Groceries Ain't Where It's At

Groceries Ain't Where It's At

I look at data a lot in my day job(s) and I find myself opining to friends about the massive changes ahead. Often people express actual fear at how things are changing and where they might lead to. When it comes to the future, I'm a rational optimist, and I think looking at long term trends can help us appreciate how much better off we are today, and maybe we shouldn't be so fearful of tomorrow.

We Got To Eat

I started wondering, while watching a bunch of kids devour a pizza, about how what we eat has changed over the long term. In particular, I wondered, economically, how has our relationship to this basic sustenance changed since my grandparents day. (OK, I was really interested in much longer time scales, but I figured finding data for the last 100 years would be easier) I came upon this data at the USDA site. Granted the data is for the U.S. only, but it reveals some interesting trends.

The chart above illustrates how we get our food, in broad terms. The blue shaded area shows you what percent of our personal disposable income we spend on food and drink away from home. This includes restaurants, sporting venues, schools, etc... All places outside the home. Conversely, the orange shaded area is spending on food and drink we consume in the home. I added a line to illustrate the total amount of personal disposable income over the same period.

We Are SO Much Better Off

Just look at the chart and think back. In the 1930s and 1940s just about 1/4 of all disposable income went to food. Now that's not a tragic situation, but that is a huge chunk of the economy that can be deployed elsewhere. Think travel. Think entertainment. Think education. Today that number is less than 10%. 

To think of it a different way today, take every dollar you spend on food and drink, regardless of location, and every time you pay for something you put an equal amount in a bucket. Go out to dinner for $100; put $100 in the bucket. Spend $90 at the grocery store; put $90 in the bucket. After a while there is a lot of money in the bucket! Now if you want to simulate living in 1930... just put a match to the bucket because it's as if it never existed. But in today's world you use that money in the bucket for other things. For example paying your cable and internet bill, which gives you entertainment options of which our grandparents never dreamed. Or paying for activities for our kids, that are more diverse and enriching than even the affluent enjoyed in the pre-war years.

Now consider all of the above while looking at the green line of total personal disposable income. We are spending a smaller and smaller fraction our income 'pie' on food, and it's a pie that is growing at a staggering rate. Yes, we have income inequality today, and we have other economic challenges. Yes, we have had years where the economy has disappointed and times seemed tough. But, when you look at these longer time scales you see that the trend is almost embarrassingly good. Things are MUCH better than they ever used to be.

Interesting Extrapolation

Of all the trends in the data, I think the most intriguing is the looking at how much money we spend on food outside the home. What fascinates me is the long term steadiness of those expenditures over time as percent of disposable income. It's pretty staggering to see income growing so much, overall food spending going down so consistently, and yet we consistently spend about 4% of our income on food and drink outside the home. Looking forward, it's a safe bet that however the economy goes up or down, in the U.S. at least, we are going to spend the same 4% outside the home. Perhaps we can add it to death and taxes as another truism of life.

Oh, and back to the title, it doesn't take much to see that being in the grocery business is not where you want to counsel your children to focus... think food-on-the-go as a better bet.

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