What's the most you'd pay for a carton of eggs?
$3? $4?
What about $10?
The near $14 Billion Shell Egg Market in the US has all
kinds of terms organic, cage free, free range,
pasture raised.
But there's a company that feels one is the most vital.
When I first got into the business, I heard the
terminology all the time.
An egg is an egg is an egg. I talked to to a chef in a
restaurant and I gave him a case of our eggs and I get a
call back. They'd say, Holy, this is not what I
expected it would be.
This is Matt O'Hayer, founder of Vital Farms, a network of
family farms committed to producing the highest
quality and most ethically created eggs ever made.
Today, it is the largest pasture raised egg brand in
the US, sold in close to 24,000 stores.
A growth rate from inception has always been tremendous.
The model that I envisioned at the very beginning was
very similar to the model we have today, which is to
teach farmers how to humanely raise laying hens
in an environment that is really good for the hens and
good for the farmer to pay them extra for that and to
produce an egg that was never been done before.
On a national scalable.
Level, there are three numbers to look out for in
this story $250,000.
The cost of the farm.
Matt started his company with 300.
The number of family farms today that have been
onboarded into the network and $465 million the
company's projected net revenue for 2023.
I think people want to know where their food comes from
because it's the most intimate thing we do with
our bodies. It's not sex, it's food.
Here's how What started as merely 20 Rhode Island hens
on a 27 acre farm grew to the second largest egg brand
in the United States at retail.
This is founder effect.
From the time I was eight years old, there was never a
question in my mind that I wanted to be in business.
I think I calculated at one point, at this point in my
life, I've started about 50 businesses of some sort or
another, large or small.
A self-proclaimed serial entrepreneur, Matt O'Hayer,
has started everything from a carpet cleaning business
to a travel company.
He even tried an egg farming business in the 80s
prior to vital farms.
Then in 1984, he met John Mackey, the founder of Whole
Foods, through a friend.
And he was like a mentor to me.
As Whole Foods grew and I was in different businesses.
I loved the way he operated his business and how
different it was than my methodologies at the time,
which was really more money focused.
In 2006, John published an essay on the Whole Foods
website titled Conscious Capitalism.
The essay highlighted the movement that businesses
should serve all significant stakeholders the
customers and consumers, but also the farmers, the
suppliers, the environment and the shareholders.
It starts with the idea that a company should have a
higher purpose than just making money.
And the analogy, which I find very illuminating, is
that a company exists no more to make profits than a
human exists to make blood.
We don't wake up in the morning saying, let's get to
work making blood.
But yet if we don't, we cease to exist.
So the profits are critical, but they're not.
Maybe the unifying theme that motivates people to get
on board. There needs to be a higher purpose than that.
And for us, that's improving the lives of
people, animals and the planet through food.
The first seed had been planted.
Matt decided that the next company he was going to
build would follow this conscious capitalism model.
It would prioritize long term sustainability for its
creators and its consumers.
I thought, wow, that's a different way of running a
business. And it takes the pressure off of the exit and
trying to get rich and really puts the focus on
those important stakeholders. I was really
inspired by that because I was always focused on the
exit, always focused on how I could make money.
Matt already had prior experience with egg farming,
so in 2007, he thought he'd take his new outlook in mind
and give it another shot, this time in Austin, Texas,
and this time with a bigger goal in mind.
I started with 20 Rhode Island Red Hens, which were
basically for our own consumption, the eggs that
they produced. I bought them at the feed store and
bought them home and they all had names.
Every one of them was named after a 1950s sitcom.
Female chickens or Sentient beings.
I mean, they have personalities.
They get upset, they get mad, they get happy, they
get sad. And I've seen all those emotions in a hen and
a chicken. And to take these sentient beings and
shove them into a cage was horrible.
We also found out that when you get them out of the cage
and put them on a pasture, that they were happy.
They make a different sound. And also magically
they produced a much better egg, which I was really
excited about because the yolks were different.
The the, they were thicker, they were darker orange and
they tasted so much better, which was a magic
combination.
