International Consumer & Retail Trends
ERS analyzes data collected by various national (U.S. trade data from U.S. Department of Commerce) and international organizations (United Nations trade data, consumer expenditures and other economic indicators from the World Bank), and a commercial vendor (Euromonitor) to examine ongoing evolutions in global food markets.
International Consumer Trends
Consumer food expenditures in recent years (see Excel table ) indicate a shift toward consumption of higher value food products across all income levels. As income grows, consumers in lower income countries shift their food purchases away from carbohydrate-rich staple foods toward more expensive sources of calories, such as meat and dairy products. (For more information, see "Richer World Wants a Richer Diet," Amber Waves, November 2003.) An examination of food expenditures and food sales data indicates that middle-income countries, such as China and Mexico, appear to be following trends in high-income countries, measured across several dimensions of food system growth and change. These include trends in important food expenditure categories, such as cereals and meat, and in indicators of food system modernization, such as supermarket and fast food sales. (For more information, see Convergence in Global Food Demand and Delivery, March 2008.)
The changes in food consumption patterns are largely driven by income growth and demographic factors, particularly lifestyle changes brought about by urbanization, away-from-home employment of women, and increased levels of information. While income growth, which affects the purchasing power of consumers, is one of the most important factors contributing to demand changes, urbanization has been equally important in changing the composition of the food basket consumed. Urban areas are generally associated with higher income levels, larger number of women in the away-from-home workforce, higher levels of education, and a wider array of food products available. Economic growth can continue indefinitely and go in cycles. However, urbanization has so far been a one-way process and, as occurred in developed countries, eventually the rural share of the population becomes so low that urbanization is no longer an important factor in projecting food demand. Among developing countries with a large share of rural population and rapid rates of urbanization, urbanization is expected to significantly alter consumers' diets with a greater consumption of meats, fruit, vegetables, and processed food products. (For more information on these and other demographic trends, see "Where Will Demographics Take the Asia-Pacific Food System?," Amber Waves, June 2004.)
Urbanization and income growth are also associated with more household amenities that enable consumers to purchase and store perishable food products. During the last decade, the percentage of households possessing refrigerators (see Excel table ) increased significantly in most developing countries. Similarly, the percentage of households owning microwave ovens (see Excel table ) is rising across countries, promoting sales of "ready meals."
ERS analysis of global food demand. ERS has estimated income and price elasticities of demand for broad consumption and food categories across 144 countries using 2005 data from the International Comparisons Program (ICP). These data on spending on food and other consumption categories and their respective budget shares provide the basis for improved income and price elasticity estimates, which give insight into food demand trends across countries and improve researchers' ability to predict potential shifts in demand for food products across different food groups.
The results of ERS research confirm many of the findings established by earlier studies. Low-income countries spend a greater portion of their budget on necessities, such as food, while richer countries spend a greater proportion of their income on luxuries, such as recreation. Low-value staples, such as cereals, account for a larger share of the food budget in poorer countries, while high-value food items make up a larger share of the food budget in richer countries. Overall, low-income countries are more responsive to changes in income and food prices and therefore make larger adjustments to their food consumption patterns when incomes and prices change. Adjustments to price and income changes are not made uniformly across all food categories. Staple food consumption changes the least, while consumption of higher-value food items such as meats changes the most.
Analysis of retail sales data (see Excel table ) reveals further trends in food consumption patterns across countries. Packaged food products account for large shares of total food expenditures among consumers in high-income countries where the demand for convenience is growing. The United States, the European Union, and Japan account for over half of total global sales of packaged products. In developing countries, intermediate products-such as vegetable oils, dry pasta, and other dried products-account for the bulk of retail sales. However, market trends indicate strong growth in sales of packaged food products among developing countries. This growth involves three-fourths of the world's consumers and is partly due to rapidly growing income levels.
Trends in the soft drinks and beverage sector are often an indicator of consumer ability to purchase higher value foods, and foreign investment in the beverage sector often functions as a bellwether for the health of local food industries. (See Globalization of the Soft Drink Industry for more information.) Analysis of soft-drink retail sales data (see Excel table ) indicates a rapidly expanding sector with large sales growth in Eastern Europe and Asia. Markets in developed countries, however, are sluggish, particularly for carbonated drinks. Carbonated drinks face strong competition from fruit juices and various health and ethnic drinks. In many developing countries such as India, where growing affluence has spurred the demand for clean drinking water, increased demand for bottled water has further boosted total soft drinks sales.
Demand for process attributes has increased consumption of quality-assured products-such as organic foods-in many developed countries and among small wealthy segments of some developing countries. In many countries, particularly in Western Europe, this has resulted in increased sales of private retail brands (see Excel table ), because retailers can set and enforce their own product quality standards. In developing countries, expansion of supermarket chains has also introduced private retailer brands, mainly as cheaper substitutes for major manufacturer brands.
See the Readings page for ERS reports and articles related to international consumer and retail trends.