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The State and the Prospects of Korean Households’ Expenditure on Processed Foods in 2018
2020-04-06
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Kyei-Im Lee, Seong-Yoon Heo, and Sanghyo Kim1
1
Center for Food and Marketing Research, Korea Rural Economic Institute, Naju, Republic of Korea
Corresponding author e-mail: skim@krei.re.kr

Statistics Korea (KOSTAT) had quarterly implemented the Household Income and Expenditure Survey (HIES) to analyze households’ current conditions and changes of living. This article analyzes the state and the prospects of Korean households’ expenditure on processed foods in 2018, based on the raw data analsis of the Household Income and Expenditure Survey conducted by Statistics Korea. In addition, we focused on the expenditure on processed foods of Korean Households by a set of demographic factors, including age of household head and household size.  

HOUSEHOLD EXPENDITURE ON FOOD IN 2018

In 2018, the status of the average monthly expenditure on food expenses in Korea (including liquor and eating out) increased 0.2% from $597($1 = 1,200 Won, hearafter) in 2017 to $598, however, given inflation the actual food expense expenditure decreased by 2.6% to $552.

The percentage of total consumer spending that was taken up by food expenses (Engel Coefficient) increased slightly from 28.0% in 2017 to 28.3% in 2018. As income increases, the expected phenomenon is for the consumer expenses on foods which are basic necessities to decrease, however, the Engel Coefficient shows a small increasing trend due to the decrease in consumption in other industries, the increase in food prices, the varying and externalized dietary life, the increase in those focused on well-being/YOLO, and the rise in value-consciousness all seem to have played a role in this phenomenon.

When looking at the ratio of food in households to fresh food expenditure, processed foods expenditure, and eating out, the proportion of eating out increased rapidly in the 1990s and came close to half, but it began to decline slightly since the early 2000s, while the proportion of processed foods remained constant until the 2000s, but began to increase in 2010.

The ratio for processed food expenditure showed an increasing trend in 2018. Processed food expenditure increased 0.6%p from 27.3% in 2017 to 27.9% in 2018 but eating out had a 46.8% decrease 0.8%p yearly. In 2018 the average expenses to eat out decreased 1.4% from $284 in 2017 to $280 in 2018, while processed food costs increased 2.6% from $163 in 2017 to $167 in 2018.

HOUSEHOLD FOOD EXPENDITURE BY EATEGORY OF PROCESSED FOODS IN 2018

When looking at the expenditures and trend of processed food expenses by category, grain processed products (flour/noodles/ramens/starch noodles/tofu, etc.) have the highest percentage at 20.1%, followed by sugars and snacks (13.0%), milk products (10.2%), other foods (10.0%), and processed fish products (9.6%).

The processed foods that showed the highest expenditure increase was other foods (porridges and soups/baby food/side dishes/kimchi/instant․frozen foods), showing the increase of 0.8% yearly by increasing the expenditure about 2,000 Won per household. For other foods, the consumption of porridges and soups, side dishes, Kimchi, instant frozen food have increased except baby foods. Especially, instant frozen food showed relatively sharp increase from $6.3 per household last year to $7.3 (15.7%)

Fruit products increased by $0.4 in 2018 compared to 2017, spending $3.3 per household, but the rate of increase was 12.1% which was the highest increase. Household monthly average expenditures compared to 2017 decreased sharply in 2018 to 19,306 Won decreasing by 5.5%, or $0.9.

Table 1. Share of expenditure by category of processed foods, 2017-2018

Item category

2017 (Won)

2018 (Won)

Change (2018-2017)

Expenditure (Won)

Share (%)

Expenditure (Won)

Share (%)

Expenditure

(Won)

Share (%p)

Rate of change

(%)

Grain processed

38,822

19.9

40,220

20.1

1,398

0.2

3.6

Meat processed

11,138

5.7

11,606

5.8

468

0.1

4.2

Fishery processed

20,437

10.5

19,306

9.6

-1,131

-0.9

-5.5

Milk processed

20,304

10.4

20,533

10.2

229

-0.2

1.1

Fat and oils

3,012

1.5

2,931

1.5

-81

n/a

-2.7

Fruit processed products

3,576

1.8

4,010

2.0

434

0.2

12.1

Vegetable processed products

2,609

1.3

2,535

1.3

-74

n/a

-2.8

Sugars and snacks

26,141

13.4

26,122

13.0

-19

-0.4

-0.1

Seasoned foods

14,050

7.2

15,216

7.6

1,166

0.4

8.3

Other foods

17,968

9.2

19,950

10.0

1,982

0.8

11.0

Coffees and teas

8,437

4.3

8,499

4.2

62

-0.1

0.7

Juices and beverages

13,720

7.0

14,318

7.1

598

0.1

4.4

Liquor

15,115

7.7

15,092

7.5

-23

-0.2

-0.2

Total

195,328

100.0

200,338

100.0

5,009

n/a

2.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: As some of the numbers in this table represent the shares of expenditure on each category, nominal amount was used for the analysis. Exchange rate: $1=1,200 Won
Source: Statistics Korea, Household Income and Expenditure Survey. 2017-2018.

