Changing Consumer Preferences Will Impact The Farm

Countless articles and news stories have circulated about how millennials are affecting our society for better or for worse. Over the past year, a new genre of articles has increasingly come along about Generation Z, the generation after millennials currently in school or university, and their preferences.

For business owners, it’s important to realize that generational change will always be a reality. Staying ahead of the curve on shifting consumer preferences is a great way to deliver value to upcoming generations and reap the rewards. Falling behind the times, however, can be detrimental to a business. This is especially true for farming, where changing consumer preferences can affect what growers produce and how they operate their farms.

Today’s consumers are willing to pay a premium for better products and more information about those products. In this article, we’ll take a look at the various generations of consumers and their food preferences. We’ll see that newer generations demand greater transparency about their food. What may have worked for decades as Baby Boomers held most of the spending power, doesn’t necessarily meet the needs of today’s younger consumers. As grocery stores, fresh markets, and food companies change their approach to meet the demands of younger consumers, so too will the farms that supply them.

Boomers

Born shortly after World War II, this generation came of age in the 60s and 70s and was the largest and most wealthy generation in American history. They still represent about a quarter of the population and hold the most spending power of any generation. However, that won’t be true for much longer as Boomers age and their numbers decline while millennials enter mid- and upper-level roles in the workforce and overtake Boomers in spending power.

Traditionally, Boomers have not been adventurous eaters. They grew up in the era of the supermarket where big, national brands dominated the food landscape. Classic tastes and staple foods make Boomers happy. Additionally, price is less of an issue for Boomers, who are willing to spend more in order to have comfortable and convenient choices from established brands.

However, Boomers are also aware of getting older. They want to make healthier choices, especially as modern medical research indicates that eating habits from the mid-20th century did damage in terms of heart health and weight management. Increasingly, Boomers are turning to whole grains, lean proteins, and low-fat substitutes for the same comfort foods they enjoy.

Gen X

Often called the “forgotten generation,” Generation X is bookended by two larger generations – the Boomers and Millennials. Gen X never achieved the same level of spending power as their parents due to the size of the Boomer generation. In addition, Gen X’s children, the Millennials, are a larger and more diverse generation, stealing the spotlight from their parents as they age.

Gen X’s food preferences, however, do tell us quite a bit about overall trends in eating habits. X-ers spend more time on food preparation than any other generation, preferring to purchase fresh raw ingredients and cook at home. Almost 55% of Gen X-ers cook on the weekends, surpassing all other generations. They also spend more on food per household than any other generation.

Millennials

Depending on how you define the age ranges of generations, Millennials are equal to or larger than the Boomers in population size. In the coming years, as Boomers continue to age and Millennials enter more senior positions in the workforce, Millennials will have the most spending power of any generation.

One defining characteristic of millennials is their affinity for technology. As a result, Millennials are more likely to purchase food online. They also generally eschew big stores and major brands in favor of specialty or independent retailers with unique products or experiences. According to Wells Fargo research, the top 25 food companies fell $18 billion in market share between 2012 and 2017, while small and mid-sized manufacturers saw 46% of overall industry gains during the same period. Farmers have felt the effects of this shift with decreasing or changing demands from major food companies and increasing interest in farmer’s markets, specialty products, and direct-to-consumer sales.

Millennials will also pay a premium for healthy foods and are more likely to read food labels than any generation. They’re eating more fresh fruits and vegetables than preceding generations and have largely abandoned packaged, processed, and frozen foods that are familiar to Boomers and X-ers. Organic, humane, and socially responsible products are important to Millennials, and they’re more engaged in learning about food’s origins than earlier generations. For growers, this means that sourcing and the food supply chain has changed as millennials’ preferences permeate the supermarket and restaurant industries.

Gen Z & the Future of Food

The changes in the food industry won’t stop with Millennials. Generation Z, today’s teenagers and university students, also worry about healthy eating. They’re also the most diverse generation ever and have grown up in a globalized world, making them adventurous eaters with diverse tastes. This generation is also social media native, and they use social networks to discover new recipes, restaurants, and products. This makes Gen Z the most trend-based generation, with swings between fad diets and superfoods-of-the-moment.

Since Gen Z is still so young, price is an important consideration for choosing foods. However, they also spend more as a percentage of total income on food than Millennials did when they were the same age. Food is the number one spending category for Gen Z. Convenience is also a big factor. Gen Z prefers snacks over meals, and they spend especially heavily on freshly prepared foods.

Like Millennials, Gen Z-ers are committed to sustainable, organic, and locally sourced foods. Gen Z is also on track to become the most urbanized generation, following the overall trend of populations moving to city centers. This makes delivering fresh, responsibly grown, and diverse produce to city centers a challenge that will continue to grow for the food industry over the coming years.

Major Trends for Farmers

After looking at the changes between generations, we can start to see some major trends emerging that will impact farmers.

1. Growing Population

Millennials and Gen Z are both large cohorts, adding millions of new consumers to the marketplace. Expect to see overall growth in demand for food. However, with shifting preferences this growth will affect some sectors more than others. Fresh fruits and vegetables, whole grains, and humanely raised meat and dairy will see the biggest gains.

2. Local Produce to Urban Centers

Continued urbanization means fresh products need to get to city centers quickly. Millennials and Gen Z-ers are increasingly aware of seasonality and want to buy ripe, locally grown products when they’re in season. Processed foods are no longer en vogue, and the fresher an item is, the more likely younger generations will buy it. If farmers can get these fresh products to consumers shortly after harvest, they’ll be able to charge higher prices for goods.

3. Organic, Sustainable, Humane

Organic, non-GMO, cage-free, grass fed, solar/wind powered, and other labels that indicate farms have a low environmental impact will be increasingly important. Younger generations are becoming wise to the fact that some labeling organizations are certification mills while others are much more rigorous, and it will pay to have the highest certification standards possible for growers’ products. Farmers can’t afford to avoid marketing anymore. They’ll need to consider the words they use to describe their products and be prepared to explain and defend their methods to give consumers peace of mind about their food.

4. High-Tech Farming

Managing farms that meet growing demands while also adhering to high certifications standards is the modern farmer’s challenge. A major way to improve the traceability, sustainability, and quality of farms is through new technologies. In-field sensors, autonomous machines, and management software will help farmers keep track of everything that’s happening on the farm and produce higher yields in the same amount of acreage.

Generational Preferences on the Farm

Younger generations are changing the food landscape and the farm along with it. In order to meet the demands of Millennials and Generation Z, growers will need to produce more diverse products, track and certify those products, and deliver them fresh to consumers in a simplified supply chain. Technology will play an important role in this transition, making it easier for farmers to manage and automate parts of farming and accounting. Those that make early investments in certification and technology will reap the rewards as Millennials and Gen Z come to dominate the food economy.

Editor’s Note: Remi Schmaltz is CEO of Decisive Farming, a Canadian software program for farms offering precision agronomics, data management, crop marketing, and telematics services. He has extensive agriculture knowledge after taking over his family’s ag retail company Dynagra Corp with his brother where he started incubating new technologies in farming resulting in the launch of Decisive Farming in 2011.