Over the next 25 years, the country's population will include more ethnically diverse Americans, more singles and more senior citizens. By 2025, 40 percent of the U.S. population will be a race other than white, up from 31 percent today, according to the U.S. Census Bureau. The ever-influential Baby Boomers will retire, while Gen Y, almost as large as the Boomers and more ethnically and racially diverse than any other generation, will make its own demands on the marketplace.
While these demographic swings will affect all future consumer markets, they're already beginning to change the foods we eat, the ingredients we buy and the amount of time we're willing to spend in the kitchen. In 2000, Americans spent $821 billion on food — from supermarket produce to meals in restaurants to candy bars from vending machines — a figure expected to grow to $1.2 trillion by 2010, according to the USDA's Economic Research Service, which tracks food consumption and spending. Transformations due to demographic shifts are already simmering within the industry. Says Annette Clauson, an economist at the Economic Research Service: “Changes in the makeup of the population, lifestyles, incomes and attitudes on food safety, health and convenience are drastically altering the conditions facing marketers of food products.??
In an effort to discern which societal shifts will affect how and what we eat, American Demographics interviewed two dozen analysts, consultants, researchers, economists, marketers and other industry professionals. Leaders within the three major food industry categories — packaged food manufacturers, restaurants and retail distributors — are turning to specific demographic, lifestyle and attitudinal changes to grow their businesses, experts say. Although each category faces its own set of sales growth challenges, what follows are the five key trends taking shape in response to demographic and lifestyle modifications.
1 Convenience
It's not surprising that the country that has made fast food a $111 billion a year business doesn't linger over the preparation of meals or the dining experience. Rather, Americans increasingly prefer meals they can make quickly and eat on the run. Almost half of weekday meals today (44 percent) are prepared in less than 30 minutes, and 12 percent of dinnertime meals feature a frozen dish, up from 9 percent just four years ago, according to The NPD Group, a research firm based in Port Washington, N.Y.
Even with the growing popularity of food shows and the celebrity status of upmarket chefs, the demand for convenience is not expected to slow down, thanks to changing demographic and lifestyle trends. For one thing, the number of time-starved, working, single parents is on the rise: Between 1970 and 2000, the number of single mothers increased to 10 million from 3 million, while the number of single fathers grew to 2 million from 393,000. In addition, dual-income families with children have become the norm, and almost half of parents with children under age 18 (49 percent) say that speed and ease of preparation are among the most important considerations in deciding what foods to buy, according to the 2001 Yankelovich Monitor. Thirty-eight percent of these parents say they are both buying more takeout and eating on the run more than ever before.
But on-the-go eating is not just limited to parents. We're all in a hurry. Case in point: One-fifth of all meals today are consumed in a car, reports Port Washington, N.Y.-based The NPD Group. Design experts and food trend specialists, such as Bob Messinger, publisher of The Morning Cup, a daily online food trends newsletter, predict that many more single-handed package designs are on the way. Breakaway Foods' IncrEdibles puts such items as scrambled eggs and Mac & Cheese into push-up tubes. These items are already available in select East Coast supermarkets and convenience stores. The production of such handheld foods has grown at a rate of about 8 percent per year since 1995, and annual sales in this category are expected to reach $2.3 billion by 2004, according to research firm Packaged Facts, a division of MarketResearch.com.
What's more, increased eating at our desks is expected to influence the way food companies package their products. Snacks that can be easily consumed while using the computer — they require only one hand and don't drip, spill or stick to the fingers — are likely to thrive in the years to come, predicts Kimberly Egan, partner and director of client services for Wharf Research, a division of the Center for Culinary Development in San Francisco. She has begun to advise her clients in the packaged food business (which includes Heinz, Kraft and Kellogg's, among others) to think about creating products that are easy to eat while surfing the Web, especially for kids. Fully half of 10- to 13-year-olds in a November 2001 Wharf study say they eat and surf the Net simultaneously at least some of the time, and of those 'tweens who are online daily, 65 percent eat while they surf.
