At many levels, the nascent movement, “Occupy Wall Street,” seems as far removed from the food industry as could be imagined. After all, its ire principally has been directed toward the alleged faults of the financial services industry — its handling of the housing market, its losses costing the public and its need for a federal bailout. A look at a list of the group’s stated grievances begins exactly with these issues:
“They have taken our houses through an illegal foreclosure process, despite not having the original mortgage.
“They have taken bailouts from taxpayers with impunity, and continue to give executives exorbitant bonuses.”
Still, one significant thread running through the protests, related to the disparity of wealth in the United States, is something that bears watching by food manufacturers. When pressure on American households reaches a point that consumers struggle to put food on the table, the food industry needs to take note. And the premise of the group is not simply that the poor are suffering. To the “Occupy Wall Street” movement, the financial sector along with compliant government are to blame, causing “the other 99% to struggle economically.”
Leaving blame aside, is it true that 99% of the population is struggling economically to the point that food expenditures are being adversely affected? Could we be near such a point in a nation where consumers already have been spending a smaller proportion of their pay on food than any other country?
Nearer than one may think. Irene Rosenfeld, chairman and chief executive officer of Kraft Foods Inc., noted that in the past year, average unit sales of food were flat in the 19 largest categories. She said annual growth had averaged 5%.
But scanner data for the past year were not the first signs consumers have been forced or have chosen to make cuts in food spending. And the pressure is not limited to the poorest Americans.
A 2009 study by the Economic Research Service of the U.S. Department of Agriculture made the point bluntly in the title, “Food Spending Declined and Food Insecurity Increased for Middle-Income and Low-Income Households From 2000 to 2007.” Looking at spending patterns during this period, Mark Nord, a sociologist at the E.R.S., found that food spending between 2000 and 2007 declined 5.7% for the population with the lowest income, 15.3% for the fourth quintile and 9% for the third (middle) quintile. As a result, groups accounting for 60% of the American public cut spending on food during this period (data for higher income individuals were not included in the study). During this same period, one that hardly has been a “golden age” for food companies, spending on housing rose 10% and on health care jumped 19.5%.
For the lowest income households, the period since 2000 has been one of rising food insecurity, which the E.R.S. defines as lack of “consistent access by all people to adequate food for active, healthy living.”
For medium-low and middle-income house-holds, Mr. Nord said the reduction in spending on food meant families “either reduced the quantity of food they purchased or that they purchased, on average, lower cost foods.”
Neither choice is a positive one for the food industry.
He continued, “Households with adequate resources may have reduced spending for ‘extras,’ such as treats and convenience foods, with minimal impact on nutrition and health.”
Again, such a change is a negative for the food industry.
Commenting on what has happened since 2007, Mr. Nord recently told Food Business News he believes food spending has continued to decline among the lower 60% of earning households and that food insecurity is on the rise.
When significant proportions of the American public view themselves as unable to sustain the “standard of eating” to which they had become accustomed, it should be a matter of serious concern to the entire food sector.