I want to
thank all of you for making the journey here today. Look forward to spending some time with each and every one of you. And with that, I'd like to introduce you to the 2nd longest serving employee of Vital Farms, Mr. Russell Diaz Conseco, our CEO. All
right. Good? Great. Well, as Matt said, we really appreciate all of you coming today. I know for some of you, it was a Connecting Flight, which is not best.
I recognize that we're not really convenient for New York or San Francisco. St. Louis, not so bad. And a little I'm going to go pretty quick today because really the star of the show is operations. And so Jason Dale is
going to walk you through what you're going
to see today out at Egg Central Station. But I'm going to talk a little bit about something many of you have heard me talk about time and time again, which is the sort of the values and the mission of the company as well as this whole squishy concept called Conscious Capitalism. But I'm hoping to bring it to life in a little bit of a more substantial way. And at the end of the day, I'll bet some of the things you've heard me talk about time and time again show up on your tour today. If you could if I could get one thing to happen today, it would be The proof points of this squishy stuff we talk about called conscious capitalism show up in the design and the management of the people in that facility.
So Matt talks about the market opportunity that he saw, which is, oh my gosh, those birds went outside and the yolks look like the top of that orange juice bottle. And I was afraid to taste them because it looks so different. But the other thing that he saw and he doesn't give himself a lot of credit But the other thing he saw was an opportunity to rewrite the rules of capitalism. He was influenced by an essay and a book by John Macchi and Raj Desodia called Conscious Capitalism. And the notion was that you could capitalism is great and important and the biggest force uplifting humans in the history of the world and yet it could be made better.
And it could be made better if it had a higher purpose than just making money And it could be made better if it were sustainable for all the co creators, all the people doing the thing that you were doing for the long haul, because it was that short termism and that focus on Shareholder gains in the short run over anything else that created kind of the rifts and the cracks in the long term sustainability of great companies and great plans. So we don't talk a lot about that. But I think there were 2 entrepreneurial opportunities when Matt started Vital Farms. 1 was bringing these amazing farm products to table and the other was rewriting the rules of capital. And so the question that was asked When he started this company was, is it possible to produce amazing food in an environmentally responsible humane manner on a commercial scale?
Lots of stakeholders represented in that question. The answer I think was yes. And we want to talk a little bit about what that looks like here. So sure. Animal welfare is perhaps the easiest and most easily imagined change in the way we produce eggs.
At the time in 2007, over 95% of laying hens in the United States were in cages. In fact, I think that was still the case in 2014 when I joined Vital Farms, it was 95%. Age free, which had gotten a lot of press back in the early maybe the late Toronto is making cage free commitments by 2025 or 2,030, a little bit like a climate commitment. By 2,050, we're going to go cage free. Cage free for a lot of people who are trying to do something other than factory farming looks an awful lot like cage, because all they did was take the cages out.
They still have these massive barns with millions of birds sometimes in them. In fact, I think the egg complexes being built by some of the biggest egg companies in America have 3,000,000 birds on one farm and Our new farm might have 20,000 birds on it. It's really just an order of magnitude difference. Free range is a much maligned term in the United States, because it really has very minimal requirements for inputs and no requirements for outcomes. You have to give birds outdoor access that you don't have to make them go outside.
And it can be for as little as 6 months out of the year. So if you're in Maine in the winter and it's snowing, it's okay, you can just keep them inside. And so this really the first element of disruption was disrupting That conventional wisdom about the best way to produce an egg and actually partnering with a third party called ServSafe Humane to develop and so that we can hold ourselves accountable and create that credibility that consumers were looking for. So here's that slide. Here's that slide about the opportunity not just to rewrite the rules of egg production, but to rewrite the rules of capitalism.
The thing I'm going to focus on is this notion of sustainability over the long haul for all stakeholders. If you go to the next slide. We talk about this thing called the pasture belt. And if you haven't heard me say, I'll say it one more time. The pasture belt is that part of the country that's warm enough for meaningful outdoor access and take rate year round for our birds, wet enough for there to be meaningful vegetative cover.
When they go outside, do they or is it dirt or dry grass? We didn't start that. Back in 2007, Matt didn't say, I'm going to bring these amazing eggs to market and we're only going to do it in the pasture belt. In fact, Austin isn't in the past, interestingly enough. We figured this out over time.
And I want to tell you very quickly the story of how we figured this out, because it was a great example of making a tough decision for the short haul that actually hurt revenues, hurt profits, but the right answer for the long haul. In 2011, 2012, small, fast growing entrepreneurial company, we're going to get retailers say, Look, you guys are great, but our consumers want local. And our biggest market, Southern California, Northern California, the buyers that our biggest customers were saying, The consumers want local, we want local, we've made local commitments and you guys are shipping us eggs from Texas or Arkansas or Missouri And that's just not going to fly with our consumers. So we said, gosh, we have to be successful in Northern California and Southern California You're going to be a leading disruptive brand of Better Eggs. And so we went to Northern California and we found a small brand of pasture raised eggs there and we actually the company.
We will bring in a little collection of farmers and we started producing eggs in Petaluma, California, so we could be local in Northern California. We then found kind of an ag a 3rd generation ag farmer in Southern California who had kind of failed in consolidation wars of 70s 80s. It's sort of like On his last loan, he had some infrastructure and some land, but he wasn't making any money. And he saw a chance for his next You saw a chance for glory again in the egg game with what we were trying to do. And he said, I really want to produce pasteurized eggs in Southern California feed.
And we said, great. About a year later, we went and visited all those farms. And here's what we saw. I wish I had pictures actually, but I this story came to In Southern California, this is in the middle of terrible drought, which happens all the time out there. In Southern California, we're on a piece of property that has ocean view.
It is gorgeous and it is varied and it's got hills and it is flat and it is dirt and there are chickens on it. And the guys got irrigation on this dirt, because he has planted grass, so we could grow the grass, So there'd be pasture for our pasture raised hemp. So in the middle of a drought, the dude is watering a lawn to make the environment we have specified of these birds. We thought, first of all, it doesn't look like it's supposed to yet. And second of all, I think we're supposed to be conserving water that doesn't for the long haul, right.
So let me go to Northern California. Thankfully, they're not watering the pasture in Northern California, Because they're not watering the past year in California, it looks dead. It's literally brown straw. And some of the birds are outside, but You think they were getting a lot of those cool bugs or forbs or seeds when they were packing? Do you think they were getting the very diet that made Matt's birds produce those amazing eggs?
No, they weren't, because it wasn't the right environment. And so over the course of the next 6 or 12 months, we tried to solve this, tried to solve this. And by the way, those farms were producing, I don't know, maybe 10% of our eggs, 10% of our revenues. And we're doing fundraises in in the private equity markets year after year. And so we need that growth to get that valuation.
