Download FOOD CONSUMPTION AND EXPENDITURE PATTERNS

FOOD CONSUMPTION AND EXPENDITURE
PATTERNS
 Consumer food expenditure are rising for three




reasons
1. Increased population and quantities of food eaten.
2. Rising food prices.
3.Consumers preferences for more expensive foods
and marketing services.
In recent years rising retailed food prices have
accounted for most of the increase in consumers
food bills.
 The second most important reason for this rise has
been the result of consumers substituting more
expensive foods into their diet eating away from
home more frequently.
 Only a small portion of the rise has been due to
increased quantities of food eaten.
 Some interesting and important turning points in the
American diet can be indentified.
 In the nineteenth century and until 1950, pork was
the most popular meat, but since 1950 Americans
have consumed more beef than pork.
 Consumption of fresh vegetables overtook fresh




fruits in the mid- 1950s.
Poultry consumption first exceeded egg consumption
in 1964 and poultry pushed past pork consumption
in 1982.
The rising soft drinks consumption trend crossed the
falling milk trend in 1967.
These trend indicate that no food has a guaranteed
market.
Each must earn its place in the mind and stomach of
consumers
 These
changing consumption patterns are of
enormous importance to food producers and
marketing firms.
 Considerable money is spent monitoring these
trends and attempting to influence them through
new product development and promotional efforts.
THE DEMOGRAPHICS OF FOOD CONSUMPTION
 Demography is the study of population
 how many people there are ,
 where they live and
 how they live.
 These trends influence food marketing by affecting
the number of mouths to feed, what people eat,
where food is sold and how people buy their food.
Population Trends
 The food market expands in proportion to the rate of
population growth.
 Immigration has increased food industry.
 The mobility of the population also influences the
food marketing machinery.
 There are differences in food consumption patterns
between one region of the country and another that
cannot be explained on the basis of income or other
factors.
 Urbanization is another important demographic
trend.
 Migration have shaped the modern food distribution
network.
 The supermarket, for example is a suburban product.
 The regional movement of population has required
new investments in food marketing facilities and
provided opportunities for some food marketing
firms to gain a competitive advantage over others.
 The age and education of the population also
influence food consumption.
 Food marketing firms have developed special foods,
packages and promotional messages for different
target market age groups.
Household Food Consumption
 The household is the basic unit of food consumption.
 Household members typically pool their income, buy
as unit and share somewhat similar food preferences.
 Only one or two people of household trend have
resulted in increased demand for smaller food
packages and more prepared foods.
 The average family size show that there are some
economics of scale in consumption so that food
spending per capita falls as the number of children
increases.
 Smaller families typically spend more per capita for
food.
 Other important household trends are the increasing
number of female- headed household.
 An increasing number of households headed by
unmarried men.
 Household
appliances
also
influence
food
consumption.
 Practically
all families have some form of
mechanical refrigeration and many have a separate
food freezer, food processor and microwave oven.
 Air conditioning has also changed food patterns.
 The
rising number of multi-car families, the
exposure
to
television
and
other
mass
communications, and the popularity of outdoor grills
and microwave ovens have also affected food
purchases and preferences.
INCOME AND FOOD CONSUMPTION
 Population and income growth have been the
two major sources of growth in food
consumption.
 The number of people determines the total
need for food, whereas their income determines
their ability to pay for it.
 Population growth has slowed but income
growth is expected to continue to increase the
demand for food.
 Many low income countries and people have a great
need for food but lack the income to make this an
effective demand in the market place.
 High income countries, such as the United States,
are generally characterized by a strong effective
demand for food.
 The responsiveness of food consumption to an
increase in income is called income elasticity.
 If the quantity of a good rises along with income, the
product is termed a normal good.
 If quantity falls as income rises the food is termed an
inferior good.
 Livestock products generally are normal goods and
have a higher income elasticity than crop products.
 Rising consumer incomes affect food consumption
patterns in several ways.
 First, consumers do not buy many more pounds of
foods as income rise.
 Instead, they upgrade their diet by substituting more
expensive foods, often meats, for staple items.
 Second, rising consumer incomes is to reduce the
consumers share of income spent for food.
 Food expenditure do not normally increase as
rapidly as income, so the ratio of food spending to
income falls with rising income. This is Engel’s law.
 Third, at low income levels, price and perhaps
nutrition are paramount concerns.
 As income rise, consumers add quality, variety,
convenience and service to the desired product
attribute bundle.
 In high income societies and populations, the
product bundle of attributes becomes more complex.
 Rising incomes and educational levels intensity
consumers concern with the quality of food markets
and the social impact of the food industry.
PUBLIC FOOD PROGRAMS
 A number of public and private programs feed the
needy.
 These are important in the study of food marketing
because they increase the demand and spending for
farm and food products.
 Government take food assistance programs such as
child nutrition programs (School breakfast), the
special milk program.
 In addition to assisting low income people and
promoting better nutrition, one of the original
objectives of these public food programs was to
reduce agricultural surpluses by increasing the
demand for food.