Millennials Spend More on Prepared Foods, Pasta, and Sweets

By Dave Fusaro, Editor in Chief

Jan 07, 2018

Despite some impressions that they love healthy food and want to prepare it themselves, millennials spend more of their grocery money on prepared foods, pasta, sugar and sweets than other generations, according to a report from USDA's Economic Research Service (ERS).

The study also found that millennials, on average, devote less of their food budgets to grocery store (food at home) purchases and make fewer trips to the grocery store than the other generations examined. They do demand healthier and fresher food—including fruits and vegetables—when making food-at-home purchases, but they place a higher preference on convenience than do other generations.

Millennials -- those born between 1981 and the mid-2000s -- are now America's largest living generation, surpassing baby boomers. As a result, their purchasing behavior greatly influences the retail landscape and, of course, the plans of food & beverage processors.

Studies have found that millennials are different from older generations in that they are more racially diverse, highly educated and internet-savvy. Most are early in their working lives and single or just starting their own families. Their grocery shopping habits are likely to change as they age, but current differences from older generations could have implications for future food demand.

The ERS study analyzed 2014 grocery store data from Information Resources Inc. (IRI) to see how food purchases differ among four generations of shoppers. Each household was assigned to one of four generational cohorts based on the age of the household head responsible for the grocery shopping:

  • Traditionalists—born before 1946
  • Baby Boomers—born 1946-1964
  • Gen X’ers—born between 1965-1980
  • Millennials – for purposes of this study, they had to be age 18 or older in 2014, so this group was born between 1981 and 1996.

ERS researchers also divided households over all generations into 10 income groups based on annual household income divided by household size. Millennials made up roughly 20 percent of the households included in the ERS analysis (U.S. Census Bureau data show millennials accounting for 26 percent of the total population in 2014).

Millennials and Gen X’ers were found to spend the least money per person per month on food at home at all income deciles. As income rises, there is a small positive effect on per capita food-at-home expenditure for most income deciles. While each preceding, older generation spends more on food at home than the younger generation after it, there is a larger gap between the spending of Baby Boomers and Gen X’ers.

Per capita food-at-home spending by Traditionalist and Baby Boomer households is similar in size to each other, and higher than spending by Gen X and Millennial households.

Among all households earning between $14,000 and $20,000 per household member annually, here's what the generations spent on food at home:

  • Millennials just under $80 per month per person
  • Gen X’ers spent $85
  • Baby Boomers spent $135
  • Traditionalists spent $154.

The differences in food-at-home spending between the generations suggests that the younger generations have a stronger preference for eating out at restaurants, fast food places, and other away-from-home venues. So does data from the U.S. Bureau of Labor Statistics' Consumer Expenditure Survey. That research found survey respondents under the age of 25 allocate the highest proportion of their food budgets (6 percent) to eating out versus the 4.8 percent by respondents between the ages of 55 and 64 years old.

ERS researchers classified the IRI purchase data into three beverage categories and 19 food categories—13 fresh or minimally processed categories and six processed categories. Processed food categories included bakery items (breads, rolls, and cakes), sugar and candies, baby food, snack items, prepared foods and other foods (condiments, seasonings, sauces, etc.). Snack items are foods not consumed as the main part of a meal, such as chips and crackers. The researchers defined prepared foods as foods that require no preparation after purchase—the food is ready to eat or ready to heat and then eat. Examples include canned soup, frozen pizza and items from the deli section, such as sandwiches, pasta salads, and rotisserie chicken. Once separated into categories, the researchers calculated monthly expenditure shares by category and household type.

Millennial shoppers generally purchase a larger share of prepared foods, pasta, and sugar and candies than the other generations -- 13.6 percent of their at-home food expenditures to these three categories, compared with 12.4 percent by Gen X’ers, 11.5 percent by Baby Boomers, and 11.2 percent by Traditionalists.

Millennial households also devote the smallest share of their at-home food expenditures to grains, poultry and red meat. Prepared foods, sugar, candies and pasta all require minimal preparation for consumption, while grains and meats require cooking.

Examining at-home expenditure shares by income, some noticeable patterns appear. As income rises, expenditure shares for vegetables, fruits, red meats, and sugar and candies for all four generational groups increase, while shares for poultry decrease as incomes rise.

It's a lot to digest, pardon the pun. But the original ERS report has five downloadable charts and much more text. See the original at: hubs.ly/H09CqGt0.

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