YOUR AD HERE »

Food spending, restaurant visits down as consumer habits change

PALM DESERT, Calif. — Spending on groceries and restaurant visits has gone down slightly despite the good economy, posing new challenges to the U.S. food industry, a prominent analyst of consumer behavior told the International Dairy Foods Association at its Dairy Forum meeting here this winter.

American spending on food has gone down 0.2 percent, David Portalatin of the NPD Group said in a speech here on January 23. “That would not seem to make sense because unemployment is low and consumers have more money,” Portalatin said, but he went on to explain that the pattern reflects a change in consumer spending habits and the aging of the population.

Some millennials may be eating less to live a healthier life, he said, but the biggest factor is that the declining percentage of the population between the ages of 18 and their early 50s, who eat the most. The American population is aging, and as people age, they eat less, he explained.



Portalatin told the dairy executives that if they are going to increase domestic sales they will have to take customers away from their competitors.

“Growth is not coming to land on your doorstep. You are going to have to lean in to find growth opportunities. The consumer is shifting toward the experiential.”David Portalatin, NFD Group

“Growth is not coming to land on your doorstep,” Portalatin said. “You are going to have to lean in to find growth opportunities.



“The consumer is shifting toward the experiential,” and food providers need to get on that bandwagon, he explained.

Day spas, nail salons, cruises and the purchase of recreational vehicles are doing well “because that is tied to experience,” Portalatin said.

“Hammocking” is the new word in consumer purchasing, he said. “People go out with friends and hammock together. It is less about the acquisition of the hammock but the experience.”

People have more obligations to “committed consumption,” meaning subscriptions to services such as Amazon Prime, Costco, Netflix and Blue Apron meal kits, he said.

The retail landscape has been dramatically disrupted by online purchases, he said, with 30 percent of electronic purchases online. But the level of food purchases online is much lower than other products, and the food sector is unlikely to rise to the level of other products because people still like to make sure their food is fresh, and they “embrace the experience of going grocery shopping.”

“Grocery stores that embrace the experiential will do better,” he said. Best Buy has succeeded because it has refocused itself as a “solutions provider” that can make gadgets “sing together.”

Best Buy may offer a model for American food providers. “The vast majority of Americans have no idea what is for dinner tonight — they need a solutions provider,” he said.

Restaurant visits have gone down for eight consecutive quarters because so many people are staying home and watching Netflix and other videos, he said. Restaurant revenues are still up, and more people are buying meals from restaurants and taking them home to consume as they watch TV. Digital orders in restaurants were up 54 percent in 2017 compared with 2015.

“If you want to watch season seven of ‘Game of Thrones,’ dinner is something you eat at home,” he said.

Millennials, he said, “are spending less than previous generations,” explaining that they have less money and want organics and fresh food that is harder to get in restaurants.

About 5 percent of consumers are using subscription meal services, he said, adding that he believes grocery stores should provide the service so people do not have to order meal kits from far away.

Other trends Portalatin sees include:

▪ Health and wellness is moving beyond a definition of diet and exercise to include image.

▪ People are avoiding “negatives in food” while desired nutrients and functionality are changing toward “clean” eating and authenticity in food.

▪ About 35 percent of people who diet make up their own diets.

▪ About 56 percent of people want to add protein to the diet, but how they acquire it is changing.

▪ Sugar is now the No. 1 food avoided.

▪ Organics and non-GMO products continue to grow.

▪ Milk is “still a big deal” in consumption, even though it has gradually eroded in consumption.

▪ Yogurt has become a more important consumer item, but concern about sugar is causing people to rethink which yogurts they buy.

▪ Cheese is stable, but ice cream sales are declining. “You don’t have to convince people ice cream is a health food. Tell people they deserve it.”

▪ Eggs, sandwiches and fruit are increasingly present at breakfast.

▪ Kids eat more snack foods at lunch. “This will carry through lifetimes,” he said.

▪ Sandwiches are a growing category at dinner.

The changes in eating habits started with parents being concerned about what they were feeding their children, but now they have adopted those habits.

“Millennial Mom got diligent about feeding Junior, then thought she should do it for herself,” Portalatin concluded.

–The Hagstrom Report