Who buys functional foods?

ANALYZING HOUSEHOLD FUNCTIONAL FOOD PURCHASES

During the past several years, functional foods have become one of the most popular concepts in the consumer food market. Although increasingly popular, functional foods are not universally defined. Two popular definitions of functional foods are (1) forms of food products that have been altered in order to serve a particular nutritional need and which is used as the primary selling point (i.e., fat-free salad dressing); and (2) naturally occurring foods particularly endowed with one or more beneficial nutritional properties that could reasonably be used as the primary selling point against similar foods (e.g., blueberries). Functional foods provide health benefits beyond basic nutrition and have been said to help prevent heart disease, cancer and stroke, conditions that are generally associated with diets that are too high in calories, total fat, saturated fat and cholesterol.

The functional foods market is an area increasingly targeted by food marketers. Spurred by the interest and enthusiasm of consumers, the food industry has produced numerous new products with functional benefits and has increased marketing of the functional benefits of many existing foods. The United States' functional food market has grown from $15 billion in sales in 1997 (Leighton, 2001) to more than $18.2 billion in 2001 (Leighton, 2002). Furthermore, in 2001, functional beverages represented another $7 billion in sales with growth rates reaching 12 percent (Leighton, 2002). The functional foods market is expected to grow more than 8 percent and reach $32.7 billion by 2005.

Of great interest to marketers are the profiles and purchase tendencies of functional food buyers. Who are the primary purchasers of functional foods and what does this emerging market mean for agrimarketers? We will explore this question using some results of a recently completed study at Purdue University.

THE STUDY

We used data for grocery purchases made by 7,195 households in 603 food product categories and household demographic data from an AC Nielsen Homescan Data set from 1999 to examine the functional food purchases of consumer households in order to gain insight into some of their buying characteristics. Five general demographic household segments were first identified and examined: single women, single men, young married (under age 45), mature married (age 45-54) and older married (age 55 and over). Comparisons of these groups to other households, of more-educated to less-educated households and of higher-income to lower-income households were also examined. Additionally, households that purchased several specific functional and more healthful foods were examined to find any unique buying tendencies.

Tables 1 and 2 provide concise summaries of characteristics and unique purchase tendencies of some household types examined and comparisons analyzed.

THE AGE AND GENDER STORY

Analyses indicated that single women were more likely to purchase healthier foods than single men. Additionally, men purchased significantly more sugary soft drinks compared to other households. Results showed that women were likely to consume yogurt and calcium-enriched orange juice, but they were not likely to purchase any other milk product, including skim milk or fat-free/low-fat cheese. Analyses also indicated that young married households (households with kids) did not purchase functional foods and more-healthy products; they purchased less-healthy products such as regular cereal (high in sugar), whole milk, regular soft drinks and frozen white potatoes. Mature married households were very health-conscious consumers as they purchased healthy products across all product categories. Incorporating healthy calcium products into their diet appeared important as they were likely to purchase low-fat/fat-free dairy products, calcium-enriched orange juice and soy-based products.

Older consumers were found to be aware of some diet/health relationships as they incorporated several functional, healthy foods into their diet. Older households may be concerned about lowering their cholesterol as compared to other households. Additionally, they were more likely to purchase products low in sugar (diet soft drinks and healthy cereal), fresh fruits and vegetables, low-fat dairy products, lean meats and calcium-enriched orange juice. Older consumers were not likely to purchase soy products.

MORE EDUCATION, MORE INCOME, HEALTHIER EATING

Analyses indicated that education plays a significant role in households purchasing healthy and functional food products. Analyses of more-educated (college-degreed) versus less-educated (no college degree) households indicated that more-educated households purchased healthier products than less-educated households.

Educated households were more likely to purchase functional and healthy foods across all product categories. More-educated households purchased more meatless items, and they purchased significantly more soy-based products. When meat was purchased by more-educated households, it was generally either lean poultry or fish. Further analysis indicated that more-educated households purchased healthier products than less-educated households, regardless of their age or marital status. However, more-educated older consumers were not likely to purchase soy-based products. More-educated single women were likely to purchase all soy products except soy milk. More-educated young married households purchased soy milk, skim milk, low-fat milk and healthy cereal.

Analyses further highlighted the importance of income to healthy functional food purchases. Higher income households ($50,000 per year or more) across all household types purchased healthier products than lower-income households (less than $50,000 per year). The only calcium-containing product that higher-income, single women were likely to purchase was yogurt. However, in the functional food product categories of soy foods and egg substitutes, both higher- and lower-income households purchased these products, thus, suggesting that education may have a more significant effect than income on purchasing functional and healthy foods across all product categories for all product types.