And at the end of that year, we said, you know what, These farms don't represent what we're telling our retailers we're doing and they don't represent what we're telling consumers we're doing. They don't look like the picture on the website. They don't look like the picture on Instagram. They don't look like the picture on the carton. And that's not sustainable for what we're doing.
And so we made the very tough call to end those partnerships. Now, we were concerned about the impact on our important stakeholders to farmers. And so we actually wrote them big checks, severance checks that were not in our contracts because We didn't want to bankrupt these guys because we changed our minds. At the time, it probably cost us about 10% of our revenue. In fact, I remember the horror that we experienced, again, bootstrapping this place when our largest customer in the largest region took facings away from us, because they felt betrayed by the fact that we've gotten those spaces by being local and we were no longer local.
Big scary stuff. And we're going into another fundraising round and we're down 10%. We have to explain how we lost facings. We lost distribution. But we did it because we knew that it wasn't right for the long term.
It wasn't right for the strength of the brand. We couldn't look ourselves in the mirror. It wasn't inspiring for our people. And if our people feel we're kind of cutting some corners or not doing what we say we're doing, You better believe they're not going to tell the consumers to believe. And so we did that and I think it's a really important example.
The way we got to that pasture belt was scary as hell. And it meant doing something bad for the short term for something really good for the long term. And I wouldn't be surprised if there are a few more moments like that along the way. But that's a great example of those values coming to life. And I thought it was really important to bring that to life.
My goal today, I don't know what else we have here, but we might be able to flip through this. So they've seen that and we're growing. Things are good. What you're going to see today and I'm going to go quicker because again, Jason is the start of the show today. We designed EggCentral Station over the course of couple of years.
I don't want to steal too much of its thunder. But suffice it to say, we were very thoughtful about the long term sustainability for all of our stakeholders in the design of the place. And it is, if you've been in any other ag pack plant, I would venture anywhere in the world, you will not recognize what we did after glorification, we didn't do that because we wanted it to be cool. We did it for the stakeholders, whether it's the welfare of our people, whether it's the environmental impact of community. The other thing you'll see, I hope, is you'll see evidence of the way we've been thoughtful about the kinds of jobs we create, the way that we develop our people and the way that we treat them.
And all those things, I would argue, develop resiliency and reliability in our supply chain that let us be successful in the time of a pandemic, that let us be successful when the orders come in higher than we could have possibly expected. And let us be successful when Amazon comes into town and offers $18 an hour to start. So with that, I'm actually going to Turn things over to Jason again. I was told give him all the time and I fully support that notion. I really appreciate you being here and I'm really excited for you maybe hold us accountable for what we've been saying all this
Great. Am I coming through? Great. Thanks so much, Russell. I'm thrilled that all of you are able to be here actually in person.
I think this is in the time that we're in right now with the pandemic, It's great to actually be able to have some physical presence and be in the same room with all of you. I think a lot of you have actually some of you have Actually met in person before, but mostly on a webcast or actually via Zoom. So it's great to be in person, number 1. As Russell said, my name is Jason Dale. I'm the Chief Operating Officer here at Vital Farms.
I have the privilege and honor to support our operating side of the business in supply chain. And today, I'm going to spend a little bit of time talking specifically about the Shell egg side of our business. I'm going to spend a little bit of time first talking about the farmers and just our relationship there, both in the journey of on New farms and how we actually build new supply, some of the economics and how we set farmers up for success from day 1, and then how we continue to support the farmers from a compliance standpoint and also from a productivity standpoint. I'm going to spend the majority of the time talking Actually about what you're going to see today, which is really the star of the show, at Central Station. And again, as Russell said, I think So the one great takeaway from this is, I think being in the presence of this facility and actually witnessing what's Happening there both in crew engagement, the high technology we use, high level of food safety is really going to bring to life a lot of the things that we've said over and over and Things that you've seen show up in slides, but being there and physically being in that space, I think, is going to be pretty impactful all of you.
So hopefully, that will be the thing that you take away from this experience. That leadership team there is extremely excited about welcoming all of you and taking you through a pretty immersive experience that Welcome all of you and taking you through a pretty immersive experience that you'll enjoy today. So Starting first with our farmers, and I'll dive into a couple of these sections in a little bit more detail. But I just want to highlight a couple of things on this slide about what the journey looks like to become a Vital Farmer. So starting with selection and we've mentioned this in the past, we do 0 outbound marketing for actually driving new supply.
So 100% of what's coming to us is either coming from word-of-mouth in existing communities that we're in today or referrals coming from provide service providers who actually deal with our farmers and coming into central queue for a phone number they call in. And at any one time, we have roughly 100 plus farmers who are intent to be farmers in that queue. As we're looking forward to supporting our growth In the future, we have a team that then starts to work that queue depending on when we need that supply in the future. Again, It's a long lead time item. It takes roughly about a year to put down a new farm.
And so we're constantly looking forward and working that But again, I think it's really important because this goes back to something Russell said, we do what we say. We've really established Credibility in this industry of what we're doing with the farm community and that shows up in the fact that we have over 100 people who actually continue to show intent and want to do this type of business with us. Once that selection team and I'll get into a little bit more detail about what they do, Once they move through that process of actually identifying this is going to be a great partner for us, then they move into the financing side of this. Historically, Vital Farms has not played a banker role or a finance role in securing financing for what the farmers need to do to build out the capital on their farms and build a new barn and equipment. But we do establish relationships with regional banks in all the communities in which we operate to again lend that credibility.
Those banks know who we are. They know what we do what we say and they understand kind of the framework and the expectation of what that farmer is going to receive from both an operating income and a cash flow throughout that process, so they feel comfortable extending that credit to the farmer. Once we actually get authorization that the farmer has the ability either to have financing or can fund new construction, We move into actually signing a contract with the farmer. And this is really where the whole process starts. So we don't really do anything lining up when birth can be delivered to this farm until we actually know we have a signed contract.
Once we have a signed contract, we have an actual that same selection team, a person on that team that's actually watching all the timing of when the dirt work has to be done, when the barn gets built, when the equipment is delivered, when the fencing goes up on the property and then when we actually expect within a matter of days or a week of when birdseed actually show up on that farm. Again, long lead time item, lots of planning happening behind the scenes, because if something doesn't happen in that timeline the way that we want to, It certainly can throw all this off and we have to figure out where are these birds going to go if this farm is actually not ready to receive their birds. So we don't directly drive that process, but certainly from an indirect standpoint have visibility and we'll interject ourselves if we see something show up and have a problem in terms of the timing. And then the last thing I'll talk about here before I move on is just around support and really around kind of setting the farmer up for success from that day 1. It's crucial on a new layer farm for everything to be perfect on that farm for when the birds show up.