MAJOR PROCESSED FOOD ITEMS PURCHASED BY KOREAN HOUSEHOLDS: YEAR 2018 COMPARED TO PREVIOUS YEARS

As a result of analyzing commonly consumed processed food based on the expenditures occupied by items of processed foods, the first place in 2018 were breads and snacks, the second place were Korean Traditional sweets and other Snacks, and the third place was milk, which was the same order in 2017.

In 2018, the expenditures on processed food item had a rapid increasing trend in the instant frozen foods section. The expenditure on instant frozen food was 3.9% in 2017, occupied in the 5th place, but in 2018, it became 4th place, increased by 0.5%p. Beers have not been changed but as for the importance of the instant frozen food increase, it landed on 5th place.

Table 2. Trend of top 30 items of household monthly average spending among processed food items

                                                                                                                                                             Unit: %

2010

2017

2018

1.

Milk

8.4

1.

Loaf breads and other breads

7.3

1.

Loaf breads and other breads

7.4

2.

Loaf breads and other breads

7.2

2.

Korean traditional sweets and snacks

7.1

2.

Korean Traditional Sweets and Snacks

6.8

3.

Korean traditional sweets and snacks

7.2

3.

Milk

5.2

3.

Milk

5.0

4.

Ramens

3.4

4.

Beer

4.0

4.

Instant frozen food

4.4

5.

Coffee

3.3

5.

Instant Frozen Food

3.9

5.

Beer

4.0

6.

Other meat processed foods

3.3

6.

Other meat processed Food

3.5

6.

Other meat processed foods

3.7

7.

Ice ceam

3.3

7.

Coffee

3.4

7.

Other beverages

3.3

8.

Yogurt

3.2

8.

Other beverages

3.3

8.

Coffee

3.2

9.

Other beverages

3.2

9.

Ramens

3.1

9.

Dried red pepper

3.1

10.

Rice cake

2.9

10.

Ice cream

3.0

10.

Ramens

3.1

11.

Fruit and vegetable juice

2.7

11.

Dried red pepper

2.7

11.

Ice cream

3.0

12.

Beer

2.6

12.

Side dishes

2.7

12.

Side dishes

2.9

13.

Other grain Processed Foods

2.5

13.

Yogurt

2.6

13.

Other grain processed foods

2.6

14.

Dried red pepper

2.4

14.

Other grain processed foods

2.5

14.

Yogurt

2.5

15.

Tofu

2.0

15.

Rice cake

2.3

15.

Rice cake

2.4

16.

Cake

1.9

16.

Fruit and vegetable juice

2.3

16.

Fruit and vegetable juice

2.2

17.

Side dishes

1.8

17.

Soju

2.1

17.

Fruit products

2.0

18.

Seaweed

1.7

18.

Cake

1.9

18.

Soju

1.9

19.

Ham and bacon

1.6

19.

Fruit products

1.8

19.

Cake

1.8

20.

Soju

1.6

20.

Tofu

1.6

20.

Mineral qaters

1.7

21.

Instant frozen foods

1.5

21.

Seaweeds

1.5

21.

Tofu

1.5

22.

Vegetable products

1.5

22.

Ham and bacon

1.5

22.

Kimchi

1.5

23.

Dried anchovies

1.4

23.

Mineral waters

1.4

23.

Seaweed

1.4

24.

Kimchi

1.3

24.

Kimchi

1.4

24.

Ham and bacon

1.4

25.

Powdered Formula

1.2

25.

Vegetable products

1.3

25.

Vegetable products

1.3

26.

Marine animal canned Food

1.2

26.

Marine animal canned food

1.0

26.

Tea

1.0

27.

Other unclassified food

1.2

27.

Salted seafood

1.0

27.

Soymilk

1.0

28.

Noodles

1.1

28.

Fish cake

1.0

28.

Salted seafood

1.0

29.

Soymilk

1.1

29.

Tea

1.0

29.

Dried anchovies

0.9

30.

Fish cake

1.1

30.

Jam, honey, grain syrup

0.9

30.

