Consumer Food Insights - August 2022

The latest edition of the Consumer Food Insights survey is now out.

In terms of the headline statistics, we saw a slight decrease in spending on food at home and a fall in consumers’ inflation expectations. Many of our other measures, including food insecurity, the sustainable food purchasing index, and food happiness remained steady.

Despite small changes in our headline numbers, this might be the most interesting report we’ve yet produced. We did a deep dive into how our various survey measures differ by political ideology, and we also asked a few questions about how people were experiencing and responding to the summer heat waves.

First, I want to highlight a general question we asked about budget stress. We asked people which three items were causing the most and which three items were causing least stress in their budgets (out of a set of 12 items). Then, we subtracted the percentage of times each item was picked as most stressful from the percentage of times each item was picked as least stressful to create a budget stress index that potentially ranges form -100 to + 100 for each item.

Which item causes the most stress? Food, followed by gas and rent/mortgage. The ranking is interesting in that it seems to reflect Maslow’s Hierarchy of Needs, and it highlights the prominent place that food plays in household financial well being. The result also helps explain why food price inflation has been a big topic of conversation over the course of the past year. The figure below shows these general trends and how they differ for people who said they were (or were not) affected by extreme heat this summer.

Overall, 65% of people said “yes” they had been affected by extreme heat this summer. For people who said “yes”, we followed up and asked how their behaviors changed in response to the heat. The figure below shows the results. Respondents said they spent less time working outdoors and shifted somewhat towards meals eaten at home as a response to heat.

In terms of political ideology, we noted some similarities between conservatives and liberals. In particular, liberals and conservatives tend to spend about the same amount of money on food (after adjusting for income) except at the highest income levels, and both liberals and conservatives report similar and very high levels of happiness with their diets.

Where do the differences come in?

• Liberals indicate they’ve experienced less food price inflation over the past year and expect lower food price inflation in the future as compared to conservatives.

• Liberals score more highly on the sustainable food price index, primarily because of the higher scores on (and higher weights placed on) environment and social issues as compared to conservatives. By contrast, conservatives score higher on economic and taste dimensions.

• Liberals are about twice as likely to identify as vegetarian or vegan as compared to moderates and conservatives and are more likely to say they garden.

• Conservatives are more likely to trust family, personal care physicians, friends, USDA, and food companies for information about food than liberals. The opposite is true of the FDA, New York Times, CNN, and Universities.

• There are sizable differences between liberals and conservatives in terms of behaviors and beliefs about the food system. The figure below shows the break-down in terms of beliefs.

There is a lot more in the August report. You can read the whole thing here.

Animal Welfare vs. the Environment

“Global population is projected to reach 9 billion by the year 2048. Increased global affluence will result in an increase in global protein requirements per capita. With more people wanting to consume meat, production of animal protein will need to increase by 70% from 2005 to 2050. Increased global demand for animal protein has the potential to exacerbate environmental problems associated with climate change and biodiversity loss. Meat-containing diets worldwide have been estimated to require 6 times more land than wheat-based diets, calling into question the ability of animal agriculture to efficiently meet growing caloric needs. One potential way to meet protein demand while mitigating environmental damages is to intensify animal agriculture, which can reduce the environmental impact per unit of food produced. However, intensification practices (e.g., battery cages, gestation crates, feedlots) are often argued to decrease farm animal well-being.”

That’s from the opening paragraph of a recently released a paper I co-authored with now PhD student, Jacob Schmiess in The Journal of Agricultural and Resource Economics (references removed for clarity).

Jacob and I invested this issue from the consumers’ point of view by looking at the tradeoffs consumers were willing to make between different attributes when buying ground beef with different environmental and animal welfare characteristics and claims. We surveyed over 1,500 consumers who were randomly assigned to choices that varied by how the welfare and environmental outcomes of beef were communicated (text only, text+visual cues, or via label claims) and by what information was presented to respondents (none, pro-welfare, or pro-environment).

Here is a summary of our results excerpted from the paper:

Across all presentation designs and information treatments, participants are far more willing to pay for animal welfare attributes than for environmental efficiencies. The three attributes representing animal welfare (particularly grassfed and AGH [added growth hormone] free) elicited higher overall WTP [willingnes-to-pay] than the three attributes representing environmental sustainability. Results indicate that [presentation format] can have a significant impact on consumer responses. Participants shown the purely informational presentation (text design) disregarded all numerically presented attributes (land use, water use, CO2 emissions, mortality rate). Instead, they chose options solely on price and whether the beef was grassfed with no AGH. The visual presentation incorporated color and size to illustrate the numeric attributes more intuitively. This group had significantly higher WTP for environmental attributes than those in the other presentations, although still lower than their WTP for animal welfare attributes. The label presentation was designed to more realistically mimic a grocery store setting, using images of packages of ground beef with labels representing each attribute besides price. Participants shown the label design had the lowest variance across attributes for WTP and relatively lower attribute WTP overall. Somewhat surprisingly, the land protection certified label produced slightly higher WTP than the grassfed label.

