In June 2017, a local newspaper announced that Muller's Farm, a poultry farmer from Germany, intended to build a large egg-laying plant in Wega, NSW. Muller's Farm started their operations in June 2018, aiming to become the Australian free range egg market leader through acquiring 25 percent of the market by the end of 2023. Currently, the majority of Muller's Farm sales are to retailers, which are the main market for free range eggs. Muller's Farm sells its eggs through large supermarkets in Australia (i.e. Woolworths, Coles, Aldi and IGA), using its own brand (i.e. Muller's Farm). However, Muller's Farm's managerial team is considering becoming more active in business markets due to the growing demand for free-range eggs in food services. 

The egg farming industry in Australia has slightly grown over the past five years. Rising concerns regarding animal welfare have prompted many consumers and downstream markets (e.g. restaurants, cafes, bakeries and confectioneries) to switch to cage-free or free-range eggs in recent years. The industry has benefited from this switch, as non-caged chicken eggs have higher prices and profit margins. Additionally, total egg consumption has increased in the past five years and is forecasted to rise over the next five years due to population growth and increased per capita egg consumption. It is expected the industry revenue will grow at the rate of 1.1 percent per year from 2021 to 2026.

Growing demand for free-range and organic eggs among Australian consumers has also led to an increase in the number of egg farms, many of which are local, small-size farms. Also, larger, more established industry players have increasingly shifted from cage to free-range egg production. As with any industry going through the growth phase of its lifecycle, the competition is becoming more and more intense. However, a large, commercially operated enterprise like Muller's Farm is predicted to survive this growing competition in the long term, as they can rely on their economies of scale, automated systems and the possibility of vertical integration with their own breeder farms, hatcheries, transport, layer farms and grading facilities.

 

Currently, Muller's Farm produces and raises 25 percent of their hens in their own farms and buys the rest from various smaller farms across NSW that are specialised in breeding, hatching and layering. Muller's Farm buys the hen feed from different suppliers in China. Feed for chickens is generally all-mash, consisting of grains, corn, and either cottonseed meal or soybean oil depending on availability. Farmers carefully mix the mash so that the chickens get just the right amounts of protein, fat, carbohydrates, vitamins, and minerals. This is essential in that the nutritional quality of the laid egg depends on the feed the chicken was given.

 

One important consideration about producing free-range eggs is the standard that defines what can be called a free-range egg. According to the Australian Government, the maximum outdoor stocking density should be one hen per square metre, or 10,000 hens per hectare. However, this standard is criticised by various institutions such as Choice and CSIRO. CSIRO Model Code of Practice suggests there should be a maximum of 1,500 hens per hectare on an outdoor range, which gives each hen a minimum of 6.6 square metres.

Muller's Farm started their operations in 2018 with 10,000 hens per hectare for all their eggs, but they gradually improved this ratio. Currently, 50 percent of their eggs are produced with a ratio of 1,500 hens per hectare and the rest are based on the government's standard of 10,000 hens per hectare. This has enabled them to diversify their offerings as well as create an edge over their competitors in the market. In terms of pricing, their 1,500-hens-per-hectare produced eggs are among the most expensive eggs in the market, whereas their normal free-range eggs are priced using a competitive pricing strategy and being set close to the average market price, including the home brand free-range eggs of the supermarkets.

  

For achieving their objective of becoming the market leader in the free-range egg market, Muller's Farm needs to buy or rent more lands in the Wega area, close to their main farm. However, their recent attempts to buy and/or rent land are being resisted by the local community. Wega is a farming town with a majority of small, family-owned farms that have been operating for several generations. In a recent letter to the council, a group of local farmers expressed their worries about the rapid growth of Muller's Farm in the area. Also, in this letter, they raised concerns about the environmental consequences of the industrialised approach of the 'newcomer' (e.g. mechanisation of certain parts of the process), an allegation that is strongly denied by Muller's Farm.

In February 2022, Muller's Farm conducted market research to investigate its brand awareness and image, and whether and to what extent customers are loyal to its brand. They found that improving their standard to 1,500 hens per hectare resulted in a group of loyal customers that exclusively buy Muller's Farm eggs. Also, based on the findings of this research, the managerial team noticed that if they want to achieve their marketing objective (i.e. 25 percent of market share by the end of 2023), they will need to increase the demand among consumers for their product, in addition to increasing the supply.

conduct a SWOT analysis. include a discussion of the results of the analysis.

 

(i) establish a strategic focus for Muller's Farm.