16 years ago, Jesse’s 3-centuries- old family farm was on the brink of bankruptcy. Factory farming had arrived in the family’s backyard, and they were competing at 1/50th the size of a predatory producer in New England. To survive, his parents had moved to producing organic eggs on a very small scale. Then Jesse came home from college.
“At first, I set about trying to build scale in order to compete. Then I had an epiphany. I realized we had a great product, a better egg, with a small-farm story to tell – one consumers wanted to hear – and that if we continued growing to keep up with market efficiencies we would be in direct conflict with who we wanted to be and who consumers wanted us to be. That was our turning point: We stopped building more barns and increasing our hen population. Instead, we pivoted toward other family farms that were aligned with our values.” The reinvention of an industry – and of one New Hampshire egg farmer – had begun.
Pete and Gerry’s, the first egg producer in the world to achieve Certified B Corporation status, partners with small family farms across 14 states to produce organic eggs from hens raised humanely. It’s a system that’s good for farmers, their chickens, and their consumers. And its success has been startling, particularly given that Jesse’s manifold challenges have included mastering complicated logistics, developing supply chain infrastructure, managing growth, choosing partners, ensuring standards, and persuading skeptical retailers.
Jesse has managed to meet the triple bottom line while becoming the fastest-growing brand in the organic egg category in the United States. For 15 years, Pete and Gerry’s has grown an average of 30-40 percent annually. They’ll soon be selling coast-to-coast, and Jesse hopes constituent family farms will number in the many hundreds within five years.
What he has learned, and what he can share, go far beyond the confines of egg farming, because his is a widely applicable business model. Though partner arrangements can vary, the model is essentially a traditional supplier arrangement. “We’re the vehicle to get family farmers’ eggs to market,” Jesse says. “They’d otherwise not have a means to do that. Barriers to entry are huge because egg farming today is so consolidated: The top 10 companies are responsible for over 80 percent of U.S. egg production.
Small Farms, Big Tech
A David among Goliaths, Pete and Gerry’s must be able to meet the supply and pricing demands of retailers in order to compete. But logistics are tricky. “We need to be very careful about aligning supply with demand,” Jesse says. “Flocks are rotating in and out all the time. Egg production varies. We’re constantly having to adjust the flow of egg traffic. I’ve had to become not just an organic eggs guy; I’ve had to become a data- driven, analytics-happy egghead.”
This self-proclaimed egghead relies on sophisticated technology, particularly as it applies to supply chains, operations and organization. “From barcode scanning to advanced analytics – we’re extremely data-driven and we have to be,” he says. “Ninety percent of the eggs sold in the U.S. still come from factory farms, so we have some room to grow. We’ll be ready.”
Learn about the Pete and Gerry’s business model, how Jesse approaches challenges such as infrastructure and partner networks, and how his hard-won experience might apply to other sectors. Look for more The Egghead Entrepreneur posts on bthechange.com beginning in October.