The life The bird shows up basically at 16 to 17 weeks of age. And from 16 to 17 weeks of age to week 22, There's a lot happening on that farm to make sure ensure success of over the entire duration of a flock cycle for the farmer that they get really great outcomes and get what they expect to achieve in terms of output of eggs, health for the bird. And so our grower support team is partnering with these farmers. They're actively involved and present when birds are delivered. And for the 1st 6 Weeks of the life of our flock in a layer environment, they're working directly with the farmer to make sure they're doing all the things that they need to do to get those great outcomes that they So
this
drilling in a little bit to the selection process. And again, this will come up, I think, numerous times. You will see throughout this presentation where The real key to us getting really great outcomes in the long term for what we do in our entire production cycle, whether or not it's In the farm side of the supply chain or even at ECF is the care, time and attention we spend in actually picking the right partners. So we are really, really rigorous in this process of making sure, number 1, we have people that are values aligned with what our values stand for and again understand to some degree the mission of what we're trying to do. And if they're really truly owner operators and actually understand that actual sweat equity they're going to need into this.
This is not something that you can enter into. It may be like, hey, I'm going to I got some credit, I got some money, I'm going to build a barn and then I can just Every once a week visit the barn and do the stuff with the chicken. This is every single day. It's a really rigorous process. They have to be actively engaged and involved.
And so there's a lot of work that happens upfront in really identifying the right partner who's really cut out to do this. And so that team is made up of 3 people, 2 people that are actually doing the actual recruiting process and doing that vetting. They'll do some form of peer vetting if they can in the communities. We have farmers who will know people that have reached out to us and showed a real intent in wanting to do this. We'll check with them.
Most of our people who come into our network are doing some form of agriculture already. So we're able to do some type of peer vetting with maybe other people they deal with in the community, whether or not it's other service providers, feed purveyors and things like that. And then once they make it through that process and this team says, hey, These people are a really great fit. We think they'll be really successful in our network and be able to support us in the future. Then it moves on and goes through the entire queue of the slide that I just went through and we go through the financing and the next steps.
And this before we move on, the example that's up here about Gabe Gilbreth's poultry farms. This is another thing we're starting to see, which I think is really amazing. And we're starting to see it show up more where we have both 1st generation and second generation coming into our farm network. So this example is a family who had a farm, actually The extension of the family, so there was a brother and sister involved as well that they actually were on the farm and And said, wow, this is great. We want to do this too.
They had some property. They set up a farm. There are 2 daughters of the family who just recently, One of them just received their 1st set of birds on their own individual farm. The 2nd sister now is actually in queue to receive birds, I think, in the coming months. And so we have a 1st generation family, we have an extended family and second generation actually operating in our farm network, not all on the same property, in the same community, on individual farms.
We're seeing this happen and we're also seeing actually 2nd generation coming back to support family farms directly and work with their and raise their family on these farms, but then using that as kind of a stepping stone and a jump off point to actually show interest in doing their own farms and connect with us in a more direct way of having their own individual contracts. So I think this is something we always talked about in the early days, but we're starting to see more of this come to fruition. And again, I think this goes back to choosing the right partners, doing what we say and really having the support network we have to set them up for success. So talk a little bit about meaningful economics that we set up for the farmer. And again, There's a lot of contract terms here.
And certainly, I think There's more than just contract terms here. This has to do really about kind of clear expectations and really making sure that they understand exactly what they're getting into. And the other thing that I would call out here is that The problem here that's stated is as far as this industry has typically been not very friendly, not the contract Ryder typically tends to be pre management, keeping the farmer under their thumb, making things not very predictable, changing things throughout the way. So giving someone a contract and saying here's what we expect out of you, but halfway through the contract actually changing the rules of the game. And so one of the things that I'll call out here that we do different than I think some other people is the predictive pricing or predictable pricing that we have here.
And there the input ingredients, whether it's corn or soy, is really not controlled. The price of that, if there's volatility in the marketplace actually drives that price, there's not a lot that the farmer can do about that. And so one of the things we do in our contract is we actually de risk that off of the farmer. That doesn't mean they still have a kind of agricultural risk. These are live birds.
They have to do everything. There are numerous things that could happen on the farm that actually create risk for them separate from just this feed volatility risk. And the one thing that I think is really great about this is that It's an input that the farmer can't really control. And if we didn't do something like this, the challenge would be that if a farmer is hit with increasing feed crisis, but we don't change what we're paying them for the product we're pulling off that farm. It may actually influence them to start making poor choices that actually impact a bunch of other stakeholders down the road.
And they're doing that because they're like, hey, I got to do something here. I can't continue to make money doing this and I'm actually going to go bankrupt. So I either have to feed the birds something different or feed them less. And that could then change the output of the product we're getting, the quality of the product we're getting and actually the predictable supply that we count on to We support our sales plans in the future. And then again, these are exclusive contracts, guarantee payments.
We do a biweekly payment for all the farmers. And again, the optional renewal of these, Once someone satisfies their kind of first three flocks, the initial contract, there are no guarantees, but we certainly Tell people that, look, if you're doing everything right, you're getting a great outcome, this is great for you, it's great for us and we're continuing to grow. It's highly likely that we will come back to you with 1 flock renewal cycles as we continue to grow and look to secure supply in the future. So finishing on the farm side, just talking a little bit about compliance and productivity and how we ensure that. Again, compliance for us is not something that we really have to manage and
show up
on the farms every day and say, hey, remember you got to let the birds outside. We've been doing this long enough now and we've really kind of set up a really good system of credibility. Again, this goes back to choosing the right partners. We're choosing people that are doing the right thing even when we're not looking. And I think that's really crucial.
We have that same exact method of not only for picking farmers, but also when we consider bringing new crew into our fold as well. So and again, it's a trust but verify. So the verify portion of trust but verify is we have audits happening on our farms almost all the time throughout a year. So if it's organic farm, you have USDA organic actually auditing our farms or outsourced party verifying the organic standards for the farm. We have Whole Foods Market that's on every single one of our farms doing an audit for the standards that they expect for us to have.
We have California Department of Food and Agriculture on our farms auditing all of our farms for those standards. We have humane farm animal care, which is also known as certified humane, which is auditing all the standards and claims that we make on all of our packages. And then last but not least, we also have the Vital Funds internal standard, which we outsource to a group to actually go through and audit those standards. So all that activity happening on all these forms is really the verification process that keeps these things happening, keeps us comfortable that we are our farmers are doing what they need to do to uphold our standards. And really what we see come out of these audits, if there are any sort of corrective actions or things like that, it has more to do with filling out paperwork Then actually, oh, they actually didn't let the birds outside.
That's actually not something that we have a challenge with anymore because again, we've set the system up pretty well.
So really, the
example here is not focused
on a here is not focused on a compliance activity, but more productivity. And it's 2 examples embedded in there. And one of them, I'll call out because that has to do with a tie in to Egg Central Station. And I'm going to get into this, but The facility has a high level of technology for being able to see the quality of eggs that run through the system. And this example is highlighting where We actually had eggs come through and we were tracking the quality or seeing higher cracks actually show up for one of these farms.
