People have more cash to spend than ever before, yet spend a shrinking proportion of their income on food.
John Mackey, founder of the upscale retail chain Whole Foods, looked at that as an opportunity. He recognized that shoppers were able and willing to pay more to get the kind of food they wanted, when they wanted it, and how they wanted it, futurist Dr. Lowell Catlett told members of the Washington Growers Clearing House Association at their annual meeting in Wenatchee.
Whole Foods, which started out as an organic retailer, is now the fastest growing grocery chain in America. Mackey’s philosophy was that the amount that people spend on food today is so low in comparison with their disposable income, why not try to get them to spend more.
Catlett, an agricultural economist at the New Mexico State University, said the babyboomer generation has 62 percent more real income, adjusted for inflation, than their parents had, and the prices of appliances, for example, have dropped tremendously.
Fifty years ago, 22 percent of the U.S. population was officially living below the poverty level. Today, that percentage has dropped to 11 percent. Families who officially live in poverty have, on average, 2.3 televisions. “The average person who lives in poverty has more appliances than the average family had one generation ago,” Catlett pointed out.
Consumers can afford to pay more for food, which means that grocery stores and restaurants could charge more and in turn pay more to their suppliers, the producers.
“We’ve got to get out of the commodity mentality and understand there’s an abundance of income in this world. It’s our choice to get it, and we can and will,” he said. “Our mentality has been, ‘Let’s just feed people,’ but people can afford what they want.”
The margin to be made by selling commodities is minor, but if producers give people what they want when they want it and where they want it, price is not an issue, he said.
Catlett, who is a consultant to big businesses and government departments, said higher disposable income is one of the major trends that are creating more opportunities for agricultural producers. Another is the aging of society.
Aging babyboomers are interested in anything that might make them younger or healthier, from cosmetic surgery and hip replacements to red wine, nutrient-enhanced water, and prescription food. “We spent 16 percent of our gross national product on health care last year,” he told growers at the meeting. “Wouldn’t you like to get some of that 16 percent? It’s not just about nourishment; it’s, is it good for you?”
Catlett said the Australian government has recognized that trees are also good for the environment because they scrub out the carbon dioxide and generate oxygen. Growers are offered tax credits for cultivating trees.
“You sell wonderful products that are fun to eat, but you have to link it to health and the environment,” Catlett stressed. “Remember, people pay for what they want.”