A Richer World Wants a Richer Diet

A number of forces, such as income, urbanization and population growth, are changing the way the world eats. Of these forces, income—both its level and growth—has had the greatest effect. Per capita income levels have more than doubled in many countries over the past two decades. While purchasing power has increased generally across countries, patterns of food demand and household spending on food differ dramatically between low- and high-income countries. Consumers in low-income countries spend a larger share of their overall household income on necessities such as food and clothing, while consumers in wealthier countries spend a bigger share of their overall household budget on housing, services (such as education), and luxury items (such as recreation).

Although the share of household income spent on food varies among countries at different income levels, demand for high-value foods—such as meat and dairy products—is growing across all income levels. Food expenditure shares for meat and dairy products are higher in high-income countries than in low-income countries, where staple foods such as breads and cereals account for 27 percent of the total food budget versus 12 percent for high-income countries.

Consumers in low-income countries also make greater adjustments in their household spending on food when incomes and/or prices change. For example, when household incomes increase by 10 percent, an average consumer in Tanzania increases spending on food by 8 percent. Spending on food would increase by 6.5 percent in the Philippines, and just 1 percent in the United States. Likewise, if food prices increase, food spending declines the most in Tanzania and the least in the U.S. Across all countries, price and income increases result in smaller adjustments for staple food items than for higher-valued food items such as meat and dairy products.