That data gets fed back to a brewer support person who is connected to this specific farm because we know the farm that the eggs are coming from. They work directly with the farmer. So again, early detection, thorough review, they partner with the farmer to try to figure out, okay, we've actually seen an up tick in cracks that are coming off this farm. Let's try to figure out what's going on. They basically identified in this situation where From the nest boxes to a conveyor, the slides were broken on some of the nest boxes or actually bent in.
And so the eggs were actually dropping onto the conveyor as opposed to rolling onto the conveyor. They weren't showing up with like broken egg matter all over the place. These are like micro but once they move through the rest of the supply chain and they get on this machine, they can actually be detected that, hey, look, this egg, when it makes it through the rest of the supply chain, it's not going to create a great experience for the consumer. And so that's actually filtered out of our process. They took all that data.
They made the changes in the barn and in days fixed that problem. So again, We certainly have the ability in our contracts that if we see higher waste come from a farm to actually not pay the farmer for those eggs. But again, to just stay there would do a couple of things. Number 1, it's not really great and doesn't help them get to better solutions that are actually getting the outcomes that they want to get. It also doesn't give us the supply that we actually need to support our sales growth as we're looking at this.
So again, Sitting on the same side of the table, partnership to get to really great outcomes, this I love this example of that. Let me move on that. So now I'm going to talk a little bit about ECS and I'll try to move through this because I have a fair amount to get through. Russell mentioned the stakeholder model and I'm going to stay focused on kind of Three specific areas. 1, the environmental impact that this facility had when we the thought and consideration that went into building it.
And as we continue to kind of run it from that aspect, food quality, so touching obviously retail partners, customer as well as consumers. And then the extra emphasis on just crew safety, collaboration, development and support that was considered when we built this facility. We spent a fair amount of time actually looking at a lot of other facilities. Russell mentioned that This place is state of the art and actually if you go in another Shell egg facility, you won't this doesn't look anything like it. If anything, what you're going to field.
And if you've been in a food process USDA food processing facility, there's a lot of things that happen in this facility that look like that, but actually to even an even higher degree than that. And I think we took The time and attention to really learn from others and build that into our process of making really great decisions. And I think you're going to see that when you get there. A couple of examples of that are, we heard time and time again from people about space. In a lot of both food facilities and egg packing plants.
You'll see $1,000,000 pieces of equipment shoehorned into really small rooms or multiple rooms connected together to do operations. The one difference here is it's 1 full free span room. It creates collaboration. There's natural light. I mean, it just you can feel the presence when you're in there.
And I think that was One big decision that we made in hearing what we heard from other people about things that they would do differently. I think the other thing that we heard loud and clear was around maintenance and uptime and really making sure that you have the right maintenance people engaged, that that machine is actually running. And we did that in both making sure we have the right crew there to support that, but also in making sure we have all the right spare parts on hand too. And you'll actually see this when you get to the facility later as well. So I'll spend a little bit about the environmental impacts.
This was a greenfield build that we originally did for AgCentral Station. And a couple of things are highlighted here. As I remember in 2015, myself, Matt and Russell actually came here to Springfield and we saw this property that the facility is on now and it was basically just a field. And I think even when we were There we saw wild turkeys and deer and it was amazing. And it was amazing it's amazing to think Back now of what we have and we see this facility, but the vegetation and what's actually on this property looks a lot like what it did before we disrupted the property and built this facility.
And again, great for the environment, but there's Again, a long term sustainable business reason to do this too that native vegetation on this facility that's indigenous to the area Doesn't need irrigation, so we don't have a real fancy sprinkler system and have to water it all the time to keep it green. And it's a natural and we don't need to use fertilizer, but it naturally and biologically treats the water runoff. So rainwater that falls on this facility. It's biologically treated before it's recharged back into the ground. The other thing for the hardscape, We have asphalt on the high end of the properties and permeable pavers on the low end.
So again, eliminates any standing water on the hardscape of the facility. I think 2 things there. We're trying to run off water and recharge it back into the ground as quick as possible. There's filter, gravel filter that's below permeable pavers that allows that to happen. But another big reason is standing water on hardscape not only is a breeding ground for insects, but also does damage to the hardscape.
And so the quicker the water runs off the hardscape, We don't have a need to constantly do repaving of our asphalt and reconstruction of the hardscape. And move on Matt. So this gets to the this slide gets to the food safety perspective. And again, it's we got a lot of high-tech stuff there that really ties into a high level of food safety. Couple of things that you'll see here, the sanitation powder that's on the floor, when you walk the facility, you will walk across that.
That's basically to disinfect anything on your shoes. And then these handwash stations, I've been in a lot of food plants. And a lot of food plants will have a wash station. When you walk in, you have a sink And you wash your hands and there's a soap dispenser. And what you typically find is that production people who are working in an environment like that are moving at such Velocity that they just really rinse their hands, don't use soap, grab paper towels, dry off and throw it and move to do their work.
And so This station in a food facility usually is actually quite messy. These handwash stations that we put in, There are actually time you and all of you will do this. So whether or not you work at the facility or you visit the facility, you'll go through this process. So you'll get to experience this. You stick your hands in this machine basically up to your elbow.
It washes basically your hands and your arms with a solution that kills 95 of the germs and viruses that could be on your arms and hands. And then you walk over to air dryers and You dry your hands off and then you either go work or you go continue and see a tour. So you'll get to see this. And again, This is just another example of how you'll never see this in another Shell egg plant. And quite frankly, I don't know that you'd actually see this in another food manufacturing plant that you visit either.
So moving on to the technology side of the equipment, This is probably the most impressive thing when you guys walk through the facility actually being able to see this machine and what it does and How it washes and dries and then packs egg, I think is really impressive. And certainly, if you've never seen it before, it's pretty amazing. But the technology that's in this machine, I think is what's really impressive. And again, we spent money here for the purpose of really driving great outcomes of having a great quality product show up on the shelf, having data that we could use to feed back to our pharma community about making decisions that actually help impact downstream in the in the supply chain. And one of the things that I would ask you to pay attention to when you're at the facility is This picture here is when the eggs are already actually on the machine and they're about to go into the washroom and get washed.
But pay close pension to how clean the eggs are before they even get to this point. And what you're going to see is They're relatively clean. They actually look like they've already been washed. And that was very purposeful, again, back to the farmers and what we require them to do and the type of that we asked them to put on their farms, the way the nest boxes are constructed. And that has everything to do again for setting up the team at UCS to be able to do a really efficient productive job of moving through the process in Washington So quickly, this runs through 2 processes.
We have a dual wash system. There's 2 175 gallon tanks. We can run those for 4 hours at a time and USDA requires you to flush the water after 4 hours. So having 2 dual tanks allows us to continue to run. And then we also have a drying system that once they're washed, they go through a dryer and we have 2 dryers back to back to try to dry those eggs.