2 Good for You
More Americans increasingly understand the connection between the food they consume and their health. Four of the top seven leading causes of death — heart disease, cancer, stroke and diabetes — are affected by diet. According to a study by the International Food Information Council conducted in 1998, three-quarters of consumers were able to name a specific food or component they believe enhances health. In addition, 75 percent said they changed their diets in the past five years for health reasons.
Older Baby Boomers have become especially attentive to health concerns. A study conducted by the International Dairy-Deli-Bakery Association in March 2001 found that 94 percent of Americans over age 50 agree that there is a link between diet and health. Eighty-one percent say they have become more conscious about what they eat, and 66 percent say they worry more about their health as they get older. The restaurant industry is paying particularly close attention to the preferences of older Boomers, those 45- to 55-year-olds, since they spend over $2,600 on food away from home each year, more than any other group, according to the 2000 Bureau of Labor Statistics' Consumer Expenditure Survey.
“It isn't going to be enough to say something is ‘lite’ on a menu anymore,?? says Stephen Carlomusto, an associate professor at Johnson & Wales University's College of Culinary Arts in Providence, R.I. “[Consumers] are going to start wanting to know exactly what that means, how many calories, how much fat and sodium, what the nutritional composition is.??
Within 15 years, Carlomusto expects restaurants to add such designations to their menus, or at least have them available. He also believes that as DNA research becomes more advanced, people will be categorized into genetic “types?? and health experts will propose food recommendations for individual health profiles. Restaurants may eventually offer as many as eight different menus tailored to such health profiles, he says.
Packaged food companies have already begun to stock store shelves with “smarter?? or “better for you?? products. Functional foods, the term given to processed food products that are fortified with nutrients and have a specific health claim — like McNeil's Benecol margarine, launched in 1999 and touting cholesterol-lowering benefits — have been sprouting up over the past few years. In 2001, about 250 functional foods were introduced, up from 63 in 2000, according to London-based research firm Mintel International Group.
Bruce A. Watkins at the Institute of Food Technologists' Nutrition Division expects more packaged food companies to enter the food-as-medicine market in the near future. In the January 2002 issue of Food Technology, he states that now that the human genome has been sequenced, research on the interaction between nutrients and the body's genes will lead to even more functional food products targeted not only to diabetes, but to cancer, osteoporosis and cardiovascular disease.
According to Mintel, the $1.4 million functional food market grew 14 percent in 2001. However, future growth will depend on how companies educate consumers about how such foods work, and how well they taste, says Bill Patterson, director of research at Mintel, which surveyed over 1,000 American adults about their attitudes toward functional foods in May 2001.
While roughly three-quarters of 35- to 54-year-olds — the primary age target for such products — say they would consider functional foods for specific health conditions like osteoporosis or high cholesterol, 39 percent of the 35- to 44-year-olds and 50 percent of the 45- to 54-year-olds remain unconvinced of the benefits of functional foods. In addition, Patterson says that while Boomers say they want to eat healthier, ultimately they would rather eat good-tasting fatty food than bland food that is good for them. That's one reason the fat-free craze petered out, he believes.
3 Customized
At MyCereal.com, cereal and snack food giant General Mills boasts that some cereals “don't exist until you create them.?? The Web site, which has been in various test phases since November 2000 and is expected to be re-launched this spring, invites customers to develop cereals that meet their specific tastes. “For years we've gotten calls from consumers asking for very specific mixes of cereal ingredients, but most of those ideas are very ‘niche’ and wouldn't warrant mass merchandising,?? says company spokesperson Greg Zimprich. “This is a way to give consumers what they really want and at the same time learn more about consumers' tastes.??
