policy — or confined to a screened-in porch.
Label confusion aside, for the segment of consumers committed to animal welfare, finding brands that offer transparency and integrity is a top priority. A few major players are emerging in the humanely raised egg segment including Vital Farms, which went public last year. According to the company's most recent earnings report, Vital Farms has an 82% share of retail dollar sales in pasture-raised eggs. The company's eggs are sold in more than 16,000 stores, and have been purchased by more than 5 million households. The company says it was the largest contributor to egg category growth in terms of retail dollar sales last year.
Pete and Gerry's fits well into Butterfly's portfolio. While Butterfly's holdings are relatively few, it also owns Bolthouse Farms, the natural fruit and vegetable focused carrot, beverage and dressings brand. Bolthouse founder Jeff Dunn is an operating partner at Butterfly, which bought the vegetable-focused brand back from Campbell Soup in 2019. Pete and Gerry's targets the same type of consumer who would be interested in Bolthouse's fresher and more natural offerings.
“Pete and Gerry’s is a forward-thinking, mission-driven company that provides a better egg to consumers, a better life for hens and a better model for America’s small family farmers," Butterfly Co-Founder Dustin Beck said in a written statement. "Butterfly is absolutely aligned with their mission and looks forward to supporting the team to continue these efforts.”
As sustainability and welfare-focused egg companies look to differentiate and catch their target consumer’s attention, having additional resources like the backing of a private equity company could be a major asset. Brands like Pete and Gerry’s have already cultivated a brand identity that resonates with consumers.
— Megan Poinski contributed to this report.