EP 228: When Necessities Become Luxuries: The Bird Flu Economy

Special Guest: Phil Lempert, consumer behavior analyst

The bird flu outbreak has transcended egg producers in the farming industry to become a critical economic disruptor and potential public health threat. With consumers spending 53 percent more on eggs in January 2025 compared to the previous year, this potential pandemic illustrates the fragility of our food systems despite technological advances. Join Shelley and Phil Lempert, expert analyst on consumer behavior, marketing trends and the changing retail landscape, as they discuss how the bird flu crisis is creating complex challenges for retailers, restaurateurs, supply chain executives, and public health officials alike. 

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Transcript

Trascript by Descript:

Until we can really control this, um, and again, whether it's with a vaccine or whatever other means, um, we, we have a serious problem, both in our food supply and our human health supply.  Retail Unwrapped is a weekly podcast hosted by Shelley Cohan from The Robin Report. Each episode dives into the latest trends and developments in the retail industry.

Join them as they discuss interesting topics and interview industry leaders, keeping you in the loop with everything retail.  Hi, everybody. Thanks for joining our weekly podcast. I'm Shelley Cohan, and I'm very excited to welcome back Phil Lempert, who is known as the supermarket guru. He's also one of our esteemed writers at the Robin Report.

So welcome back, Phil.  Thank you, Shelley. It's a pleasure.  I'm always thrilled to have you on Retail Unwrapped. Today's conversation, we're going to be discussing the bird flu and the impact on consumerism. And for our listeners, Phil wrote a great article last week called Planning for the Bird Flu Epidemic.

So if you have read it, if you have missed it, and you didn't read it, go back and take a look. So Um, let's jump right in and so Phil, the CPI, the consumer price index just came out last week for January and it showed that we are spending 53 percent more on eggs in January 2025 as compared to January 2024 a year ago.

Now that's pretty significant. How serious is the bird flu and what are we looking at from a long term impact?  So Shelly, first of all, it's very, very serious. Uh, number one, number two, uh, the prices that you're talking about are national here in Southern California, a regular double a egg. There are about eight to 9 a dozen.

If you go cage free, you're looking at 12 or 13 a dozen. So this is a very serious problem. There's been 166 million birds that, had to be cold, destroyed. Um, and the way bird flu works, if there's just one hand that is found with bird flu, they have to destroy the entire flock. So you look at some of these huge egg operations, they could have a million birds just under one roof.

Uh, very serious problem. And also we're missing because of all these you know, chickens being killed. Uh, we're missing about 26 billion eggs. Now this all started in January of 2022. Um, and it's continuing. And the problem is that when you, when you take a look at the way You know, chickens are raised. They take about 18 weeks from birth till they can start laying eggs.

And when they start laying eggs, it's only four to five eggs a week. So you can see that this is going to be a very long term problem.  Wow. And I know a lot of grocery stores are simply charging more for eggs or they're putting limits on the amount, the quantity that people can actually purchase Trader Joe's for example, while they haven't raised prices significantly.

Like the larger grocery stores have but they're also selling out of eggs even with putting limitations on quantity Um, so how long will it take for these prices to come back down?  Well, I don't know if they're ever going to come back down. Let me, let me, let me start there. Um, I really don't. And again, when we take a look at climate change, we take a look at what's gone on politically with health and human services.

I mean, just over the weekend, what we found is a lot of the scientists who were working on the bird flu vaccine were fired. They were fired. And then, you know, another email went out to them that said, Oh, we made a mistake. You know, you're not going to be fired. I mean, if you take a look at what's going on in Washington with health and human services, FDA, USDA, we have a significant issue.

Um, that we might not have the best and the smartest working, you know, on this. And what it's really going to take is it's going to take a vaccine. And there's a lot of people in Washington that are very fearful that this bird flu could be even worse than COVID 19 was as a pandemic. Keep in mind that it started with.

Birds, then it went to ducks, um, then it went to cows. There's over 600, uh, dairy farms that have been affected and it's gone to humans. Um, so we, we really are at risk and we've gotta have the best and the brightest working on this. Um, and you know, the other problem. Um, that it's important to bring up is we've got about 40 million people on SNAP programs, food assistance programs.

Yeah. They consume eggs as their primary source of protein.  If they can't afford eggs, they're not getting protein, which can deal with a lot of other major health issues for this population.  So what, I want to go back to something you said about the health and human services. So what is RFK Jr. doing? And what is being done now from the health and human services? 

Well, the only thing that we know is that the people that were fired were brought back to work. So we know that as a fact, we have no idea what R. F. K. Jr. Is His position on bird flu, uh, there's a lot of lip service, you know, being given to it that says, Oh yeah, we're working on it. You know, we're, we're focused on it and so on.