Industry watchers say that packaged food companies are beginning and will continue to customize products to reach smaller and smaller slices of the American population, in an effort to spur growth. One example of a female-targeted product is General Mills' Harmony cereal, introduced in January 2001, which incorporates calcium, iron and soy “developed to meet a woman's nutritional needs.?? Products are even being developed that cater to specific hobbies. In March 2001, a food company called Golf Nutrition, Inc. launched the “Caddy Bar,?? formulated for and marketed to golfers. The bar features nutrients which, the company claims, “increases the dopamine and acetylcholine levels within the brain, increasing mental alertness and quick thinking.??
Ramses Toma, a professor of food science and nutrition specializing in food product development trends at California State University, Long Beach, expects the development of more demographic and lifestyle specific foods in the future — particularly ones targeted to younger generations, who have grown up in an individual-focused era and are thus always looking for ways to distinguish themselves.
In fact, 67 percent of 18- to 24-year-olds say they are interested in buying foods that are customized to their needs and tastes, compared with 56 percent of the national population, according to a study conducted exclusively for American Demographics by research firm Harris Interactive (see “Swap Meet,?? June 2001). But the tastes of young men and women are very different. Toma has conducted fruit drink focus groups among his Gen Y students and found that men tend to prefer flavors such as mango, guava and kiwi, while women prefer banana and strawberry.
The growing number of seniors will also drive the customization trend. People are living longer and healthier than ever — by 2030, the over-60 population will increase to about 70 million, from 46 million today, projects the Federal Interagency Forum on Aging-Related Statistics. And because more and more of them are choosing to live on their own, this group will demand more nutritious, single-serve, convenient and easy-to-open food products from manufacturers, Toma says.
4 Flavor Burst
Tomorrow's foods will be spicier and more flavorful than today's. One major reason: Baby Boomers' taste buds are dulling, a reality that food industry experts say is a key factor driving the future of food in this country. If this group — whose total spending power is expected to reach $5.2 trillion by 2005 — can't taste the food they're buying, the industry will be in big trouble, says Erlina Hendarwan, a consumer analyst for London-based market research firm Datamonitor. Boomers' dulling buds may also be a major reason that the amount spent by manufacturers on food flavor and flavor enhancers is expected to grow to $2 billion in 2006, from $1.4 billion in 2000, says Hendarwan.
Heinz North America is one company that's caught on to the
flavor burst. In January, Heinz launched a new line of flavored
ketchups called Ketchup KICK'RS
But spice and flavor are just as important to Gen Y. As the country's most diverse generation, this group will likely demand more authentic, exotic foods, analysts say. Because many of these kids have parents with little time to cook, their exposure to different types of foods is extensive. For example, 81 percent of 10- to 13-year-olds go out to dinner, at least once a week, and 17 percent eat out three or more times a week, according to Wharf Research's study of 400 'tweens, released November 2001. Indeed, 'tweens have a well-developed palate: 86 percent are familiar with sushi, 87 percent know what quesadillas are, 45 percent are familiar with pesto and 16 percent have tried samosas. “The future adults of this world have palates that are so much more diverse and sophisticated than any other generation,?? says Wharf's Egan. “When their families go out to dinner, they go to have sushi or Indian, not Denny's.?? In fact, 39 percent say that Chinese food is their favorite, followed by Mexican (21 percent) and Japanese (12 percent). American fare, good old hamburgers and hot dogs, scored with only 9 percent of 'tweens.
The growing ethnic diversity in the U.S. population, as well as increased international travel and exposure to TV chefs who highlight various regional food types, are all additional drivers of this flavor burst. Hendarwan expects to see more regionalization of flavors in dishes, both in restaurants and in prepared and frozen foods of the future. So, instead of Chinese, consumers will expect distinctions between Szechuan and Hunan cuisine, for example.
Marcia Schurer, president of Chicago-based food development consultancy Culinary Connections, says that the food industry hasn't even begun to scratch the surface of flavors and spices that could become popular in this country. For example, she's working with a spice company from Mexico to develop a blend of spices called Achiote, which has been manufactured and used in the Yucatan for years.
5 Safe
From mad cow disease to genetically modified foods to bioterrorism, consumers are becoming more concerned about their food's safety. People want to know more about where their food is coming from, and where it's been. They also want their food's packaging to be safe for the environment.