Powdered formula

0.9

Note: In order of items with high share of expenditure

Source: Statistics Korea, Household Income and Expenditure Survey. 2010-2018.

Mineral water were not within the top 30 items until 2010, however, it has increased rapidly, rising from 23rd place in 2017 to 20th place in 2018. The monthly average expenditures on mineral water per household in 2018 was $2.8, increased by 18.8% from $2.4 in 2017, and increased by 90.9% from $1.5 in 2015.

ANALYSIS OF EXPENDITURE OF PROCESSED FOODS BY AGE OF HOUSEHOLD HEAD AND HOUSEHOLD SIZE

When looking at the overall food expenditure by householder’s age, the expenditures on the processed foods showed the distribution of 22.8%-29.7% by age, displaying a feature of relatively small difference compared to the expenditures on fresh food and eating out. The expenditures on fresh food by age group was 7.5%-37.9% and eating out was 33.0%-69.6%.

Household monthly average food expenditure by the householder age of 40s has the most spent amount for $702, and in case of expenditures on processed food spent the most amount of $204.

In the household with householder age of 30s, the processed food occupied 29.7%, showing the highest in overall food expenses. The order of ages with high processed food spending were 30s, 40s, and 60s and over.

20s had high eating out for 69.6%, and 60s and over spent more on fresh agricultural products, occupying 37.9%, showing big difference in food components by age group.

Table 3. Shares of expenditure of food categories and their annual change by age of household head

                                                                                                                                                     Unit: %, %p

 

20s

30s

40s

50s

60s and over

Share

Yearly Changes

Share

Yearly Changes

Share

Yearly Changes

Share

Yearly Changes

Share

Yealry Changes

Fresh produce

7.5

-0.9

15.9

-0.7

20.9

-0.2

26.3

0.4

37.9

-0.2

Processed foods

22.8

-1.1

29.7

0.4

29.1

0.7

25.7

0.8

28.9

0.9

Eating out

69.6

2.0

54.4

0.3

50.0

-0.6

47.9

-1.3

33.0

-0.8

Note: As the numbers in this table represent the shares of expenditure on each category, nominal amount was used for the analysis.

Source: Statistics Korea, Household Income and Expenditure Survey. 2017-2018.

For households whose ages are in their 20s, the expenditures on processed food increased to 0.4% year on year, the expenditures on grain processed products were 12.1% and juices and beverages increased to 6%. On the other hand, the expenditures on fats and oils were $0.4, decreased by 35.2%, and the expenditures on vegetables, fruits and fishery processed products decreased 26.1%, 19.2% and 19.6%, respectively.

For households whose nages are in their 30s, the year on year expenditure on the processed foods decreased 0.3%, and the expenditure on fruit processed food and fats and oils increased relatively sharply to 29.8% and 21.1%, respectively. Expenditure on other foods was increased 11.2% year on year, but the expenditure on vegetable processed food and meat processed products decreased 19.9% and 10%, respectively.

For households whose ages are in their of 40s, the expenditure on processed food year on year increased 3.1% overall, while expenditures on other foods (14.5%), fruit processed food (12.0%), and fats and oils (10.7%) showed relatively high increase year on year.

For households whom are in their 50s, the expenditure on processed foods yearly increased 3.5% overall, while expenditures on other foods (23.4%), fruit processed foods (20.6%), and fats and oils (13.9%) showed notable increase every year.

Table 4. Expenditure on processed foods and yearly rate of change by gge group
                                                                                                                                                               Unit: Won, %

 

20s

30s

40s

50s

60s and over

Expenditure

Yearly rate of change

Expenditure

Yearly rate of change

Expenditure

Yearly rate of change

Expenditure

Yearly of change

Expenditure

Yearly rate of change

Grains processed

26,994

12.1.

