Increasing Importance of Foodservice Markets for Agriculture
Have you noticed the increased variety of places from which you can buy food today? Are you eating out more? It was not so long ago that the average consumer placed primary importance on food purchases from the local supermarket and supplemented these purchases with only rare visits to the restaurant.
The food purchasing scene has changed significantly from 25 years ago. The mobility of our society, higher disposable incomes, food processing technology, and franchising have transformed the food expenditure choices. In 1970 Americans spent 33% of their food dollars on away from home consumption. Today it is about 50%.
Food service represents the segment of our economy devoted to preparing and providing meals and snacks for consumption away from home. Growth in this sector of the economy has been tremendous and looks to continue. In 1986, food service sales in the U.S., led by restaurants and fast food outlets, were $171 billion. This past year sales approached $300 billion.
Restaurant and fast food outlet sales have led the charge. Non-commercial foodservice, however, has also grown in significance. Institutions such as hospitals, extended care facilities, and educational institutions have grown to over $65 billion in annual food sales.
Consumer demand for convenience, variety, packaging, quality, and value have driven the direction of growth for the foodservice sector. The adding of value to agricultural products has subsequently been realized on a tremendous scale.
What does the growth in foodservice mean for agriculture? Do greater consumer expenditures on food necessarily translate to greater farm-gate revenues? Not necessarily.
It does translate into both new marketing needs and opportunities. Food sales through conventional supermarkets will continue to be the primary marketing channel. An investment into learning how to competitively meet the needs of the growing foodservice sector, however, should pay off handsomely.
More generally, producers and producer marketing organizations, that can be responsive to the changing needs and preferences of the consumer as reflected in the changes within both foodservice and supermarket institutions, will be looked upon favorably as preferred suppliers to these important intermediate customers. Look for and keep open to opportunities to capture some of the value-adding that is demanded by final consumers within your own farm or agribusiness by exploring new partnerships, new customers, and new ways of marketing your product.
For More Information
For additional information, please contact, Tim Woods.