Vital Farms, an Austin-based "ethical" egg producer, made its Wall Street debut Friday, with shares soaring 68 percent after trading began.
Husband and wife team Matt O'Hayer and Catherine Stewart founded the company in 2007 as a small urban farm in south Austin with 20 hens. It has since expanded distribution into 13,000 stores, including Target, Whole Foods Market, and Walmart, and become the number one producer of pasture-raised eggs and butter.
"They saw an opportunity to bring food to Americans in a more ethical way with better outcomes for all stakeholders, most notably the animals that produce the food," CEO and president Russell Diez-Canseco told Cheddar shortly before the closing bell.
The pasture-raised label is not officially recognized by the USDA, but it generally refers to the amount of space afforded to livestock. Vital Farms' hens are provided 108 square feet of space and "plenty of fresh air and sunshine year-round," according to the company.
Diez-Canseco noted that Vital Farms is currently in just 2 percent of U.S. households and that the company plans to expand beyond its main product categories of eggs and butter.
"Beyond that, you could certainly imagine us continuing to expand within value-added dairy, which is a really big and growing market," he said. "Consumers we've talked to would love to have lots of different kinds of food produced by Vital Farms."
Vital Farms' high price point compared to competitors does present a challenge amid the ongoing economic downturn brought on by coronavirus.
"We certainly put a lot of thought into that every day," Diez-Canseco said. "The truth is, producing food in a way that's sustainable for all stakeholders, meaning that delivers on better outcomes for small family farms (who often lose at the end of the movie in this country), for consumers, for our employees, for communities, and for shareholders, isn't a cheap endeavor."
He added that household expenditures on food are at an all-time low, and that developing a more sustainable food system means "we need to be able to pay for it."