The use of pro-animal welfare information in the text design produced a significant increase in WTP for animal welfare attributes as well as lower preference for [beef overall]. Pro-environment information had no effect on any design.

In the label design, participants’ WTP for a meat option over a “purchase neither” option was 1.5–2 times higher than that of participants the other designs. This group was also the most heavily influenced by price and had relatively low attribute WTP overall. One potential reason for this is that the label design does not display a “less desirable” level of each attribute, only the absence of a desirable label. It is possible these labels are seen as bonuses to an already desirable product rather than as a better alternative to an explicitly “undesirable” quality.

You can read the whole thing here.

Consumers are taking note of inflation and worsening economic conditions

The July 2022 edition of the Consumer Food Insights (CFI) report from the Center for Food Demand Analysis and Sustainability (CFDAS) at Purdue is now out. A key take-away from this month’s findings is consumers’ buying behaviors are beginning to be affected by inflation and worsening economic conditions.

We repeated a question we asked back in February, which asked respondents to pick the top 3 answers that most reflected how they were responding to higher food prices. Back in February, the most common response (selected by 31% of respondents) was “little or no change.” In July, that figure fell nine percentage points to 22%. Now, the most common answer is “sought out more sales and discounts” followed by “switched to generic brands.” Whereas the “switched to generic brands” category was only selected by 13% of respondents back in February, in July it was selected by 22% of respondents.

Despite this finding, we are not yet seeing an uptick in food insecurity rates, and total food spending continues to rise.

This month, we did a deep dive into effects of education on food behaviors and attitudes. We find:

• Food insecurity in 2022 is highest among those without any college education.

• The most educated consumers report being most satisfied with their diets.

• The importance of nutrition increases as consumers complete more years of college.

• Gardening, vegetarianism, and recycling are most popular among those with a graduate degree.

Here’s how various food-system related beliefs vary by education.

A lot more is available in the full report.

What Caused the Increase in Pork Prices?

That’s the question Glynn Tonsor and I tried to answer in a recent report we prepared for the National Pork Board. From January 2020 to May 2022, retail pork prices increased over 27%. Why? The figure below summarizes our assessment.

From the executive summary:

“Several factors contributed to the 6.3% increase in consumer willingness-to-pay for pork. Analysis suggests that changes in the prices of beef and chicken relative to pork are probably not major drivers of the increased willingness-to-pay for pork. Rather, a more likely driver behind increasing pork demand is strong consumer food spending, buoyed by federal stimulus and COVID-19 relief payments.

A number of factors contributed to the estimated 45.6% increase in marginal costs of pork production. These include: 1) Significantly higher feed costs. Inflation-adjusted corn prices increased 79% from January 2020 to April 2022, and soybean meal prices increased 42% over the same period. 2) Fuel and transportation costs have escalated. Real gasoline and diesel prices are about 48% higher than in January 2020, and refrigerated trucking rates were up about 50% at the first of 2022. 3) Wages in packing and retailing have outpaced inflation, pushing up pork prices.”

For the economists out there, the approach we used to quantify the price increases is one that could be readily applied in a variety of other contexts. If one knows the change in price and quantity and is willing to make assumptions about the elasticities of supply and demand, then it just takes a bit of algebra to decompose a price change into the portion arising from demand factors and the portion arising from supply factors.

There is a lot more in the full report, which is available here.

Most plant-based meat alternative buyers also buy meat: an analysis of household demographics, habit formation, and buying behavior among meat alternative buyers

That’s the title of a new co-authored paper led by Purdue PhD student, Zack Neuhofer, that was just published in the Nature journal Scientific Reports. While there have been many survey efforts to understand consumer buying behavior related to plant-based meat alternatives, fewer studies have used actual purchase behaviors. Here’s the abstract:

“The promise of novel plant-based meat alternatives (PBMAs) to lessen the health and environmental impacts of meat consumption ultimately depend on market acceptance and the extent to which they displace meat in consumers’ diets. We use household scanner data to provide an in-depth analysis of consumers’ PBMA buying behaviors. PBMAs buyers tend to be young, single, female, college educated, employed, higher income, and non-white. About 20% of consumers purchased a PBMA at least once, and 12% purchased a PBMA on multiple occasions. About 2.79% of households only purchased PBMAs. About 86% of PBMA buyers also bought ground meat; however, PBMA buyers spent about 13% less on ground meat. Interestingly, after a household’s first PBMA purchase, ground meat consumption did not fall. The number of households buying a PBMA for the first time fell over the two year period studied, despite the increase in market share in the ground meat market.”

We summarize some of the results in this venn diagram.

You can read the whole thing here.

P.S. This paper largely provides a descriptive analysis of buying behavior; Zack is currently working on another paper that will include formal demand modeling.