Consumers have significant influence over the direction of the food and agriculture system. Through their purchases they express their preferences and values and help shape the decisions producers and retailers make.
Their influence is growing as they consider what they buy, why they buy it and how and where they purchase food and agriculture products.1
These consumer trends are global, but the nature and extent of their influence is shaped by geography, cultural norms, government policy and socio-economic status. The following chapter provides an overview of these global drivers of change. An in-depth look at the evolution of U.S. consumer preferences shows how these trends are transforming food and agriculture systems in the twenty-first century.
Demographic Drivers of Change
Food demand is driven largely by changes in the size, rate of growth and age of the population. Even though the rate of global population has slowed, by 2050 there will be nearly 10 billion people needing nutritious, safe affordable food.2 The latest UN Population Report finds that the global population is growing older and younger, with significant implications for global food demand.
Global birthrates are declining and in a growing number of countries, the birthrate is too low to maintain the current population levels. At the same time, life expectancies are rising, even in low-income countries. As a result, in 2050 the number of people aged 60 and over will equal the number of people aged 15 and under.3
As people age, they do not need to eat as much, which may slow the overall rate of food demand growth in coming decades. Seniors are living longer than they anticipated and without employment or sufficient savings, increased rates of food insecurity and undernutrition among seniors are likely. Many will need government and non-profit food assistance programs to meet their basic nutritional needs.
By contrast, the population in some regions is trending younger. In sub-Saharan African, 60 percent of the population is under 25 years of age and the birthrate, while declining, is still twice the global average.4 This youth explosion is driving up food demand, but many of these young people are living at or below the poverty line. They lack the resources to purchase or grow enough nutritious food to maintain a healthy diet.
Finding any food at all is a daily struggle for 810 million people and 151 million children are affected by stunting (low height-for-age ratio) which causes life-long physical and cognitive impairments.5 At the same time, overweight and obesity rates are rising to alarming levels, especially among the young; 38 million children are now overweight or obese.6
United States: A New Consumer Shapes A New Century
In the U.S., food production and consumption are big business. According to the USDA Economic Research Service (ERS) U.S. consumers, businesses, and government entities spent $1.46 trillion on food and beverages in 2014.16 The agriculture and food sectors, from farm to fork, employ 19 million people in full and part-time jobs.17
American consumers are changing the way they engage with food, including how and where they buy it, as well as what they eat and why. Some of the factors driving these shifts include the rise of the Millennial Generation, the purchasing power of working women and concerns about diet and health.
Generational Shifts Drive Food System Change
By 2019, the Millennial Generation (aged 20-35) will surpass the Baby Boomers to become the largest generational group in the U.S. with 74 million people.18 Their numbers and purchasing preferences are beginning to fundamentally alter the food production and retail system in the U.S. and beyond.
Millennials, together with members of Generation X (66 million people, aged 36-51), are in their peak food-consumption years. Most are working and raising families and/or caring for elderly relatives. As a result, their food purchases are the trends most closely watched by producers, retailers and restaurateurs.
A USDA study of Millennial food purchases confirms that this generation spends more on food, overall, particularly on food not consumed at home.19 In their food-at-home purchases, they put a premium on convenience, spending just 55 minutes per day on food preparation and clean-up, significantly less than previous generations. Almost two-thirds of the Millennials surveyed said they bought some form of prepared food in the previous week.
Millennials shop for prepare-at-home-foods at a variety of retail outlets, rather than just their closest supermarket. They are also the biggest users of grocery delivery services and meal kits.
But it is their dramatic increase in food purchases from online-only retailers, such as Amazon.com, that has the greatest potential to disrupt the store-front grocery sector. A survey for the Food Marketing Institute (FMI) found that 43 percent of Millennials purchased food from online-only retailers during 2017, up from 28 percent in 2016.21 Baby food, pet food and treats, cleaning products, snacks and sweets are the most common purchases from online-only outlets; as delivery mechanisms for fresh and frozen items continue to improve, those purchases will increase as well.
The USDA study of Millennials provides an important nuance to the FMI survey findings.
Food expenditures and purchasing patterns within the Millennial generation differ depending on when people entered the work force, according to USDs data.22 Young people who tried to get their first jobs during the Great Recession struggled to find work and accepted jobs with lower wages. This leads to a lower wage growth trajectory that will continue throughout their working lives. As a result of their experiences, Recession Millennials have more conservative attitudes toward food spending. They eat at home more often and spend less on food compared to others in their generation, even those who have similar incomes, but started working before or after the recession.
While Recession Millennials are a relatively small segment of their generation, researchers predict that these conservative attitudes and spending habits will resonate throughout their lives.