As a result, farmer's markets have become increasingly popular over the past two decades, even in urban settings, says culinary historian Andrew Smith. “There weren't any green markets in New York City 20 years ago,?? he notes. “But now they're all over. People are much more interested in buying food from a local farmer.??
In fact, 71 percent of adults surveyed by Wharf Research in November 2001 say they have ready access to a farmer's market, and 1 in 3 (33 percent) buy at least some of their produce at such markets. Of those who do, 76 percent say they do so because they feel they are getting fresher products, 73 percent think the quality is better and 54 percent like the fact that the foods are locally grown, and thus they know where their food has been before reaching their tables.
While farmer's markets account for only about 2 percent of total at-home food sales, supermarkets have recognized the changing attitudes of their consumers and have tried to compete by introducing more organic foods in their aisles. Seventy percent of shoppers say their primary store sells natural or organic foods, according to the Food Marketing Institute. And a study by Roper Starch Worldwide of 1,000 adults for organic food company Walnut Acres, finds that 61 percent of consumers who buy organic products say that food safety is a major reason they do so.
The events of Sept. 11 are also likely to fuel consumer demand for what is known as “traceability,?? or the ability to trace food to its place of origin, says Jean Kinsey, professor of applied economics and co-director of The Food Industry Center at the University of Minnesota. “The need to know that these bananas came from Costa Rica and what has happened to them since they came off the tree has been heightened,?? she says.
Proper labeling of ingredients on food packages will become important to future food acceptance, notes International Dairy-Deli-Bakery Association (IDDBA) director of education Mary Kay O'Connor, as more reports tie allergy sufferers' health problems to their eating foods with misleading labels. Food safety concerns and lack of nutritional information prevent many older consumers, for instance, from buying prepared meals or hot or cold foods from their supermarket delis, according to a study of Americans age 50 and older by the IDDBA. Fifty-five percent of respondents in that study say they would be more likely to buy prepared food from the deli if it came with nutritional labels. Because of this increased sensitivity, food companies may be forced to spend additional time and finances on creating proper labeling, says O'Connor.
To respond to the demand for improved food safety, “smart?? packaging, which utilizes computer technology, is being developed by several research facilities. For example, as an alternative to the “use-by-this-date?? label donned by the majority of foods on today's supermarket shelves, some grocery stores and restaurants have begun to require time-temperature indicator labels (TTIs) on the products they stock, such as the Fresh-Check® brand produced by Lifelines Technology, TTIs are essentially stickers that are put on refrigerated foods after processing. Each indicator is tailored to the product's shelf-life characteristics and changes color if it is out of its safe temperature zone. The restaurant chain Outhouse Steakhouse and the Trader Joe's chain of grocery stores already require these stickers on certain products they purchase from manufacturers.
GRAB & GO NATION
Americans today are spending a greater proportion of their food dollars on fast, convenient alternatives to home cooking. In 1869, just 5 percent of Americans' food budget went toward food prepared outside the home, compared with the 47 percent of food dollars spent in restaurants, vending machines and on takeout today.
| SHARE OF TOTAL | SHARE OF TOTAL | |
|---|---|---|
| U.S. FOOD EXPENDITURE SPENT ON FOOD | U.S. FOOD EXPENDITURE SPENT ON FOOD | |
| AT HOME | AWAY FROM HOME | |
| 1869 | 95% | 5% |
| 1899 | 91% | 9% |
| 1929 | 83% | 17% |
| 1959 | 74% | 26% |
| 1989 | 54% | 46% |
| 2000 | 53% | 47% |
| Note: “Food Away From Home?? includes ready prepared foods purchased at restaurants, takeout, and vending machines; “Food At Home?? includes foods purchased at supermarkets, grocery stores, etc. that are prepared at home. | ||
| Source: Economic Research Service, USDA | ||
FOOD AS MEDICINE
Sixty-eight percent of black consumers say they would like to know more about functional foods, compared with less than half (49 percent) of the general population.