What's really happening. I don't know if any of us know.  Interesting. And so you also mentioned that the risk to humans is out there. What are we looking at on that front?  Well, CDC says, you know, there's zero risk. However, we've had one person die from it. We've had almost a dozen people who have become infected.

Now, they've become infected because they worked on a dairy farm or they were in close contact with hens. Um, so the risk of human to human contact is very CDC. Hopefully, we're not going to see that as an issue. Uh, but it's still a reality. And until we can really control this, um, and again, whether it's with a vaccine or whatever other means, um, we, we have a serious problem both in our food supply and our human health supply. 

Yeah, certainly. I, and I, I also know that a lot of restaurants like Waffle House, for example, started charging more for egg dishes. Denny's just recently announced. Uh, the same. And I think from a consumer perspective, like consumers understand this, they're willing to pay the extra price because of the egg situation.

Um, especially from, you know, restaurants that are the lower tier restaurants that have very thin margins, right? So do you see more restaurants kind of going this route and adding surcharges for egg dishes?  Yes. Um, there is one exception, by the way. Cracker Barrel came out as soon as, um, as soon as the announcement from Waffle House came out, Cracker Barrel said that they will not do a surcharge.

So, good for them. Uh, but yes, I think restaurants are going to have to, uh, have a surcharge or in some cases, they're eliminating their egg dishes. So, They don't even have to have that confrontation with the consumer where, you know, it's 50 cents extra an egg. Um, and, and that's just the start of it. You know, charging another 50 cents, isn't even covering their costs to it.

So, you know, while, while we might complain, the waffle house is doing it, you know, they're holding back on what they really should be doing. But I think more restaurants are actually going to eliminate, um, dishes.  It's interesting, it's also sad when you talk about, you know, a lot of American families, you know, have a tough time affording to go out to eat to begin with.

So, when we start charging more for food, uh, especially in restaurants and stuff, it's, you know, it takes away that, you know, income, that discretionary income that, Um, consumers can use on other things.  Yeah. And you know, I, I started out, uh, life working at Shelly's lunch, Annette Newark, New Jersey Really?

And, and then, yeah. And then from there I was 13. Um, and then from there went to, um, McDonald's and then Howard Johnson's. So what I can tell you, uh, doing that is eggs in a kitchen are really. you know, a high waste product. If the eggs don't look great, um, very often, you know, the chef or the cook, um, is going to toss them because they don't want to present it badly, especially if they're making an omelet or, or something like that.

So there's that whole issue of, of wasting eggs as well.  Oh, that's interesting. The other thing I wanted to ask you about, so, you know, we, we have a lot of. Expense in grocery, uh, eggs being one of them, but there's other rising prices, especially in the grocery sector, especially with food that we make at home.

Are you seeing more trade offs to store branded items?  Yes, there's no question that store brands, especially since the pandemic have really number one up their game from a quality standpoint. Number two, let's not forget that every store brand food wise, um, does have a money back guarantee. So if you don't like it, you can always bring it back and get a full refund.

But, um, It's, it's more than just the store brands. If you take a look, people are choosing other products, you know, because of the egg situation, there's now a lot more attention be given to just egg and some of the, you know, plant based egg replacements. So, you know, you've got that opportunity from, from those kinds of companies as well.

Uh, but let's not forget the reason that we have. Price increases for our food to combination, labor costs going up, climate change, you know, every food started in the ground some way, shape, or form. I don't care if it's the most ultra processed food ever. Twinkies started from in the ground. You know, yeah, of course, you know, so when you take a look at climate change, labor, the cost of transportation, you know, all of those factors, our food prices, I don't care who the president is.

Our food prices are not coming down. The best that we could hope for is they stabilize where they are. You mentioned waste 40 percent of all of our food. Yeah. Food in this nation is wasted. Now, a lot of that has to do with us at home. Um, and you know, you, you look at the Best Buy date, you say, eh, well should I try this?

Should I not try this? You toss it just to be safe. Uh, hopefully there's gonna be legislation that clears that one up for us, but. In the meantime, you know it. We need to stop wasting our food at home. Before you go shopping, take inventory of what's in your refrigerator, what's in your freezer, what's in your cupboard, so you don't overbuy. 

That's interesting. Can I go back and ask you about the date thing? What's happening with legislation that's gonna change the date?  So, what, what is being proposed is instead of all these, you know, slogans that are meaningless, um, best buy, things like that, there's just going to be two. One that says, you know, best if used by, and that's about quality, and then,  which is from a food safety standpoint.

