Millennials Paving The Way For Produce Consumption Uptick

Research and Data

The retail food industry is very interested in the tastes, preferences and shopping habits of Millennial (those born between 1981 and 2003) households. One widely identified trend across all age groups is that convenience is highly valued when it comes to food purchases. A recent report from USDA’s Economic Research Service (ERS) using data from 2014 finds this trend is especially true among Millennials. This group of consumers spends the least amount of time eating, drinking and preparing food compared to other generations despite also having the lowest average total hours worked per week.

While Millennials are demanding convenience, they may also be more health conscious than previous generations. Additional findings from the ERS report suggest Millennials are devoting a larger percentage of their grocery bill to fruits and vegetables than Generation X (born between 1965-1980) and Baby Boomer (born between 1946-1964) shoppers. Fruits and vegetables are considered healthy options, and they can often be consumed with minimal to no preparation. For example, shoppers can very easily buy a bagged salad kit and freshly chopped stir-fry vegetables or pre-cut pineapple in most supermarkets today.

When grouping Millennial shoppers by household income, wealthier Millennials spend a larger share of their food expenditures on fruits and vegetables than Millennial households at lower income levels. Although one cannot say how Millennial food purchasing behaviors will change over time as they age and start families, it is expected that average Millennial earnings will rise as they approach their top earning years. It is encouraging to see wealthier Millennials today are purchasing a larger share of fruits and vegetables, and this may continue to persist as this group becomes wealthier on average in the future.

Millennials exhibit a higher propensity to buy fruit and vegetables compared to Generation X’ers and Baby Boomers.

The Great Recession (2007-2009) may have had noticeable effects on Millennial lifetime earnings and their shopping habits. Millennials entering the workforce for the first time during this period could have adapted their shopping behaviors in response to a softened economy and labor market. To identify whether the recession may still be influencing Millennial shopping patterns five years after the end of the recession, the ERS report divides Millennials into two distinct groups based on possible labor force entry during the Great Recession. Millennials who were old enough to enter the workforce during the Great Recession comprise one group, “recession Millennials.” A second group of younger Millennials is identified who were less likely to have entered the job market during this time, “non-recession Millennials.”

There is a common shopping pattern for both recession and non-recession Millennials when looking across per capita income levels for each group. Both Millennial groups showed a positive relationship between total dollars spent per person and percentage of total food budget for fruits and vegetables with per capita income. Where these groups differ are in the magnitudes for total dollars spent per person and expenditure share. At lower per capita income levels, recession Millennials show higher total dollars spent for fruit and vegetables than non-recession Millennials. This gap narrows until recession and non-recession Millennials are virtually identical in total expenditure and expenditure shares at the highest income group.

A possible explanation is related to the negative income effect from the recession that was endured by the recession Millennials. Higher total dollars spent per person and expenditure shares for fruits and vegetables at lower income levels may indicate that recession Millennials responded to the recession by allocating more of their food budget to fruit and vegetable grocery store purchases as a means of cost savings (as opposed to, for example, spending more on food outside of the home). The food-shopping behaviors of higher income Millennials may be less affected by income shocks such as the recession.

Millennials are now the largest living generation in the United States, surpassing even the Baby Boomers, according to the U.S. Census Bureau. Millennials have tremendous buying power and are shaping the current retail landscape. Like previous generations, their purchasing power and retail influence is expected to grow as they get older and reach their peak earning years. Millennials exhibit a higher propensity to buy fruits and vegetables compared to Generation X’ers and Baby Boomers. If current Millennial tastes for fruits and vegetables continue to persist as this group ages, future demand for fruits and vegetables may also increase.

See also Jim Prevor’s ‘Comments and Analysis’ – Hard To Study A Moving Target


 

Michelle Saksena

Michelle Saksena

Anne Marie Kuhns

Anne Marie Kuhns

This article uses research from the ERS Economic Information Bulletin report titled “Food Purchase Decisions of Millennial Households Compared to Other Generations” and was published in December 2017. The original report can be found on the ERS website, https://www.ers.usda.gov/publications/pub-details/?pubid=86400

Michelle Saksena and Annemarie Kuhns are agricultural economists at The Economic Research Service of USDA. Both are based in Washington, D.C.

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