Food spending declines 3.7 % in Q4 2008 in the United States

Fourth quarter 2008 consumer food spending met its steepest decline in more than half a century, according to data from Commerce Department's Bureau of Economic Analysis. Spending on food at retail and restaurants fell 3.7% from the previous quarter, with consumers are increasingly swapping their Starbucks for homemade Joe, and trading in name brands for generic products.

Sales of alcoholic beverages saw one of the largest declines at 10.9% from the previous quarter;sugar/sweets, cereal and coffee/tea saw declines at 5.1%, 4.3% and 2.1% respectively. Financial woes at the end of 2008 also prompted consumers to curtail spending on pricier proteins. Beef and veal purchases were down 3.4%;poultry spending was down 3.2%. Fish and seafood spending was also down 3.5%.

But it’s not all bad news. Analyzed separately from restaurants, says Todd Hale, Senior Vice President of Consumer Shopping &Insights for The Nielsen Company, retailers fared better. Sales at retail were actually up quite significantly for canning and freezing supplies at 11%;sales of alcoholic beverages were up at 7%. Even fresh meat saw gains in 2008.

Brand name still matters to more than nine in 10 consumers (92%), but a majority (53%) are now purchasing private label brands, according to the National Grocers Association. Although branded food captures the lion’s share of total store sales, says Hale, private labels are performing well, and reached a 16.6% dollar share across all departments (food and non-food) in 2008.