Source: ABS 2017a,b
Author: Lindsay Hogan
This report briefly examines recent trends and issues relating to Australia's household food expenditure.
Trends in Australia's food market
Trends in Australia's food market between 1988-89 and 2016-17: indicative food production increased from $65 billion to $117 billion, an average increase of 2.1 per cent a year; household food consumption expenditure increased from $49 billion to $92 billion, an average increase of 2.3 per cent a year; and net food exports increased from $16 billion to $25 billion, an average increase of 1.5 per cent a year (in 2015-16 prices).
- Food exports increased from $20 billion to $39 billion (2.4 per cent a year), or from 30 to 33 per cent of indicative food production. Food imports increased from $4 billion to $14 billion (4.8 per cent a year), or from 8 to 15 per cent of food consumption.
Key drivers of food demand growth in Australia: estimated growth in the volume of household food consumption has been relatively consistent in recent decades, averaging 2.4 per cent a year over the period 1988-89 to 2016-17, but key drivers have changed.
- Between 1988-89 and 2009-10, key drivers were population growth (55 per cent of food demand growth), income growth (42 per cent), and changes in tastes and preferences (9 per cent), partly offset by higher real food prices (-7 per cent).
- Between 2009-10 and 2016-17, key drivers were population growth (64 per cent of food demand growth), changes in tastes and preferences (20 per cent), lower real food prices (10 per cent) and income growth (6 per cent).
- Growth estimates for the volume of food consumption per person (1.0 per cent a year between 1988-89 and 2016-17) should be interpreted with caution and may indicate there has been some switching toward higher-priced food types.
Changing household food expenditure patterns: based on ABS household expenditure survey (HES) data, the trend away from home cooking toward meals out and fast foods has continued in recent years (Figure S1). The share of meals out and fast foods in total food expenditure increased from 25 per cent in 1988-89 to 31 per cent in 2009-10 and 34 per cent in 2015-16, the latest year available. That is, on average, consumers have switched further from food products toward higher-priced food services—between 1988-89 and 2015-16, real consumer prices increased overall by 5 per cent for food and 17 per cent for meals out and take away food.
Economic opportunities for food producers: future food demand growth will be underpinned by population growth. A key uncertainty in the outlook is the extent to which the broadly-based trend toward spending more on meals out and fast foods will continue.
- Under illustrative medium-case projections, Australia's household food consumption expenditure increases from $92 billion in 2016-17 to $165 billion in 2049-50, an average increase of 1.8 per cent a year; this comprises growth rates of 1.3 per cent for the population (ABS Series B population projections), and 0.5 per cent for household food expenditure per person (average of recent and longer-term trend growth).
- There are significant market segments across the food price-quality spectrum. Price is the key driver of food demand in several population sub-groups, particularly lower income and net worth households, while there is a revealed willingness to pay a price premium for quality attributes in higher income and net worth households. Reliable food quality is likely to increase the willingness of people to pay a price premium (all else constant).
Food security in government payment households: based on HES data, in households where government payments are the main income source, on average, the share of household income spent on food has declined significantly, from 29 per cent in 1988-89 to 21 per cent in 2009-10 and 19 per cent in 2015-16. The main difference in food expenditure patterns from the average Australian household is spending on meals out and fast foods. For example, in 2015-16, expenditure per person in government payment households, as a share of the Australian average, was 74 per cent for total food, 90 per cent for food excluding meals out and fast foods, and 42 per cent for meals out and fast foods. Some households may still require complementary support, for example, from non-government organisations.
Nutrition security: in recent years, globally, there has been a significant focus on the role of nutrition in food security and health outcomes. Modern food systems are associated with lower levels of undernutrition—including deficiencies in macronutrients (proteins, carbohydrate and fats) and micronutrients (vitamins and minerals)—and higher levels of overweight and obesity, and diet-related non-communicable diseases. The Australian Government Department of Health has a website with guidelines on healthy lifestyle choices for various population groups, including information on nutrition and physical activity.
- There may be a useful role for government to provide more nuanced and accessible information about diet and lifestyle attributes than is currently available to encourage people to make incremental choices that lower expected health risks, taking into account their individual circumstances (including tastes and preferences).
- Given the importance of meals out and fast foods in household food consumption, there may be a useful role for government to consider cost-effective options to provide consumers with information about nutrition content and food source in the food services industry (for example, through a healthy star rating system and origin labelling).
Food waste and losses: global food losses and waste account for around one-third of food produced for human consumption; in North America and Oceania (including Australia), around 13 per cent of initial food production is wasted at the consumption stage. Australia's National Food Waste Strategy, launched in November 2017, aims to halve food waste by 2030; the Strategy presents a framework to support policy options to reduce food waste. An example of current CSIRO research that aims to reduce food waste is the processing of pulp that remains after juicing.
- Reliable food product and service labelling will allow consumers to make food choices that, for a given price, are more closed aligned with their tastes and preferences, reducing food waste (all else constant).
Food demand 2018 data visualisation
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