43,807

-2.6

50,478

4.9

43,577

5.0

31,711

5.6

Meat processed

5,314

-7.7

13,237

-10.0

16,595

-3.6

13,658

23.4

7,169

19.4

Fishery processed

4,295

-19.6

13,787

-8.5

19,991

-3.5

20,911

-9.1

24,031

-3.6

Milk processed

9,703

-1.6

28,298

2.6

24,984

0.5

19,396

0.3

16,923

3.4

Fats and oils

529

-35.2

2,203

21.1

3,019

10.7

3,036

-18.9

3,739

-2.8

Fruit processed products

902

-19.2

3,507

29.8

4,480

12.0

4,634

4.7

4,205

14.7

Vegetable processed products

445

-26.1

1,303

-19.9

2,393

-3.8

3,419

20.6

3,091

-13.2

Sugars and snacks

18,005

-0.2

35,146

-0.5

37,167

2.3

24,182

-1.8

17,107

2.4

Seasoned Food

2,328

-6.7

6,706

-8.7

10,954

2.0

15,010

6.5

25,865

12.0

Other foods

14,103

-3.4

25,715

11.2

28,023

14.5

20,574

13.9

12,200

10.8

Coffees and teas

5,397

1.1

9,803

-5.4

10,085

0.2

9,734

8.0

6,515

0.4

Juices and beverages

12,986

6.0

18,383

-0.9

18,267

4.8

15,098

6.8

9,162

10.0

Liquor

11,164

-1.9

20,149

2.6

18,446

0.5

16,049

-2.3

10,358

2.5

Total

112,165

0.4

222,046

-0.3

244,883

3.1

209,279

3.5

172,077

4.8

Note: Nominal amount was used for the analysis. Exchange rate: $1=1,200 Won

Source: Statistics Korea, Household Income and Expenditure Survey. 2017-2018.

Expenditures on processed foods in households with the age of 60s occupied the most of 4.8% by age groups, and expenditures on meat processed products (19.4%), fruit processed products (14.7%), seasoned products (12.0%), other products (10.8%), juices and beverages (10.0%), etc.were relatively high increase. Except for vegetable processed foods (-13.2%), the degree of decline was not big in decreased items.

The household with householder age of 20s showed highest expenditure on breads (loaf breads and other breads), occupied the 1st place followed by snacks (Korean traditional sweets and other snacks) and instant frozen products. The expenditures on other beverages, ramens and cakes were high compared to other ages groups, and only the mineral water was included in the ranking, showing that the consumption of mineral waters is spreading focusing on the young consumers.

For households whose ages  ages in their 30s, the expenditures on snacks (Korean traditional sweets and other snacks), breads (loaf breads and other breads), and beers were high in order, with characteristics of powered formula included in the ranking. For households whose ages are in their 40s, the expenditures on breads (loaf breads and other breads), snacks (Korean traditional sweets and other snacks), and milk were high in order and starting from the households with householder age of 50s, the rice cake and dried red peppers were included in the ranking.

For households whioseages are in their 60s and over, the expenditures on dried red pepper, breads (loaf breads and other breads), and milk were high in order and the rice cake was in 5th place. Fruit processed products and salted seafood were included in the ranking and the ramens were relatively low in the ranking.

Table 5. Comparison of top 15 items by age group in 2018

20s

30s

40s

50s

60s and over

1.

Loaf breads and other breads

1.

Korean traditional sweets and snacks

1.

Loaf breads and other breads

1.

Loaf breads and other breads

1.

Dried red pepper

2.

Korean traditional sweets and snacks

2.

Loaf breads and other breads

2.

Korean traditional sweets and snacks

2.

Korean traditional sweets and snacks

2.

Loaf breads and other breads

3.

Instant frozen foods

3

Beer

3

Milk

3

Milk

3

Milk

4

Beer

4

Instant frozen foods

4

Instant frozen foods

4

Other meat processed foods

4

Korean traditional sweets and snacks

5

Other beverages

5

Milk

5

Beer

5

Instant frozen foods

5

Rice cake

6

Ramens

6

Other beverages

6

Other meat processed foods

6

Beer

6

Coffee

7

Cake

7

Ice cream

7

Ice cream

7

Other beverages

7

Other meat processed foods

8

Ice Cream

8

Coffee

8

Ramens

8

Coffee

8

Other grains Processed foods

9

Milk

9

Other Meat Processed Food

9

Other beverages

9

Ramens

9

Yogurt

10

Coffee

10

Powdered formula

10

Side dishes

10

Side dishes

10

Side dishes

11

Other grains processed Foods

11

Ramens

11

Coffee

11

Rice cake

11

Instant frozen foodd

12

Mineral water

12

Side dishes

12

Fruit and vegetable juice

12

Ice cream

12

Fruit products

13

Other Meat Processed Food

13

Cakes

13

Other rrainsprocessed foods

13

Other grain pocessed foods

13

Salted seafood

14

Side dishes

14

Fruit and vegetable juice

14

Yogurt

14

Yogurt

14

Ramens

15

Fruit and vegetable juice

15

Yogurt

15

Cake

15

Dried red pepper

15

Other beverages

Note: Nominal amount was used for the analysis.

Source: Statistics Korea, Household Income and Expenditure Survey. 2018.

