Millennials Paving The Way For Produce Consumption Uptick — Hard To Study A Moving Target

Millennials Paving The Way For Produce Consumption Uptick

by Michelle Saksena and Annemarie Kuhns

April 2018 – 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.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.

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.

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.

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,  

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


Hard To Study A Moving Target

by Jim Prevor, Editor-in-Chief, Produce Business

Certainly, knowing how Millennials differ in their purchasing behavior from senior citizens is useful if, for example, a retailer is located in an area rich with Millennials or senior citizens. It gives clues as to how to merchandise and market, what products might make sense to procure, etc.tudying the shopping and consumption habits of Millennials is quite obviously important. As the largest age cohort, their shopping and consumption patterns will determine which retailers will succeed, what the dietary health of Americans will be, and the group will be seen as models for future generations. But viewing age as an independent variable is just a first swipe at the data. The researchers acknowledge this by starting to look at income and also even within an age cohort how certain events, such as the “great recession,” might impact different parts of this group.

But if we are looking to understand how the Millennials differ from their predecessors, we need to look at many more variables.

To start with, you really want to compare, as they say, apples to apples. So, the question is not how do Millennials differ from Baby Boomers; the question is how do Millennials differ from Baby Boomers when the Boomers were the same age as the Millennials are today.

Even this is only part of the story, because age is just one variable. There are changes in living patterns, such as when people get married, if they cohabitate, when they have children, etc. – all these things impact family size. In fact, it is a little unclear what a Millennial “household” actually is. If the last Millennials were born December 31, 2003, that would make them 14 years old today. Add in older ones who are still in college, or graduate school or the military or have moved back in with Mom and Dad, and it is not clear how you would get a truly representative sample of Millennial households, many of whom do not actually yet exist as separate procurement entities.

It is also important to distinguish differential consumer choice patterns from different product availability patterns. It is certainly true that today’s Millennials buy more convenience produce items than Baby Boomers did at the same age. They buy Bistro Bowls from Ready Pac and Nourish Bowls from Mann Packing; they buy Veggie Noodles from Cece’s Veggie Noodle Company; they buy marinated beets from Love Beets, etc.

Their grandparents didn’t buy these products. This may be due to changing eating habits, different percentages of women in the workforce, differing economic conditions, etc., but it is also true that none of these items existed back then. New technologies in processing and packaging, as well as new processing networks, have made many products possible that simply weren’t feasible in generations past.

It is important to look at the big picture. Millennials may indeed work less than other generations, and so it may seem in isolation  to be quizzical that they also spend less time eating, shopping and preparing foods. In all probability, though, Millennials spend a lot more time in school than any other age cohort included in this study. Perhaps if we added school, studying and work hours together, we might find the Millennial desire for convenience more understandable.

It is also likely that this age cohort has more joint living arrangements than other age groups. Whether that is having a bunch of roommates, living with parents, living in dorms where they may have meal plans, etc., it is likely more common than other generations that Millennials have others doing meal preparation for them.

The data indicating Millennials spend a higher percentage on fruits and vegetables than older generations is interesting. The researchers theorize it might be due to greater health-consciousness. That is, of course, possible, but there may be other explanations. Do these numbers only cover Fresh produce? If so, this might imply an older generation comfortable with canned green beans and Mandarin orange sections is being supplanted by a new generation that might demand more Fresh.

It might also be a consequence of living situations. If young people, with less need to worry about school quality and a backyard for the kids, are willing to live in urban venues, they may also shop more frequently as they don’t have large storage areas in urban apartments. It is also likely the ethnic makeup of Millennials is different than the makeup of Baby Boomers. If you have a higher percentage of Latinos and Asians, they may be inclined to buy produce items in addition to the standard fare long consumed by Anglos.

Understanding not merely what is different but why makes a big difference. If Millennials buy more fresh produce because they live an urban lifestyle, shop every day and are not worried about fresh items going bad, that will probably dissipate as  they get married, have children and move to the suburbs. But if they buy more avocados and mangos because they are Mexican, that probably will stay with them for a lifetime.