So We have a limited amount of water when they actually end up in the carton. Water and pulp cartons don't mix well, and so we certainly want those eggs to be as dry as possible before they hit the packaging area. The crack detector that's on here, I think this is another level of just really cool high technology that we have in this machine. There is lots of pictures being taken of the egg to make sure that there is no leaking egg matter on the egg. And if there is, that's identified, Those eggs are actually kicked out before it goes through the rest of the process.
But this machine right here actually uses of microphones that tap the eggs 16 times. So 4 on each side to basically tell whether or not there's micro cracks in the egg. So something that's not visible to the eye and goes through and you can set the machine and dial it to how sensitive you want that to be. USDA would actually allow you to, in one case, a product 7% of what you can send out to the consumer can actually have a crack, Can't have leaking egg matter, but it could basically be a crack in the egg. There's an 80% to 85% chance by the time that ends up on shelf or with a consumer that that's going to be a broken egg when you actually open your carton.
So we actually run this at a much higher tolerance to avoid that. And we've studied and really dialed in that the crack the micro cracks that we allow to go through this machine are only the top 10% level that we see coming through. And we've tested those in the supply chain to make sure that that doesn't show up as a bad experience to the consumer. I think there's a consumer impact there, but there's also a retailer story there too. We don't have a lot of our retailers partners coming to us and asking for 1.5% to 2% of sale allowances for shrink, because again, we see higher quality products showing up on the shelf.
Can you move on that? From there, it goes through a sanitation process. We use UV light to sanitize the eggs. Once they're sanitized, they go into a load cell. Their weight is a proxy for size of the egg.
And so if this machine will determine, Hey, this is a medium egg or this is a large egg or an extra large egg and the bottom photo you see here is basically the packing lanes. And so those lanes They're set up to say, hey, we're going to have lanes 1 through 8 are going to be large, extra large. And so all the large, extra large eggs will be sent to those lanes. And then Lanes 1012 are set up for medium, so only medium eggs will go there and be packed into retail cartons that are reflected for medium. So that whole process is what grading and sizing is as reflected on here.
And then the last step in this process on the production floor is a quality step that we do. Again, Not necessarily a requirement, but this is an internal process that we do. The eggs are in a carton, packed in a case. Our quality team before that pallet is allowed to go into the cooler and be set up to be shipped to a customer. They're pulling one case off of the pallet, going through doing an inspection, looking for these things that are noted on the slide.
If they see anything showing up In terms of they'll use metrics of numbers of errors that they see or something that they think could basically be a failure upstream. They'll communicate that to machine operators. And if it's high enough, they'll actually flag the entire pallet to be reworked. But for the most part, this is just a double check and most The times they've worked through the product, it's fine. They'll put that case back on and let the pallet go to be shipped out to customers.
The back of the facility and the dock, again, Safety, food quality, both of these examples are showing that. I think 2 things that aren't reflected here. One of the things you're going When you're there, we have wider aisles than you would see in most facilities. Again, that's done for safety reasons. And we have a trucker lounge.
It's separate. So it's part of the building, but it's separate for biosecurity reasons. There's a card reader for a door to go back and 4th from there. But there's an open window, so they can communicate with our warehouse team. The lounge isn't anything fancy, but it's air conditioned.
It has a couch. It has a bathroom, they can get coffee, we have snacks, there's beverages there. And it's just another great place for us to connect with a stakeholder, which is our truck drivers that both bring us product and deliver product, for them not to actually have sit in the truck the entire time while we're either unloading or loading their truck. So talking more specifically about crew safety and more about automation in the facility, you're going to notice there are Some big pieces of automation, we used robotics in the facility and we typically have tended to automate the Parts of the facility that were really super labor intensive and either not very ergonomically friendly, A picture that's not shown here is the front end of the loader. That's you'll actually see a full robot doing all of that loading, and doesn't require anybody to actually physically stack trays onto the machine.
And
one of the
great things about this is that these jobs, While they were very labor intensive and they're obviously crucial for the operating process, they're not very value added. And so what This automation allows us to do is actually repurpose crew to much more value added roles. Again, A high level of learning and development that's taking place trying to grow all of our team members into becoming leaders in parts of the facility. And so, this isn't really a way to displace jobs, more of a way to actually repurpose those people to things that are more value added at the facility. And these are two examples.
1, the vital times at one point in time in the past, we used to have someone stand there in the lanes and actually shuffle those like cards into the And if you can imagine trying to do that for 8 hours, number 1, it's not a very enjoyable job and it's again not very ergonomically friendly. And case packing, we still have people doing case packing. We have 8 lines that are automated. These tend to take the majority of what's running on the machine and the other lines that are being done manually tend to run at a slower rate because they're just smaller frequency SKUs that we're actually running on the machine. So again, a great way just to create more throughput here and less labor intense.
Again, I talked about this a little bit in the beginning, but you're going to feel all of this when you get there. Free span building, the space it creates, climate controlled, the natural light, I think, is a huge differentiator for us. I mean, there's not a lot of plants you go into that you actually see natural light anywhere in the facility. Fresh air is balanced. I mean, you can feel all this.
And the other thing That I think you're going to notice when you're there is that this is like an orchestra. Like there's something we call a control tower. There's someone who sits up on a machine, which is the brains of the entire Mogo machine. And they can see the entire floor. They can see all the different sections of what's happening.
And so they're very quick to jump on any issues. They're all tied in with radios and they're all constantly talking. And there's not a lot of people running around with their hair on fire. There's not a lot of fire drills happening. It's a very consistent process that happens on that floor.
And certainly, there are things that happen or we have like anyone would some level of downtime or something like that. We have that arise. But again, the thing that I think you'll notice there when you're there is it just feels calm, it feels good, it feels productive. So a little bit about and this is going to be the first you're going to see when you go there because of the construction we're doing on the facility with the expansion and actually bring you through the front office first. And I think the team there is going to go through all of these things.
Again, Lots of high-tech here. I think a couple of things I'll point out. The solar shades are super cool, like depending on where the sun is hitting the building, Shades are constantly going up and down. Again, all in an effort to really create a great environment where everyone can work. The wide open floor plan certainly creates collaboration within this team.
And humidity and CO2 sensors, Again, I think super important in terms of just regulating that, making sure CO2 levels don't get too high in an enclosed area and keep everybody feeling great and productive throughout their entire workday. They'll likely point this out on the tour, but the other cool thing is the floor, like it's a raised floor, although the mechanical was actually underneath the floor. And one really cool thing about it is we have vents, Individual vents on the floor, they're actually movable. There's cement squares that actually you can take out and actually move around. If we reconfigured the office space we have the ability to actually reconfigure the vent system for HVAC in this part of the facility.
