Food by Subscription? Why Not?

By Katrice L. Mines

If you haven’t noticed by now that we’re an increasingly subscription-based economy, let me be the first to tell you: we are. AT Technology for Business writer Brent Leary has been talking about the topic for some time and for just about everything you could want from movies to jewelry, beauty products, gaming and even food. Over the past couple of years, subscription programs built around helping you to spice up your diet have gained popularity. But, are they around to stay? I tapped Food and Agricultural Economist Jayson Lusk to give us some perspective on the future of the food subscriptions and whether their fad or trend.

It seems like the popularity of subscription boxes grew so quickly that interest in them also became watered down. But new ones are steadily popping up. What’s driving that? Is the market still ripe?

I haven’t seen any good data on trends in subscriptions to these sorts of box services. Thus, I’m not sure that interest is watered down — I certainly hear many more advertisements for these services than I once did. In general, it’s hard to separate a short-term fad from a trend that has staying power. One thing to look at is the underlying economic forces and see whether there is reason to believe a larger market could exist. In this case, I think so.

Why? Agricultural technologies have resulted in a long-term trend toward less expensive food. As a result, Americans spend less than 10 percent of their disposable income on food — lower than at any point in history and lower than in any other country. Practically, what that means is that many consumers can afford to pay for convenience or higher quality. For example, the share of expenditures on food away from home have dramatically increased over the past 30 years as we now pay others to cook and clean up for us. Still, this is a huge market. Americans spent $1.4 trillion on food in 2013 with about an even split being spent on food at home and food away from home.

So, demand for convenience has grown. Demand for quality has grown. The subscriptions boxes offer convenience and quality, all in the comfort of one’s home. Typically, one had to choose one or the other (e.g., I could have convenience but that would mean low quality or eating out), but boxes are an innovation that has broken down that traditional constraint.

Will the market continue to grow?

Hard to say. It will depend on the ability of the box services to continue to offer competitive offerings with grocery stores and restaurants, and it will depend on how these other food service outlets respond in turn. For example …. Read the rest: bit.ly/1Ov3Mww