NEW YORK, June 30, 2016 /PRNewswire/ -- As the celebrated July 4th holiday fast approaches, Americans everywhere will begin planning for the age-old tradition of the backyard barbeque. And while shoppers can expect to see prices drop on some of the most widely used barbeque essentials this year – items like protein, some cheeses, and ice cream – this year's index also highlights an interesting trend – the "millennial barbeque" – which could cost millennial shoppers a staggering 73 percent more than a traditional barbeque.
This is the first year Rabobank has analysed the cost of a millennial barbeque, due in part to the fact that millennials make up nearly 25 percent of American consumers, and because the palpable shift in their purchasing preferences is forcing large food and beverage companies to take notice.
"The $200 billion spending power of the millennial generation—which just this year has surpassed boomers as the largest generation—is proving to be very disruptive," said Nick Fereday, Executive Director, Food & Consumer Trends at Rabobank. "Although they're a diverse multicultural cohort, a few generalizations still ring true: they're more experimental in their food and beverage choices, health conscious (seeking fewer processed foods), and they also appear to be willing to spend a greater share of their income on food."
Each year, the Rabobank BBQ Index uses data from the Bureau of Labor Statistics to check prices and track changes for everything from burgers to produce to ice cream. Since 2004, when the average cost of feeding 10 people at a barbeque was just $51.90, the price has steadily increased. This Independence Day, hosts of a traditional barbeque can expect to pay a total of $69.05, up $.83 from last year. The largest price fluctuations can be seen in beef prices (down 9.8 percent), chicken (down 7.2 percent), and beer (up 6.2 percent).
But those relatively moderate price shifts don't seem to apply to today's millennial host.
"We're seeing some really fascinating trends when it comes to consumer purchase preferences among millennials," said Ross Colbert, Head of Food and Agribusiness Research at Rabobank. "Knowing the age group's partialities to food labels such as organic, local, free-range, and artisanal, for a party of ten, the millennial host is averaging $11.91 per guest, or just over $119 total. The discrepancy between the two barbeques is enormous."
In 2017, millennials will officially represent the U.S. age group with the largest spending power, and will account for almost 30 percent of the population. "This is, largely speaking, a price inelastic group of purchases, which has massive impact on their food and beverage preferences" says Colbert.
2016 BBQ Index Breakdown
Meat: Last year, beef represented the main driver of barbeque costs, having made a 40 percent price jump from 2010 to 2015. In 2016, however, we're seeing that cost drop back down, falling to $3.82 per pound. While the standard beef generally purchased for a traditional barbeque has dropped in cost, the grass-fed beef more frequently purchased by the millennial shopper has jumped in price by more than $1 since 2015, ringing in at just under $10 per pound. In fact, almost 70 percent of millennials report that knowing the origin of their beef is important in their purchasing decisions.
Dairy: While commodity cheese inventories are up, essentially driving the price down, there has been strong demand growth in the specialty cheese sector, including blue cheese. It is a natural product, high value-add due to its specialized processing, and has shown popularity amongst food-centric pop culture in the U.S. The limited production capacity, paired with the demand, has driven the price up.
Beverages: The price trends in beverage purchases show a stark difference between traditional and millennial barbeques. While the price of beer has increased just over 6 percent, coming in at $1.37 per 16 oz. can, millennials tend to trend toward higher end alcoholic beverages such as craft beer and small-batch spirits. The price premiums that come with craft spirits account for a large portion of the millennial price tag and today's popular choices, such as tequila and bourbon, have driven recent growth in the spirits sector.
Bread/Snacks: A January 2016 Mintel study shows that 47 percent of consumers want more premium buns on their burgers and that the number of Brioche buns on burger menus has increased by 59 percent in the last three years. Brioche is seen as a premium product in its sector due to the eggs, butter, milk, cream and sugar added during the production process, which gives the bun its pastry-like texture.
Overview Rationale and Methodology
The Rabobank BBQ Index assumes an average American family/neighborly BBQ situation that could take place over the U.S. Independence Day celebration. The Index assumes an average of 10 adults attends; hypothetically, each person consumes the same amount of food and beer. Each individual is estimated to consume two burgers (one chicken, one beef) with a slice of cheese, five handfuls of chips, 2 beers, a can of soda, a pickle and 3 scoops of ice cream. The millennial barbeque assumes the same number of people, an average of 10 adults, within the ages of 21 to 34.
As a means of comparison, the BBQ Index parallels the Bureau of Labor Statistics (BLS) and IRI Market Research as data sources. The BLS series we selected was the "average price index, U.S. city average", which is a monthly series. The Index is based on the January 1, 2000 price. The formula for the weighting is (sum of component*weighting) / (base sum of component*weighting)*) 100.
For details on components and weighting by value, please inquire.
Rabobank Group is a global financial services leader providing wholesale and retail banking, leasing, real estate services, and renewable energy project financing. Founded over a century ago, Rabobank is one of the largest banks in the world, with over $750 billion in assets and operations in more than 40 countries. In the Americas, Rabobank is a premier bank to the food, agribusiness and beverage industry, providing sector expertise, strategic counsel and tailored financial solutions to clients across the entire food value chain.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/the-2016-rabobank-bbq-index-reviews-commodities-fueling-us-bbq-prices-300292850.html