Groceries are Cheap! Gain the power to save at the supermarket and reduce food costs.
Welcome to this exciting topic from Fooderer on gaining the power to reduce your food costs. My name is Matilda, and I am talking here with Simon.
Simon:
Hi everyone, We are kitchen coaches at Fooderer, and we have been asked today to present the first of our weekly posts where we explore smart ways to manage your kitchen to save at the supermarket and reduce food costs. Today, I’m going to present the proposition that groceries are cheap . . . and that the real cost of feeding a family is mainly due to our choices in managing our food! . . . The reason I think it’s important to explore this is because the current dialogue around supermarket prices, to some extent makes us feel that we are powerless to manage the cost of our food. I believe that if we learn to look at the costs and value of food differently, we can then gain the power to save at the supermarket and reduce food costs.
Matilda:
So how do we wrestle back some power over the price of our groceries. I mean we live in a cost of living crisis, where rising grocery bills, inflation, and general food costs are a constant concern. People are really struggling . .
How food is presented to us and how we value food has changed
Simon:
Absolutely, I know this idea sounds really odd. How can this be? Grocery prices have definitely increased dramatically in the past year, however that alone is not our biggest problem. What is really costing us money today is how we manage and value our food and the expectation now of what is normal.
Household food supply channels have changed massively within just the past decade. If we just pause and consider that the way food is now presented to us, has already changed how we go about nourishing ourselves. I believe this is not really being discussed. What moved first? Did our lifestyle change, and marketers saw the opportunity, or is it the way apps disrupted supply chains, has flowed on to change our lifestyle?
Matilda:
So what you are saying is that changes to the supply chain has impacted how we buy food and that plays a key role in making food more expensive.
Simon:
Exactly . . . There are a few elements to discuss here. Let’s firstly look at how technology and improvements in the supply chain have impacted grocery prices. If we look back say 50 to 100 years, food costs as a share of household income were more than double what we spend today. Past generations were spending 30% to 50% of their income on food.
Today, that figure has dropped to about 10% to15% in Australia So what’s changed? Food is cheaper because production and supply has become more economical due to technological advancements in farming and supply chains. Modern agriculture has seen leaps in efficiency – drought and pest-resistant crops, GPS-guided tractors, and enhanced food distribution systems mean food gets to your local supermarket more cheaply and faster than ever before. This means fresh produce remains viable on the shelf for longer, which reduces waste and again keeps prices down.
Matilda:
So food definitely has become cheaper than in past generations and while that fact does not help families trying to save money on groceries right now, to gain perspective it’s sad to discover that food in developed countries like Australia, costs less as a portion of our income than what people have to pay in developing countries. For us today food is cheaper and more abundant than it ever has been in the past.
Supermarket pricing and margin share of price
Simon:
That’s not to say that supermarket food prices are fair and reasonable. They are not. There is plenty of room for more of the efficiencies in our food production and supply chain to filter through to lower prices on the shelves, especially those linked to seasonal availability and crop volumes. In many cases the prices on the shelf might be about right, but what is not right is the “share of price” within our food economy. It is clear to most of us that the farmers, who are the backbone of our food supply struggle and don’t get a fair share of the revenue.
Matilda:
There are so many examples of this. The price of milk has recently adjusted, but it has been a hot topic for years. How is it that milk—a product that requires so much labour, land, and resources to produce, had become cheaper than bottled water?
Simon:
And it’s not just milk. Recently, it was sad to hear that farmers were selling sheep at auction for as little as $2 an animal while the price of lamb in supermarkets barely budged. In recent seasons there has been times of oversupply, yet, did the supermarkets really support strategies to incentivise consumption?
Farmers had to destroy crops because the market “apparently” couldn’t support the volume. We have seen it with oranges, peaches, pears, cherries and bananas, now avocados. Food being dumped rather than discounted in the stores. Supply increased, market prices drop, supermarket prices for consumers stay much the same, and why? Because ten percent profit on $4 per kilo is double what you make if you sell it at $2 per kilo.
Matilda:
So what I understand at this point is that many foods in the supermarket are not really over priced. Production and supply chain efficiencies for groceries helps to reduce prices, it is just that the share of value is imbalanced with the supermarkets using their power to take more, leaving farmers often struggling.
