A Marketing Perspective

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Our Food System Trends Toward Local Food A Marketing Perspective Farm Supply Farms First Handler Food Commodities Food Products Processor Distributor Retailer Dr. John Park Roy B. Davis Professor of Agricultural Cooperation Breakdown of the Consumer Food Dollar Food Expenditures as a Percent of Disposable Personal Income $900 30 s (Current) Billion Dollars $800 $700 $600 $500 $400 $300 Marketing Bill $200 $100 Farm Value $0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 t Percent 25 20 15 10 5 0 Food at Home Food Away From Home 1930 1940 1950 1960 1970 1980 1990 2000 Source: USDA / ERS Source: USDA / ERS What a Dollar Spent for Food Paid for in 2000 What a Dollar Spent for Food Paid for in 2000 1

Food Industry Stats, 2006 $511 $500 925 Food System Impacts Costs and Benefits to Society Restaurants Supermarkets 12.5 34 3.4 Sales (billions) Locations (thousands) Employees (millions) Source: NRA, FMI Societal Impacts Obesity Rates POSITIVE Low cost food Greater wealth to dedicate to other uses Greater convenience Greater variety Year round availability Certain and reliable food supply NEGATIVE Industrialized food production Reliance on fossil fuels Less variety Increased rate of obesity Increased rates of Type II Diabetes BRFSS, 1985 BRFSS, 1986 2

BRFSS, 1987 BRFSS, 1988 BRFSS, 1989 BRFSS, 1990 BRFSS, 1991 BRFSS, 1992 15% 19% 15% 19% 3

BRFSS, 1993 BRFSS, 1994 15% 19% 15% 19% BRFSS, 1995 BRFSS, 1996 15% 19% 15% 19% BRFSS, 1997 BRFSS, 1998 15% 19% 20% 24% 15% 19% 20% 24% 4

BRFSS, 1999 BRFSS, 2000 15% 19% 20% 24% 15% 19% 20% 24% BRFSS, 2001 BRFSS, 2002 15% 19% 20% 24% 25% 29% 15% 19% 20% 24% 25% 29% BRFSS, 2003 BRFSS, 2004 15% 19% 20% 24% 25% 29% 15% 19% 20% 24% 25% 29% 5

BRFSS, 2005 Top Causes of Mortality in US, 2005 Heart disease: 652,091 Cancer: 559,312 Stroke (cerebrovascular diseases): 143,579 Chronic lower respiratory diseases: 130,933 Accidents (unintentional injuries): 117,809 Diabetes: 75,119 15% 19% 20% 24% 25% 29% 30% Source: National Center for Health Statistics, CDC How did we get here? Wealth US consumers are relatively wealthy, spending only about 10% of disposable income on food Population Families continue to feel the pressure of time with more dual income or single parent households h Convenience Demands on time have changed how we shop, what we eat, and how we cook Technology The fast pace of technology has not only impacted consumer behavior and expectations, but also changed what is possible for manufacturers Who do consumers rely on to help them eat healthy foods? Themselves Manufacturers Government All Food Stores Consumer Groups 5% 5% 3% 4% 11% 9% 16% 14% 16% 2003 2004 25% 46% 41% 0% 10% 20% 30% 40% 50% Source: Food Marketing Institute Consumer Conflict Government Action Dissatisfaction with consumption and result Help me get back in balance! Help me make better choices Make the foods I love better Give me new options to improve my health Food Fads Legislation and Lawsuits Lifestyle Changes 6

When consumers give up rights of choice: legislation or lawsuit? Super Size Me (2004) As a statement on the impacts of the modern food system, filmmaker Morgan Spurlock attempts to eat nothing but McDonald s food for one month. Local Food One Trend or Two? Leading up to Local Food The Natural Food Movement Make what we have better Organic production practices Niche Farming Producers taking advantage of niche organic markets Pizza Farms and ag tourism Local Food Movement Community Supported Ag Farm to School programs Slow Food gardens Consumer Driven Food System Locavores Not Fully Understood Consumers High Quality, Own Brand Organics, Natural Foods Local Food Slow Food CSAs Consumer Cooperatives Food Retailers Food Manufacturers Producers What is local anyway? In state and nearby very similar to consumers 44 states with labeling programs Whole Foods foodshed within 250 miles Socially motivated? Focused on distance to consumer Sustainability of resources, ecology Product focused? Freshness Anti corporate images 7

Kraft Foods Reinvented? Retailers and Local Food Closest competitors to Farmers Markets or CSAs Very adept at merchandising Could enter the Local Food market as it matures Issues for retail Reliability of the source Seasonality Attracting the locavore 8