But each person, I can be in a work space and I can just be hot natured and I can turn my vent full up. But I can have someone right next to me who is the exact opposite of me and is actually cold all time until they can keep their event closed. And so again, just a little bit added touch that we put in, In the beginning of constructing this building, the thinking about, hey, how do we really make sure people are comfortable, and that they're most productive while they're here at work? Yes, go ahead. So I spent a little bit of time talking about feedback and just develop I think the next slide is talking about development.
We certainly are collaborative with our crew. You'll see when you're there an idea wall, which is encouraging them to come up with really great ideas. I think they're usually split between lots of production and process improvement ideas and then we also see some HR ideas show up there as well. The one thing I want to call out on this slide is the last piece about crew being eligible for GGO B bonus in equity. We actually do equity awards for every single person in this company.
But the GGOB bonus, so that's a great game of business. It's a form of open books management and it's basically a gain sharing program. So the people in this facility have their own kind of P and L, they don't really have a revenue driver, but they have a cost structure of what they're expected to do. And they have different levels of wherever that cost structure ends up on levels of bonus that they'll actually make in this program. It's an annual program that's managed quarterly.
They all have really good understanding what their cost drivers are within their control. But the thing I want to point out here that isn't on this slide is there's Also these things called mini games. And I think the team when you're there is actually going to take you through this and you'll see some examples of some prizes that come out of this. The mini games are run-in a much smaller frequency and the driver of mini games is all about continuous improvement and engagement towards the total effort of, again, trying to run the most efficient they can to actually achieve their bonus. But the mini games are done in a way to where I have two examples.
1, we had a situation where we were actually had our error rate on this shipment of cases going up. That shipping team spent the time for 9 weeks. They set out a goal and said, look, we're going to reduce our error rate by 50%. They then get to choose, hey, here's what we want for the prize. If we get all the way there, We want this for a prize.
And you would think they're like, well, we want $100 or we want but no, actually what they choose is This shipping team shows they wanted beams. So, beams are functional for them. They're in and out of coolers. But the other cool thing is Most of these things tied to Mini Games end up being some form of swag that we have and it's independent to that effort. So and Russell was talking to someone earlier today about this.
There are actual Articles of clothing and things we have in the business that if you actually didn't participate in that mini game and drive that, you don't have access to get that. So It's a form of pride for this team to really drive to great outcomes, continuously think about how to improve. And this example that I just gave with shipping, they actually were able to reduce this by 75% over the 9 weeks from where they were and keep that at a sustainable level. And they all got to get their beanies. There's another example that's tied to sanitation, which I think The team, when you're there later today, we'll touch on as well.
And then lastly, before I talk about the expansion a little bit, Again, focused on crew care, really the time and attention, I mentioned this about learning and development. We spend a ton of time on developing these people from whether or not they start on the Hack Lane, and trying to give them some sort of experience about what it means to actually be a people leader in Vital Farms. Most recently, we just had a program called New Ways of Working, which was really a leader development course that was run from July through part of September. And we took all those people leaders through a process by which how to give proper feedback, how to really open up communication lines. Again, you think about frontline people in this type of work environment, historically are just told go work and do your job and then get us what we want to get and we'll come back next day and do it all over again.
This type of attention and what we're doing is starting to prove out we have people in the facility that have been with us for years that started just putting egg cartons in a box and are now actually leading teams of people facility. So I think it's great, again, all in an effort of making this facility more productive, more efficient and again, impacting all of our stakeholders and really growing that pie for all of them. The other thing I want to call out here is COVID-nineteen in Our protocols, we put things in place in March of 2020, PPE, shift separation, trying to keep people socially distanced, All of those things are still in existence at the facility today. And I think that has everything to do with minimal disruption that we've seen through this process. We also surveyed our crew.
We have lots of different opinions about whether or not we should wear a mask or not wear a mask. But the one thing we heard resounding from 100% of the people that we talked to is, we feel that Vital Farms kept us safe this entire time. So it was a pretty easy answer for us just to continue on the path we're on and keep all the things in place until something changes and makes us feel like we can be comfortable and safe removing any of that or addressing. And the team there will tie end of this, but our learning and development program that this crew has access to, we refer to as Cluck University. It's a platform that they can actually access from home if they have Internet access.
It's web based and so they can take different training courses. But we also have an IT station actually set up at the facility that they have access to do as well and we give them time to do that. Can you move on, Matt? And then lastly, talk a little bit about the Expansion, again, the headline here, we are planning to finish on time and on budget. We should be putting eggs in a box by mid-twenty 2.
Unfortunately, it's a Construction zones, you're not going to actually be able to see the inside. You will be able to see the outside of the building. It's For the most part, complete on the shell. You'll see a wall up that will be pointed out to you that separates the existing processing floor and what will be the new floor. Again, as a reminder, this is a mirror image.
So basically, you have what's called a dirty and a clean side of the facility and both 30 sides will be bumped up against each other, but we'll have basically the same machine that we have in the existing facility will be put in the new part of the facility. And again, this will double our capacity. So we'll have the ability to support a $600,000,000 Shell egg business. And I think in closing here, What I'd like to point out just from again reiterating collaboration and reiterating how important that is to how we do business. We could have embarked on doing this expansion to say, hey, look, we did a really great job with the first one.
And so let's just replicate that and do that same thing again. But we actually paused for a minute. We brought in internal stakeholders, our maintenance team, our sanitation team and our production team. We actually had a meeting about, hey, we know we did a really great job with this first bill of the facility, but are there some key things that we could have done differently that we want to actually account for in this facility. And sure enough, there were a couple of things that showed up.
One of which was, you'll realize we don't have trench drains on our floor, which is a design choice. We have what's called sanitary drains and That's another food safety aspect of the facility. To clean a trench drain, you basically have to high pressure hose and you aerate all the bacteria, which is not good in a food facility. But the sanitary drain position in the way the packaging layout is done isn't very conducive to actually squeegeeing water and some of those drains are hard to get to. So that sanitation team basically expressed that to our engineers.
They said, okay, well, we can just change some position layouts where those drains go. The other thing is in when you walk through the washroom, when we drain those 1 175 gallon tanks. Basically what happens is that amount of water that comes through, the pitch of that floor, actually the water runs to the walls. It's an enclosed room, so there's not a huge issue with that, but it's not the most efficient way to actually drain that water. And so one of the things we're addressing and again, this came from, I think, both the maintenance and sanitation teams, we're changing the pitch of the floor in the new room to actually allow for more efficient draining of that water when we do have to change the wash water over.
So again, another example of Really how we're taking the time, care, listening to people involved in all parts of our network, Again, all in the effort of continuing on our mission to improve the lives of people, animals and planet through food. So I thank you for listening to me for as long as I've talked. And I'm really excited for you get to go See this place and I know the leadership team there is certainly looking forward to welcoming you and I think they'll do an amazing job of really bringing this all to life. So thanks
so much.