Abundance impacts our perception of value
Simon:
That’s right . . . food has never been of such high quality, so abundant and such good value. And it’s the fact that we have such abundance that plays with our minds. This is the area where we can really save money. For many of us the real problem around managing food starts with how we value it. Our access to incredible food has never been better. An amazing array of different foods from different cultures is presented in great abundance just down the street in most suburbs and cities. There’s a basic psychological principle at play: when something is abundant, we tend not to value it. Supermarkets pile food-high to create an illusion of endless supply, and it works. It makes the prices look cheap, we buy more than we need or generally can consume.
In truth, at no previous time in history have humans ever experienced the availability of such a massive range of quality fresh, semi-prepared and packaged foods as we have just down the street from our house today. This is an incredible privilege, that we simply accept as normal and take for granted. Maybe only during COVID did we stop to think about the journey that a piece of meat, vegetable, or fruit goes through to get to our plates. COVID caused disruption and scarcity in our food supply. This was the point where we saw the initial real jump in food prices. It feels as though the supermarkets saw what we were prepared to pay for certain items, and they increased their margins on goods not even impacted by COVID supply disruption and the prices never went back down.
So going back to the point, abundance lowers our perception of value and scarcity creates value. This is how gold, is used as a fundamental backing for our currency values. When we don’t value the food we have, we tend to buy more than we need, cook more than we can eat, and, come garbage night, we throw away what is left in the fridge or from our plates . . . And on top of all this, when we shop for food there is another psychological element, – human instinct comes into play. We have an innate need to feel like we’re good providers and we all have food FOMO. We fear running out of food, so we just add a few more things to the trolley – just in case. This ultimately leads to waste, and waste leads to higher food costs.
How much Food Waste costs us
Matilda:
Absolutely. This is something I am very passionate about. Due to our lifestyle and the pressure of our working week, across the broader community 20% of the food purchased never makes it into someone’s mouth. From what I have read, this costs each household around $200 every month or $2,000 to $3,000 each year, which is incredible. That’s money directly down the drain.
Think about it – if you were buying gold and someone in your house was tossing out 20% of it each week, you’d put a stop to that pretty quickly, right?
Simon:
That’s right Matilda, that is how we should value our food, and in addition to the direct cost of food waste, there’s the impact on the environment. If you can reduce your food waste you will reduce your environmental footprint, and as a by-product, the money you save can really help to add more quality to your food selection, or just help to keep your head above water. It’s pretty simple . . . The best way to save money on food is just to eat everything you buy.
Kitchen Management and cooking skills
Matilda:
How many of us had a grandparent that always told us we had to eat everything on our plate.
Simon:
Absolutely, but combined with that is portion control, knowing what to buy, how much to put on the plate, how to look after what is left in the pot, and how to keep-n-use any parts of the vegetables not required in a recipe. There are a few skills involved, and unfortunately that is something we are also losing . . . At a time when we have never had access to such abundance, we’ve never been so ill-equipped to benefit from it. Out of necessity and even scarcity, our grandparents knew how to provision their kitchens, preserve food, and cook efficiently. For them, there was no other option. But many of us have lost these essential skills, which has eroded our ability to make food choices that are both economical and healthy.
Matilda:
That’s true . . if you are not confident that you can walk into your kitchen and produce a nice meal within 20 to 30 minutes, then maybe that’s why you feel ordering in meals prepared by someone else is your first best option.
Simon:
There was a time when your grandmother’s recipe book was a family heirloom. Today we have instant access to a million authentic recipes, often with over 50 variations on ways to cook a particular dish. Further, if you simply enter the core proteins, and fresh ingredients that you have on hand, ChatGPT will immediately present you with at least a dozen meal options across different cuisines . . Never-the-less, for many people, cooking has now become a chore, something we do only when we have to. However, when we think of food as a chore and a constant problem, we lose far more than money. We don’t have to look far to see cultures and communities where food is the foundation of the family, of passion, joy, love, and their way of life. In fact the word diet, is derived from the ancient Greek word diaita, meaning way of living.