WHICH OF THE FOLLOWING DESCRIBES YOUR VIEWS OF FUNCTIONAL FOODS AND DRINKS?
| All | 18-24 | 25-34 | 35-44 | 45-54 | 55-64 | 65+ | WHITE | BLACK | |
|---|---|---|---|---|---|---|---|---|---|
| You would consider them for specific conditions like osteoporosis or cholesterol | 73% | 73% | 68% | 75% | 74% | 79% | 73% | 74% | 69% |
| You'd like to know more about them | 49% | 47% | 50% | 48% | 50% | 47% | 49% | 46% | 68% |
| You're not convinced of the benefits | 41% | 33% | 43% | 39% | 50% | 31% | 47% | 42% | 33% |
| They're not something you'd buy | 35% | 37% | 41% | 30% | 41% | 33% | 32% | 35% | 32% |
| You buy them regularly | 27% | 33% | 27% | 23% | 23% | 32% | 24% | 24% | 35% |
| Source: Mintel/ICR | |||||||||
FOOD FETISH
Over half of Americans (56 percent) in an exclusive American Demographics/Harris Interactive survey say they would be interested in buying or using at-home food and beverages that contain ingredients they were able to customize. Southerners, blacks, middle-income wage earners and young people are the most interested in such products.
| VERY/SOMEWHAT INTERESTED | |
|---|---|
| TOTAL | 56% |
| AGE | |
| 18 - 24 | 67% |
| 25 - 29 | 68% |
| 30 - 39 | 69% |
| 40 - 49 | 56% |
| 50 - 64 | 48% |
| 65+ | 37% |
| RACE/ETHNICITY | |
| White | 54% |
| Black | 79% |
| Hispanic* | 57% |
| INCOME | |
| Less than $15,000 | 55% |
| $15K - $24.9K | 61% |
| $25K - $34.9K | 68% |
| $35K - $49.9K | 60% |
| $50K - $74.9K | 48% |
| $75K - more | 52% |
| REGION | |
| East | 54% |
| Midwest | 46% |
| South | 63% |
| West | 60% |
| *Hispanic can be of any race | |
| Source: American Demographics/Harris Interactive study, July 2001 | |
SUGAR AND SPICE
American men like it spicy: 64 percent of adult males say they like spicy foods, compared with 51 percent of women.
PERCENT OF MEN AND WOMEN WHO SAY THEY LIKE THE FOLLOWING FOOD FLAVORS:
| MEN | WOMEN | |
|---|---|---|
| Spicy | 64% | 51% |
| Onion | 49% | 57% |
| Garlic | 49% | 54% |
| Mesquite/BBQ | 55% | 43% |
| Citrus | 46% | 52% |
| Butter | 45% | 50% |
| Honey | 43% | 32% |
| Source: “Heinz Food Flavor Study,?? conducted for Heinz by TNS Intersearch, January 2002 | ||
SAFETY FIRST
Fully 80 percent of Americans say they are concerned about the safety of many foods today. And of those who purchase organic food, 61 percent do so because they believe it is safer than non-organic food.
| TOTAL | MEN | WOMEN | 18-24 | 25-34 | 35-44 | 45-54 | 55-64 | 65+ | |
|---|---|---|---|---|---|---|---|---|---|
| Percent who are concerned about the safety of foods today | 80% | 73% | 85% | 74% | 78% | 82% | 83% | 85% | 77% |
| Percent of organic food buyers who say a major reason they buy organic food is because they think it is safer | 61% | 55% | 66% | 46% | 52% | 68% | 69% | 64% | 64% |
| Percent of organic food buyers who say a major reason they buy organic food is because they think it is better for the environment | 59% | 56% | 62% | 44% | 59% | 59% | 66% | 69% | 63% |
| Source: “Walnut Acres Certified Organic Future?? survey, conducted for Walnut Acres by Roper Starch Worldwide, released July 2001 | |||||||||
