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Americans spend some $821 billion on food today — from supermarket produce to restaurant meals to snack foods at vending machines. The U.S. Department of Agriculture reports this figure will grow to $1.2 trillion over the next decade. Much of that growth will be hard earned by the food industry.

The food business is a mature one and faces new challenges. No longer forced to buy what is available from the grocer on the corner, Americans now have the option to shop at supermarkets, mass merchandisers, convenience stores, green markets, gas stations, even at their local gym's snack bar. And because increased competition has kept food prices down, as incomes have risen, people can afford to be more selective. On average, Americans spend just 10 percent of their disposable income on snacks, meals and beverages, compared with 24 percent in 1929. As such, in order to spur growth, each of the three major categories in the food industry — packaged food manufacturers, restaurants and retail distributors — has little choice but to figure out ways to lure business from the other two. That's why it has become necessary for all three to keep up with the country's eclectic tastes, changing needs, on-the-go lifestyles and, of course, demographics. In our cover story this month, Senior Editor Rebecca Gardyn identifies five demographic and lifestyle trends that are already beginning to transform the food business.

Gardyn interviewed two dozen analysts, consultants, researchers, economists, marketers and other industry experts in an attempt to identify which societal shifts will affect the industry. Each category in the food industry sector faces its own set of sales challenges. Packaged foods companies have experienced flat overall sales growth for more than a decade. This lack of growth is due in part to the fact that as more women work full-time, they cook fewer meals at home. As such, analysts say that one of the biggest challenges to the packaged foods industry in the coming years is to whip up more food products for the home that offer the ease, taste and convenience of restaurant fare.

As the number of restaurants in the U.S. continues to grow — to 1 million by 2010, from 858,000, according to the National Restaurant Association — their future success will depend on how well they can distinguish themselves through new and innovative dining concepts, especially those that attempt to reach more targeted consumer niches, like Boomers. Supermarkets, meanwhile, also strain to keep their customers, many of whom have been tempted by warehouse clubs and other retailers that offer more food in their aisles and convenient one-stop shopping options. The trends Gardyn identifies in her story, “What's Cooking� on page 28, are expected to change for years to come, not only the foods that we eat, but the ingredients we buy and the amount of time we spend in the kitchen.

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