Frankly, you know, I'm much more concerned about the food safety aspect of it. Uh, Frank Yanis, um, who, who comes from Walmart and then he was a USDA really is focused on this food safety and the, you know, used by date. We should have one date that makes it really clear. And also let's not forget a lot of canned goods, um, that, you know, have a shelf life of two or three years.

They don't even put it in English, you know, that that's the date stamp, you know, on the top in that's in a code that says, you know, what the ship was, what the factory was, things like that. We need plain English. Now, the good news is, as the UPC code is being sunsetted, and we're now going to have from GS1 the 2D  barcode, which can give 2 to 4, 000 characters instead of just 10 digits, we're going to have a lot more information from a food safety standpoint, from a sourcing, nutrition, ingredients on our packages.

Now, very few food companies have started. P and G has done it on their health and beauty aids. A lot of wines in Europe now have that 2d barcode. But over the next two years, we're going to see more and more of that. And just with a click of our phone, we're going to be able to get all the information that we want about that food product, the name of the farmer, you know, who grew it, what the truck was that it was transported on.

All of that kind of information is really close to getting to us. Wow, Phil. So are you saying when you say Hey, We can un really understand where our food's coming from. Do you mean we, like me and you, the consumer we?  Yes. All the, all that we're going to have to do is take our phone, you know, scan that 2d barcode and everything is going to come up, um, about that product.

Now the problem is that we're still have to rely on whether it's the company or retailer to fill in that information. Uh, but again, you know, Frank Yanis, when he was at, um, Walmart and started with IBM on the whole blockchain. That was where we were getting, uh, to it. So, you know, we're close, no cigar yet.

Uh, but we are close, uh, to be able to get all that information.  Wow. That's great. Especially from the food safety standpoint, being able to trace things.  Absolutely. I mean, that's one of the biggest problems that both retailers and manufacturers have. And we look at all these recalls, whether it's because you know, cross contamination, peanuts are in this factory or whatever else, or, you know, we have salmonella or we have E.

coli. We need a much better system for product recalls and for you and I to be educated about what to do. Now, the retailer who does the best job, that's Costco. Um, whenever they've got a, you know, a recall, they've got those robo calls that call your house that say, you know, you bought X, uh, don't consume it, bring it back to the store.

We need every retailer to be doing things like that. Now, that's great. And they have their membership program. So they have an easy way to get in contact. They know exactly what you bought. So that's great that they're doing that.  So do you have any advice for consumers and also for retailers on how to manage through this bird flu crisis? 

Well, from a retailer standpoint, I think that limiting the amount of eggs someone can buy is the right way to do it. Um, number one, um, we've also seen, especially here in Southern California, um, which is illegal. A lot of people bringing eggs from Mexico or trying to bring eggs from Mexico over the border.

Um, we saw that during the pandemic as well. It is illegal to transport eggs from Mexico into the U. S. So they're being confiscated. Um, so that that's one situation. I think from a consumer standpoint, it's let's not panic. Um, I think whenever there's panic buying or or there's, you know, just this feeling that, oh, I'm gonna never have an egg again.

People, you know, lose, lose their sense of control.  What I do, and I, and I I've always done this. Um, you know, I add a little milk to my eggs, so that extends it. Um, so, you know, think about adding more vegetables to that omelet or more cheese or, or whatever, just to stretch it out. Um, I think that the egg producers are really working hard to get this controlled.

Uh, but. It is gonna take a while for us and we are gonna pay more money than, than we want to for eggs.  It's interesting, Phil, because you mentioned something about consumers can actually do things, something in their everyday lives to kind of help the crisis right now. But I don't see a lot being talked about in that way.

So for example, you're adding, you know, milk to an egg. I've like reduced my egg intakes significantly. Um, as well, just really being conscious about how many eggs I'm eating in a week. And  I think consumers can do more. There should be more out there about what consumers can do with recipes or menu items or ideas and suggestions. 

You think that  And keep in mind that just about every supermarket chain now has retail dietitians on staff. So you know, look at the websites, they're putting out recipes, they have helpful hints. When you're in the store asked to talk to the retail dietitian, there are a wealth of information both from a nutrition standpoint and a recipe standpoint.

So you know, now that we've got the internet, now that we've got, you know, Tik Tok, um, there, there are tons of egg recipes and. And ways to extend those eggs.  That's great. Well, Phil, anything else you want to add?  Just when we go shopping, relax, enjoy that shopping experience. Don't panic. Don't overbuy and continue to eat those eggs.

They're good for us.  Yeah, they are. Thank you so much. It's always a pleasure having you on the show.  Thank you, Shelly. It's my pleasure. 

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