THE UPSHOT

With the U.S. consumer's food preferences continuing to fragment, agrimarketers must be in tune with the trends. As input firms create new products that deliver functional benefits to consumers, agricultural producers target niche markets with functional foods or processors focus more resources on this emerging market, the question of who is buying is a crucial one.

This study suggests that single women, mature married couples and older adults all represent core markets for functional foods marketers. Education is strongly associated with preferences for functional foods and is even more important than higher income. Finally, and perhaps most importantly, people who purchase one functional food item are very likely to purchase others. Such insights can help agrimarketers jumpstart their promotional strategies by targeting existing users and the right demographic.

Segmentation is a fundamental marketing concept, and targeting functional food buyers starts with understanding some of the basic characteristics of functional food purchases. While demographics are generally not enough, they can provide a useful beginning.

Dr. Wilson is an assistant professor in the Department of Agricultural Economics, Purdue University. Sharon Abbott is a senior project analyst with VNU Modeling and Analytics. For more information, e-mail Dr. Wilson at [e-mail].

Table 1. CHARACTERISTICS AND PURCHASE
TENDENCIES OF HOUSEHOLD GROUPS

HOUSEHOLD        PRIMARY
TYPE             CHARACTERISTICS

Single           No children
women            Employed
                 Income <$50,000
                 College or post-graduate education

Single men       Employed
                 No children
                 Income <$50,000
                 College or post-graduate education

Young            Three or more members per household
married          Male and female employed
                 Male and female under age 45
                 Children present, 12 years old or under
                 Male and female college educated
                 Income <$75,000

Mature           Male and female employed
married          Male and female ages 45 to 54
                 Generally no children
                 If children present, they are teenagers
                 Male and female college educated
                 Income >$50,000

Older            Male and female over the age of 55
married          No children
                 Not employed
                 Not college educated

HOUSEHOLD        UNIQUE
TYPE             PURCHASE
                 TENDENCIES

Single           Yogurt
women            Calcium-enriched orange juice
                 Soy-based products
                 Fish
                 Fresh fruits and vegetables
                 Diet soft drinks
                 Snacks

Single men       Egg substitutes
                 Sausage
                 Bacon
                 Fish
                 Regular soft drinks

Young            Regular cereal
married          Whole milk
                 Regular soft drinks
                 Frozen white potatoes

Mature           Lean beef, lean poultry, and fish
married          Calcium-enriched orange juice
                 Veggie burgers
                 Fat-free/low-fat cheese
                 Fat-free/low-fat dressing
                 Diet soft drinks
                 Skim milk

Older            Fresh fruits and vegetables
married          Egg substitutes
                 Fat-free & low-fat dressing
                 Fat-free and low-fat cottage cheese
                 Fat-free/low-fat cheese
                 Skim milk
                 Benecol/Take Control margarine,
                   lean beef, lean poultry, and fish
                 Healthy cereal

Table 2. UNIQUE PURCHASE TENDENCIES OF
SPECIFIC BUYER VS. NON-BUYER GROUPS

GROUP                 UNIQUE PURCHASE TENDENCIES
                      OF THE MAIN BUYER GROUP

Benecol/Take          Egg substitutes, healthy cereal,
Control buyers        fresh fruits and vegetables,
vs. non-Benecol/      low-fat and fat-free dairy products,
Take Control          soy-based products, veggie
buyers                burgers, lean poultry, fish

Soy foods             Fresh fruits and vegetables,
buyers vs.            low-fat and fat-free dairy products,
non-soy               soy milk, tofu and veggie burgers,
foods buyers          egg substitutes, fish,
                      Benecol/Take Control margarine,
                      healthy cereal

Blueberry             Fresh fruits and vegetables, low-fat
buyers vs.            and fat-free dairy products,
non-blueberry         yogurt, soy-based products, lean
buyers                poultry and fish, fat-free
                      and low-fat dressing, Beneco/Take
                      Control margarine, egg
                      substitutes, healthy cereal

Calcium orange        Fresh fruits, skim milk, regular
juice buyers vs.      soft drinks, regular cereal,
non-calcium orange    lean meat and fish, regular
juice buyers          poultry and sausage, Benecol/
                      Take Control margarine, egg
                      substitutes, soy-based products

Tofu buyers vs.       Soy-based products, egg substitutes,
non-tofu buyers       lean poultry and fish,
                      fresh fruits and vegetables, low-fat
                      and fat-free dairy products,
                      low-fat and fat-free dressings