All right. Well, I guess I'll close things Quickly, first, thanks to all of you for making the journey here. I think excited for you to see the facility that Jason just described. I think you really see how it really exemplifies everything that you hear us talk about from a mission and values for the company. And I think you'll be really impressed.
As you know, we're doubling the size of the facility. And so I'm going to just take Just a couple of minutes to focus on the growth aspects of the company, because that's why we're actually taking the footprint and doubling it, allow us to be able to sell $600,000,000 of eggs from this facility. I'm going to first start with what have we done, right? From 2017 to 2020, we've grown the top line at a 43% compound annual growth rate. Q2 of 2020, the 2 year compound annual growth rate was still at 37%.
So post COVID and all the looks we saw there, we continued to show that high level of growth. At the same time, in 2017 2020, we We've expanded gross margin points by over 1,000 points. We hit 36% in the first half of this year, which is in line with our long term projections that we have for gross margins for the business. And we've grown EBITDA from loss of $800,000 to a profit of $16,800,000 last year. So we've been able to sustain this high level of growth for a number of years, while growing the profitability of the business.
So the other thing that we've been able to do, if you go back, Matt, I mean, we provided the sell side analysts from which are in the room today with a 5 year model at the time of the IPO. For 2020, we exceeded what we said we would do, both on the top line and the bottom line. For 2021, the guidance that we provided on the top line is above the 5 year model we provided. And on the bottom line for EBITDA is in line with what we've communicated in the 5 year model. And that's despite the headwinds that you hear from all companies on the commodity front, on freight and other things.
So I think the other thing that we've been demonstrating is that we've been able to achieve what we said we're going to do and actually do a little bit better and deliver on our commitment. And we think that's important and want to continue to do so. So As we look forward, we're doubling the size of this facility. How are we going to get there? I'm just going to emphasize a couple of the points that we've talked about in the past, but There are some of the key pillars that are going to drive our growth going forward.
Pete Pappas, who leads our sales team, Tim and his team has done a great job continuing to drive sales store growth, right? We finished at the end of Q2 with just over 17,000 stores. Specialty eggs today are sold in close to 32,000 stores. So there's still a lot of room for us to grow into where all of the eggs, the segment within which we compete are sold today. That's still one of the pillars of our growth platform.
Billing we have is Whole Foods is one of our important customers that's been with us the longest. On average, they have 13 SKUs today in their stores. MULO in the conventional category, we have 3 SKUs on average. So not only do we have the opportunity to get into more stores, in a lot of the stores that we're in today, we have the opportunity to continue to grow the SKUs. And that happens naturally over time.
As we get our core SKUs into new stores, they see the success that drives for them in terms of dollaring and profitability. And they add more SKUs over time as we prove that out for them and they see that happen in their stores. The 2 important growth pillars for us that will allow us to continue to grow at the pace that we have. The next one is Our core consumer, we call them Abby and Abe. Abby and Abe is typically a female, 25 to 49, Income of greater than $75,000 a year, simply college educated, interested in where their food comes from and the health benefits for their family.
And We have identified there's about 14,000,000 Abby and Abe households in the U. S. We've done a good job continuing to grow that, but we're only at 5,500,000 households today. So with our core consumer, with the trade and marketing investments that we continue to make over time, We still have a large opportunity to get to the full cadre of what we see as our core consumer. We're only just a little over the third of the way there today.
Total households in the U. S, 130,000,000. We're not going to get to 130,000,000 households, but we also see That there's more of Abby and Abe coming into the fold as people get more concerned about where their food is coming from and the health of that. So that's another opportunity over time. So as
we look
at, we've done a great job growing the company till now, but there's still a huge opportunity in front which is why you're going to go and see a facility that we're about to double the size of to ensure that we can continue to participate in that growth and deliver what we want. So we're just reaffirming guidance at this point. So net revenue on the top We're going to grow 15% to 18% for this year. So net revenue between $246,000,000 and $253,000,000 And adjusted EBITDA in the range of $7,000,000 to $9,000,000 The first half, As we've talked much stronger than what
the back half will be.
In the back half, we're investing more in marketing and trade. Some of those new store placements, you want to drive trial, get those new consumers to try as quickly and bring them into the fold. As well, we have The impact of the commodities and freight costs, because of the way that we compensate the farmers, as Jason described, we as feed costs go up, We adjust their prices and pay them for that 1 quarter in arrears. The peak of commodity costs happened in Q2 and they started to drift down from them. That's going to impact our back half.
So for now, we're reaffirming guidance. The last thing I want to do is just reaffirm what our long term financial goals are that we've articulated. And we still believe that we're going to continue to grow net revenue over 25% a year. Gross margin targets are still in the mid-30s and we anticipate that we'll get to EBITDA margins in the low double digits. And that's a quick summary of what I had to try and get us back on time.
And I think we're opening it up now for Q and A. Is that right? Chris? Yes. We'll repeat it.
Sure. I think we are seeing commodity costs come back down, but they're still above the long term average. We are investing more in marketing and trade in the back half and plan to do so to get to more stores and more consumers and translate those into trial. So I think you are going to see more investment in that and that's built into the guidance that we've provided so far. Yes.
I think if it comes down more than we thought, we'll certainly look at the opportunity need to drive the high level of growth because that's really what we want to sustain and get in as quickly as we can.
Yes. So just as when you all started to see inflation pop up and we started to get the questions about what actions we would take to offset that. And we gave perhaps the unsatisfying answer of We're not taking price. We have a long term growth plan and we don't see this necessarily as a permanent change in cost structure. And therefore, We're not going to let it change our go to market strategy, at least not at this time.
In the same way, we didn't pull back a lot earlier in the year. So it's not like suddenly we got an upside surprise and we've got money to spend. We continue to play the long game we were playing a year ago and we'll play
next year. So I'll repeat the questions. I didn't do that for the last time the people on the webcast. The question asked was, hey, we've achieved a 36% gross margin sort of our long term target in the first half. Do we see an opportunity for that to continue going forward and to reinvest?
Yes, I mean, We've achieved the long term gross margins. I think as we think about it over time, as we start to enter new categories, we're likely see that those new categories will start off with a lower margin, and that will grow into the margins over time as we continue to expand them. So I think as we think of the long term margin, it's a combination of what we'll achieve on the Ag business, which is the majority of our business today and the temporary margins we have as we enter new categories that will get us back to that mid-thirty target.
Thanks, Brian. So the question was, how do we think about innovation and what's our purpose doing it. Are we looking to expand households? Are we looking to expand usage occasions, both? And I would say with Fultander, The product new product innovation that we have brought to market, because as I'm sure you all know, the products we to market in the last few years have all been within the egg or the butter categories.
