Where consumers put their food money

July 11, 2012

Processed foods and sweets capture nearly a quarter of the U.S. grocery spend, extending a lengthy share rise.

On a national basis, households spend less than 9% on groceries in 2012 vs. more than 12% thirty years ago, according to U.S. Bureau of Labor Statistics data assembled by Planet Money/National Public Radio.

Today’s favorable spending ratio certainly doesn’t reflect people eating less—witness the record obesity rates and population growth in the United States. There’s more left in our wallets—and on our waistlines.

Center-store looks to be the reason why. We currently spend close to a quarter of our grocery dollars (22.9%) on processed foods and sweets. That’s about double the 11.6% rate of 1982, the BLS figures show.  

Cost shifts in meats, produce, baked goods and other foods make the processed items relatively cheap per calorie—not per nutrient. For millions of consumers who need the energy while stretching their food budgets in tough times, this is appealing. For those who crave the convenience and simplicity of packaged foods, the processed items are traffic draws, says F3.

These pulls are powerful. Processed foods and sweets are collectively the #1 sellers when compared with: 
•    meats (21.5% of today’s grocery spend vs. a commanding 31.3% in 1982)
•    fruits and vegetables (14.6% today vs. 14.5% in 1982)
•    grains and baked goods (14.4% today vs. 13.2% in 1982)
•    beverages (11.1% today vs. 11.0% in 1982)
•    dairy products (10.6% today vs. 13.2% in 1982)
•    other foods (5.1% today vs. 5.3% in 1982)

That’s despite so much retailer attention to perishables and perimeter departments, a revamped Federal food pyramid, and a steady stream of opinions from health experts to eat less sodium, sugar and fat.  

With sugar prices down 16.7% to 70 cents per pound, manufacturers are understandably tempted to use this affordable ingredient—and it appears many consumers find these products hard to resist. Other packaged food examples in the BLS/NPR data show:  an 11.9% price decline for potato chips to $5.01 per pound; a 6.6% price dip for ground coffee to $5.51 per pound; and a 34.4% price drop for butter to $3.18 per pound.

Even more severe price drops accounted for the pronounced share loss of grocery spend on meats. For instance, bacon prices slid 12.9% to $4.53 per pound in 2012, ground beef prices fell 19.9% to $3.33 per pound, steak prices dropped 30.0% to $4.90 per pound, chicken leg prices were down 35.2% to $1.59 per pound, and pork chop prices tailed off by 37.9% to $3.72 per pound, the comparative data show.

Meanwhile, a Meijer survey released last summer shows a majority of adult consumers seem quite aware of their dietary shortcomings. Nearly six out of ten (58%) feel they don’t enough fruits and vegetables. 

“Most people know they should be eating more fruits and vegetables, but they perceive them as expensive to purchase [39% said this] and difficult to prepare [20% said this],” said Shari Steinbach, Meijer registered dietitian and healthy living manager, at the time. By comparison, 48% of consumers surveyed by Meijer said their kids eat more fruit than other children, and 35% said their kids eat about the same amount of fruit as others.  With regard to vegetables, 36% felt their kids ate more and 44% felt their kids ate about the same amount as others.