America's Changing Appetite

CONTENTS

Also Inside

45 Food Assistance Expenditures Increase

in 2001

-- Victor Oliveira

51 ERS Releases New Report, Household Food

Security in the United States, 2000

Consumer-Driven Agriculture

2 America's Changing Appetite: Food

Consumption and Spending to 2020

--Noel Blisard, Biing-Hwan Lin, John Cromartie, and Nicole

Ballenger

10 Population Growth and Demographic Change,

1980-2020

--John Cromartie

13 New Health Information Is Reshaping Food

Choices

--Jayachandran N. Variyam and Elise Golan

19 Changing Consumer Demands Create

Opportunities for U.S. Food System

--David E. Davis and Hayden Stewart

24 Food Product Introductions Continue To Decline

in 2000

--J. Michael Harris

28 Innovation by Food Companies Key to Growth

and Profitability

--Hayden Stewart and Steve Martinez

33 Farm Business Practices Coordinate Production

With Consumer Preferences

--Steve Martinez and David E. Davis

39 U.S. Food Sector Linked to Global Consumers

--Anita Regmi and Greg Pompelli

America's appetite, like its population,

is always changing.

Foods once favored are now rarely

eaten. Foods once only dreamed

about are a reality. Dining out, once

thought to be a luxury, is now common.

The Nation's population is

wealthier, older, more educated,

and more ethnically diverse than

in the past. And these demographic

changes are likely to become more

pronounced in the next 20 years.

Consumers will continue to demand

new food products, new packaging,

more convenience, new delivery

systems, and safer and more nutritious

foods. Consequently, USDA's

Economic Research Service (ERS)

has undertaken an extensive effort

to project how population growth,

an aging population, ethnic diversity,

other demographic trends, and

income growth will affect future

food choices and how the food system

will respond to such changes.

By 2020, the U.S. population

will add between 50 and 80 million

people--all becoming part of the

food system. Based on an increase

of 50 million food customers, U.S.

food expenditures are projected to

rise 26 percent between 2000 and

2020.With food spending already

approaching $800 billion in 2001,

the projected increase will boost

food sales of supermarkets, restaurants,

fast food outlets, and other

retail food establishments by $208

billion.

Increased food spending driven

by population growth is just one

way consumers will shape the future

of the U.S. food system. Our

research is also designed to understand

how shifts in the demographic

profile of the projected U.S. population

in 2020 will affect what people

will eat and how much they

will spend, where people will eat,

and what product characteristics

will command the consumer's food

dollar. These future food choices

will have implications for the organizational

structure of the food industry

and for the economic wellbeing

of farmers, food processors,

retailers, and other participants in

the food production and marketing

system--our concept of "consumerdriven

agriculture."

Models and Assumptions of

Our Analysis

ERS's consumer-driven agriculture

project involved separate but

coordinated econometric modelbased

projections of per capita food

expenditures and per capita demand

for food quantities. The first

step was to estimate the effects of a