We haven't innovated into a whole new category yet recently. And so there's as much of an experimentation approach as there is a long term strategic approach. The fact is, these are smaller bets that frankly we do in part to be able to learn from. So when we launch an egg bite, for example, we know that the economics of that product are supported by the fact that We take more of our eggs out of cartons than most egg companies do because we have a higher standard for defects. They still are great edible eggs.
They may just not look quite as pretty as we'd like them to in the carton. Well, we want to do something else really meaningful with those. And so an egg bite product, a breakfast bar product is designed in part to be able to make use of those eggs and create value with them. At the same time, we had a hunch that there was an unmet need. We've done some research that said, hey, especially parents on the go were dissatisfied with the ingredient stack and the protein content of the snacks they could give their kids on the go.
So we wanted to fill that unmet need, but we didn't know when we launched it and we're still trying to figure out, we're still learning about whether that meant a whole new consumer or simply a different daypart and usage occasion for our existing consumers. And I don't know that we've got a definitive answer yet, but we're happy either way, right. The business is performing well. The volumes are there. We've quickly risen to the number 2 in a very crowded market of Egg Bites.
And As long as we've got a great place for those slightly less than perfect eggs to go, I'm happy either way. I think as we Look further ahead and start to think about bigger bets in new categories, we're going to be much more thoughtful about our right to win. We're going to be much more thoughtful about What kind of household penetration we need in order to win out of the gate, and much more thoughtful about whether that's a new consumer. And ideally, we'd like to see new consumers because we're only in 5% or so of U. S.
Households versus selling more things to the existing one.
Yes. The question was relative to our farmers, do we see a range of Production outcomes change from the maybe an initial farmer that gets in versus someone that is a more longer or tenured farmer and do We see higher results with them. I think there's some part of that. Again, I'll go back to what I said relative to The very beginning of when birds are actually brought on a farm. We've spent a lot of time over the years doing what we're doing and really creating a manual of what if you actually follow all of these steps, you have a much higher degree likelihood of having really great outcomes come on that farm.
The key is that Front end process and really when the birds are first brought on the farm and doing all the things in the right way and having the environment set up in the right way to support that to get those outcomes. If for some reason there's something and this can go all the way back to the rearing of the birds actually. And so raising those birds from day 1 all the way to week 17, if something happens in that process that actually affects those birds, it can affect the outcomes later in the bird's life through the lay cycle. So I don't know that I would specifically say that we actually see farmers get Smarter over time, there certainly is collective knowledge that's transferred in our farmer network. Pre COVID, we did Quarterly grower meetings where we bring all of our farmers together.
And again, we have a system set up that doesn't pit the farmers against each other. So we don't have high quality farmers and lower quality farmers and we're paying them in different mechanics, which would then inspire the higher performance, say, look, I'm not going share any of my information because I want to stay ahead of the game. We actually have a fair and balanced scorecard across it and really inspire all of our farmers talk to each other and do a lot of knowledge transfer. So again, there's probably some level of improvement over time as people start to do this, but I don't think it's materially meaningful. I think we are so engaged from the early onset to really make sure that great outcomes are happening from
day 1.
Yes. So the question was over the past 5 years, has our production results and performance outcomes on our farms gotten better? Absolutely. I think we have in the early days, we were a lot of learning as we were going and really kind of testing out things at work. And Both Russell and I have specifically gone to the U.
K. To learn more about how to do this type of production and we brought that learning back. We've also had Farmers in our queue who've actually been with us since 2015, who have learned a lot along the way too and have had really great outcomes and helped us build basically what we consider an operating manual now.
So one way to think about this, it's The outcomes today between a 1st flock, a 2nd flock and a 3rd flock may not vary a whole lot, not nearly as much as they did back in the day. If you were to chart it out though, what does vary a lot is the intensity of our level of support in year 1. So there's a the former head of HR at Google is a guy called Laszlo Bock, and I'm a little bit of a fanboy, I read all his books. Laszlo Bock talks about how orientation For a new employee isn't a 2 week thing or a 1 month thing. It's actually a whole year long thing.
And we think about orienting a new farmer in the same way. It's high touch for that entire 1st year because we've seen it all before. We've seen all the trials and tribulations, the potential to misorder your feed or the potential to miss an alarm code that goes off. And so we want to hold their hands, not so much to get a better outcome than as possible in year 2, but to help remove some of the risk that they'll get something less than in year 1. So the question was, you're only at 5,500,000 households today.
You've got over 14,000,000 AbbVie and Abe households and 129,000,000 in total. How are you getting into those new households? How are you telling the story? There's an awful lot of story to tell. So I'm going to start by saying the better person to answer that question is Catherine McKeon in the back of the room and she's going to be at one of these tables in communications and she'll give you a much more satisfying answer than I can.
But I'll just throw out a couple of things. When I joined Vital Farms, Part of my orientation was Matt, our Founder explaining to me that he wasn't quite sure if we were an egg company or an education company. Because back then we were creating a brand new standard and unless people could understand what that was, why in the heck would they pay more for the thing we were doing. And in those early days, it was enough simply to explain the animal welfare aspects of what we were doing because they were so different than the 95% of laying hens that were in cages. And once we could explain what we were doing, that was often enough to inspire purchase, especially since we were kind of the only game in town, the only nationally distributed egg of our type.
Over the years, what we found is that, as you can imagine, there are a lot of fast followers and we've had everything from store brands to national brands come out with a lot of the same words on their packaging as our packages do. And the way we've been able to continue to accelerate households, accelerate market share, accelerate our growth versus all those other players, is not by saying that our one 108 Square Feet is better than the other guys, although we think it is because it's in Pasteur belt. But it's as much by demonstrating transparency. So on our social media channels, it's very tempting to show pretty pictures of beautiful dishes you can make with our eggs, maybe a bright orange yolk dripping in just the right way. We call it egg porn actually.
We also offer beautiful pictures of birds out on pasture and anybody can take a beautiful picture of that type. And that's what we have in common with all those other brands. But what they can't do because they don't operate the way we do is they can't offer the pictures and the video on the farm. They can't offer the traceability so that you pick up a carton of eggs and it says the name of the farm, the came from the need to watch a video because they're buying eggs in the wholesale market and we're buying them from the farms we have direct relationships with. And so it's a whole bunch of those little signals that say, 1st, we do a couple of things different.
We don't have to talk about the other guy. We just have to show you what we do because the other guys can't match it. And we're going to be transparent about how we operate. And we're going to talk about all the things that are important to us and not just the consumer friendly ones. We'll highlight that guy that drives us pick up down the road to decide whether that farmer fits our needs or not.
And he'll be on our Instagram page. We'll highlight the person that packed the eggs for the food bank and why that was so special to them. And it's not about virtue signaling, it's just about showing what the heck it is we're doing. And that is remarkably uncommon in our sector and frankly in food more generally. So that'd be my headline and you'll hear a lot more from Catherine when you visit with her.