Prepared Foods - August 2008 - (Page 24)

new product trends spending is larger at lower income levels than at higher income levels. This explains why, as incomes rise in lower income countries, their food expenditures tend to catch up with those of higher income countries. Analysis of 2004-2005 consumer expenditure data conﬁrms the trend in declining food budget shares for the U.S. (see charts “Across U.S. Households” and “Across Countries”). Among four-person households, total food spending— including food away from home—is slightly over $2,500 per year among the highest income group, roughly double that of the lowest income group. However, average annual after-tax income in the highest earning households is more than eight times that of the lowest income households ($116,290 vs. $13,290). Thus, the share of income devoted to food declines from 37% for the lowest income households to 9% for the highest income households, reﬂecting Engel’s Law. A similar trend in declining food shares is noted across country groups with varying average income levels. Euromonitor International’s annual per capita food spending data (not including food away from home) for 67 countries revealed that food spending increases from less than $200 per capita per year in low-income countries to $2,133 in high-income countries, while the food share of PCE decreases from 42% in low-income countries to 12% in high-income countries. Increased Food Spending in the U.S. Favors Increased Quality, Variety and Convenience In the U.S., the rise in food spending as income increases is driven largely by food away from home, which captures two-thirds (65%) of the more than $450 increase in monthly household food spending between the lowest and the highest income groups. The highest income households spend nearly half (47%) of their food budget on food away from home, almost double the share among the lowest income households. Among at-home foods purchased in grocery stores, spending on “other foods” rises the most with increases in income. This category includes high value-added foods such as frozen prepared meals, canned and packaged foods—including a variety of novel and ethnic products—snack foods and nonalcoholic beverages, in addition to condiments, sugars and sweets, and fats and oils. Spending on “other foods” increased from $92 per month for the lowest income U.S. households to $161 per month among the highest income households. Interestingly, households in all income categories consistently spend the largest share of their food budget on “other foods,” followed by meats, fruit and vegetables, cereals and bakery products, and dairy products. In contrast with the increased spending on “other foods,” spending on meats, cereals and bakery products, and dairy products remains fairly steady across household incomes, until incomes reach $50,000 per year. While per person total food expenditures increase with income, the food expenditure share of income declines both across U.S. households and across countries. Increasing Incomes and Food Expenditures Across U.S. Households Annual food spending, US $ 3,000 2,500 2,000 1,500 1,000 500 0 Food spending Food share % of household income 40 35 30 25 20 15 10 5 40-50 (1,625) 50-70 (2,903) >70 (7,240) 0 0 Low-income countries Lower middleincome countries Upper middleincome countries Highincome countries 1,000 20 15 500 Food spending 10 5 0 2,000 Food share Annual food spending, US $ 2,500 Across Countries % of private consumption expenditures* 45 40 35 30 1,500 25 10-15 (502) 15-20 (541) 20-3(1,349) 30-40 (1,508) Household income, $1,000 (number of households) *a proxy for income Source: Country-level data from Euromonitor International (2006) and country grouping based on 2005 Word Development Indicators from the World Bank. U.S. data from U.S. Bureau of Labor Statistics, “Consumer Expenditure Survey” (2004-2005) for four-person households. 24 August 2008 ● www.PreparedFoods.com http://www.PreparedFoods.com

Table of Contents Feed for the Digital Edition of Prepared Foods - August 2008

Prepared Foods - August 2008 Table of Contents Hitting the Shelves Promoting Craveable Foods and Beverages It’s a Small World MarketWatch Regulations: Safety Dance A Taste of Southeast Asia Flavor Secrets: Asian Five-spice Flavor Secrets: The Well-seasoned Potato On the National Menu To Serve and Protect: Flavor and Nutrition Protection Fat Applications in Transition: Creation of Good vs. Bad Fats A Tasteful Formulation Balance Nutrient Density and Dairy Foods R and D Applications Seminar: Formulation Information R and D Applications: Some Flavors Like it Hot R and D Applications: Prebiotics from a Conifer? R and D Applications: Seeing Red (Foods) R and D Applications: A Probiotic with Survival Skills Abstracts

Prepared Foods - August 2008

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