In 2018 the average monthly overall food expenditure of 1-person household was $345, which is lower than 2 or more-person household (per household member) of US$. The expenditures on processed food was $92 in 1-personhousehold which is lower than $114 in 2 or more-person household.

1-person household was 7.8%p higher than 2 or more-person households, but decreased 1.4%pover the last year, showing rapid decline. On the other hand, the processed food increased 1.2%p compared to the last year, showing rapid increase compared to 2or more-person household (0.6%p).

Table 6. Food expenditure by number of household members
                                                                                                                                                  Unit: %, %p

 

One-person household

2 or more-person household

Share

Yearly changes

Share

Yearly changes

Fresh produce

20.3

0.2

26.7

0.1

Processed foods

26.7

1.2

28.1

0.6

Eating out

53.0

-1.4

45.2

-0.7

Note: Expenditures are adjusted based on the number of household members by applying the OECD equalization method (expenditure/square root of number of household members).

Source: Statistics Korea, Household Income and Expenditure Survey. 2017-2018.

The expenditures on processed food year on year of 1-person household increased 6.6%, showing relatively high increase, and among them, the item with highest increase includes fruit products (24.0%), seasoned food (23.4%), coffees and teas (13.8%), and other food (13.0%). When viewed from characteristics by item, this is seen as the process of replacing the consumption within the house as much as the eating out reduces. For detailed items, Kimchi and side dishes, seasoning, fermented soy products, ketchup and dressings increased largely.

Table 7. Expenditure on Processed Foods and Year-over-Year Rate of Change by Number of Household Members

                                                                                                                                                  Unit: Won, %

Classification

1-person household

2 or more-persons households

Expenditure

Yearly  rate of change

Expenditure

Yearly rate of change

Grains processing

22,189

10.7

27,466

3.6

Meat Processing

4,638

15.4

8,165

4.5

Fishery processing

9,853

-1.8

13,753

-5.0

Milk processing

8,832

-4.0

14,401

2.8

Fat and oils

1,533

-0.7

2,092

-1.6

Fruit products

2,134

24.0

2,870

13.3

Vegetable products

1,098

10.3

1,858

-2.6

Sugars and snacks

12,290

1.7

17,954

0.8

Seasoned food

8,906

23.4

10,750

5.9

Other foods

12,438

13.0

13,230

12.5

Coffee and tea

5,887

13.8

5,593

-1.3

Juices and beverages

9,823

3.6

9,324

5.7

Liquor

10,796

-2.2

9,894

0.9

Total

110,417

6.6

137,350

3.0

Note: Expenditures are adjusted based on the number of household members by applying the OECD equalization method (expenditure/square root of number of household members). Exchange rate: $1=1,200 Won

Source: Statistics Korea, Household Income and Expenditure Survey. 2017-2018.

Looking at the detailed items with high expenditure, 1-person household is high in coffees and beverages, beers and ramens compared to 2 or more-person households and have characteristics of having mineral water and soju included in the ranking. On the other hand, compared to 2 or more-person households, ranking of milk and ice cream are low and yogurt and rice cake are not included in the ranking.

Table 8. Comparison of top 15 items by number of household members in 2018

1-person household

2 or more-person households

1.

Loaf breads and other breads

1.

Loaf breads and other breads

2.

Korean traditional sweets and other snacks

2.

Korean traditional sweets and other snacks

3.

Instant frozen foods

3.

Milk

4.

Beer

4.

Instant frozen foods

5.

Coffee

5.

Other meat processed foods

6.

Other beverages

6.

Beer

7.

Milk

7.

Dried red pepper

8.

Ramens

8.

Other beverages

9.

Dried red pepper

9.

Coffee

10.

Side Dishes

10.

Ice cream

11.

Other grains processed foods

11.

Ramens

12.

Mineral waters

12.

Side dishes

13.

Soju

13.

Yogurt

14.

Other meat processed foods

14.

Other grains processed foods

15.

Ice cream

15.

Rice cake

 

Note: Nominal amount was used for the analysis.

Source: Statistics Korea, Household Income and Expenditure Survey. 2018.

REFERENCES

Lee, K.Y., et al. 2019. Analysis of Household Consumption of Processed Foods, Korea Rural Economic Institute, Webzine of the Agency for Food Industry Information Analysis (AFIA) Project <http://www.krei.re.kr/foodInfo/selectBbsNttView.do?key=738&bbsNo=435&nttNo=129931&searchCtgry=&searchCnd=all&searchKrwd=&pageIndex=1&integrDeptCode=>

Statistics Korea. Household Income and Expenditure Survey. 1990-2018.

Received: February 3, 2020
Accepted: March 19, 2020

 

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