Matt began selling his eggs to local restaurants and
farmers markets, all at a premium price.
This is a practice they continue today with a dozen
eggs costing up to $10.
At the time, I had to sell my eggs wholesale at $4 a
dozen, and that was unheard of.
It's more expensive to not torture an animal.
To do the right thing is not always cheap.
Our eggs are typically the most expensive on the shelf,
and that's not something we shy away from.
It's something that we hold out as indicative of what it
takes, we think, to produce eggs the way we believe they
should be produced. And we found that a lot of
consumers are willing to pay that high price because
they're looking for something that's pretty rare
in this country, which is food from a food system that
they can really trust.
By 2008, Whole Foods began selling the company's eggs
in the Midwest.
It took off within Whole Foods early on.
We got one region after another.
And the way we expanded was not through relationships
necessarily, but through the fact that our eggs were
selling and selling well within Whole Foods.
The Whole Foods customer got us early on, and that
was important because we're we're doing something that
was totally different.
Vital farms began to slowly onboard more and more family
farms to expand the network.
Today, over 300 farms across nine different states
have joined in an area they call the pasture belt.
Pasture belt is an area of the United States that we've
found over trial and error over time where the
temperatures and the rainfall meet a standard
that we have, where the birds can be outside year
round.
We analyze those areas for weather patterns, climate
patterns, to make sure that when we place a farm in an
area, that farm has a wonderful chance at having
great outdoor conditions for our birds.
Though Vital Farms has had great success as a brand,
it's not without controversy, as Peta has
filed. Multiple lawsuits against it, citing
greenwashing and the industry standard practices
of male chick culling and beak cutting.
I think when you produce food from animals, either
the animals themselves or food that's produced by
those animals, you have to be okay with animals dying
to make that possible.
And there's nothing different about the eggs
that we produce. We're very transparent about that.
The truth is that no matter what eggs you're buying in
the country, there are some ways in which we would like
to see producing those products be made better in
some way. Our focus is on improving the parts of the
egg supply chain that we can really improve, and that
shows up on our farms on those 300 small family farms
where our birds live, what we believe to be a
fundamentally better life than the majority of birds
in this country do.
Growth has been quick for vital farms from 50 farms in
2015 to over 300in 2023.
However, both Russell and Matt want to be sure that
too much growth doesn't ever negatively affect their
products.
The speed at which we grow is really governed less by
the opportunity in the marketplace and more by our
ability to execute well.
And executing well for me means maintaining our high
standards, making sure that what we do is sustainable
for all stakeholders, including shareholders,
which means profitable growth.
It means high quality growth.
Most recently, the company has onboarded four
restorative farms for a new initiative called
Restorative Eggs.
These farms focus more on regenerative farming tenants
to boost soil health at $9.99.
These are some of the most expensive eggs vinyl farm
sells.
They really are using new ways or some might say very
traditional ways of farming that work to improve soil
health through reducing the amount of disturbance of the
soil, the use of cover crops to ensure soil health
and soil stability.
And you can actually measure it in the bacteria
content and the water holding capacity of the
soil. It's a wonderful kind of back to the future
approach that we think is increasingly becoming the
dominant way of farming in this country.
Sales overall have grown staggeringly for vinyl farms
over the years. The company's revenue has grown
an average of 35% every year since 2015.
In the summer of 2020, the company went public by the
end of 2023.
Vinyl Farms is expected to bring in around $465
million.
We've grown to become the second largest egg brand in
the United States at retail, and yet we're still
only maybe 5 or 6% of US retail sales of eggs.
And so it feels like we're still very much the startup
in that space and we have a lot of runway to continue to
expand and grow and bring our products to more and
more households. At the same time, our purpose is to
improve the lives of people, animals and the
planet through food.
And there are a lot more people and a lot more
animals and a lot more land in this country in front of
us.
I think we've shocked a lot of the marketplace to think
that people would be willing to pay extra for
eggs. Our growth rate from inception has always been
tremendous. It shows that that movement is working and
that people really care what they eat and where they
where it comes from when it comes to eggs.