Matilda:
So abundance and not valuing our food, leads to inefficient shopping and that, with poor kitchen management skills, leads to food waste. I’m not a great mathematician, but essentially throwing out 20% of what you buy is equivalent to paying 25% more for your groceries.
Simon:
Absolutely, and it shows exactly the cost in waste when we don’t connect a real value to the food we have available. The other aspect of food pricing that we can control is how we value food in the context of our lifestyle. I was saying before that household food supply channels have changed, and the way food is now presented to us is so different, that we have lost some of the skills of past generations.
The cost of Convenience
Matilda:
Lack of skills to some degree makes cooking at home less convenient. As we said, if you are not confident that you can produce a good meal without too much hassle, today you pick up the phone and order your food cooked and delivered. In fact this is so common it now makes up a significant portion of our food supply, where 45% of Millennials and Gen zed, who statistically are the most frequent users of services like Uber Eats and Menulog, are typically opting for food delivery over cooking.
Simon:
That’s what I mean when I speak of new distribution channels transforming what we think of as normal, in this case I am referring to sourcing our food via meal delivery apps and meal planning services. The choice of using these services for your food supply is a budget killer. We need to recognise, one of the key reasons we order food delivery is because at the time, in the moment, when we need to address our hunger, we don’t have a better option in our kitchen.
If you are not organised, who wants to start a whole recipe process from scratch at 7 pm on a Thursday night? We all feel like this, with good intentions, we brought home beautiful groceries on the weekend, however without considering and valuing the food, we just threw it in the fridge. We made a few good meals, but we get to Wednesday or Thursday, the working week is taking its toll, we come home late and tired, some of the food in the fridge is looking a little sad, we pick up the phone and order dinner for delivery. There goes $50 to $80.
Matilda:
Home delivery has become such a standard thing, it’s amazing to think that these services pretty much didn’t exist just a little over ten years ago, and today it’s a billion dollar industry. I understand that in Australia over 7 million people now regularly use food delivery services – more than double the number from just a few years ago.
Simon:
That’s right and when you buy food prepared out of home you are paying 4 to 8 times the cost of ingredients due to catering business costs and profit, as well as the huge delivery service margin and their labour cost. Roy Morgan research shows that a family dinner ordered via Uber Eats or MenuLog can easily run you $60 to $70, while cooking the same meal at home would cost about $20 to $30. We know this but when we are tired and hungry, we want a solution right now and we will consider the consequences later.
The new normal – how we buy our food
Matilda:
And in this category of home delivery, it’s not just the fast food and quick service restaurant meals, there are the meal plan services. Ten years ago, services like HelloFresh and Marley Spoon were niche markets. Today, they dominate. According to Business Wire – the global meal kit industry, which is worth $16 billion in 2024, is projected to double in just the next 5 years to hit nearly $34 billion by 2029.
Simon:
Yes, and when you think about those numbers, that represents a significant disruption to our supply chain, how food is presented and marketed to us and what is being seen as a normal way to find dinner. There is nothing wrong with these services by-the-way, in caring for our wider family, there can be good reasons why home delivery meal plans might serve an important role in provisioning meals.
However, in the context of a discussion on having the power to save at the supermarket and reduce food costs, a meal kit covering three or four meals from HelloFresh for a family of four, can cost around $10 to $12 dollars per meal or $134 to $150 a week. If you provisioned and prepared similar meals from your local supermarket it would be half that. The solution for food prices that I want to present here is that we have choices, and we can empower our options by valuing the process, cost, and role food plays in our lifestyle. I mean if we are concerned about food prices, we can add skills that makes better food more convenient in our kitchen.
Matilda:
And if we choose not to develop our food skills, then using others to bring us food will become our normal. As an example, in America today over half the food consumed is prepared out of home. In round numbers 35% is sourced as home delivery or fast food, quick service restaurants, 15% is dine in restaurants.
Clearly, what is considered normal can quickly change. In Australia, according to the Australian Bureau of Statistics and Roy Morgan reports, we source around two thirds of our food as groceries, with 20 to 25% home delivery or quick service restaurants, and 10% to15% is dine in restaurants. Base on the growth figures for home delivery, or meals prepared out of home we seem to be following a path where it’s normal to pay others to cook most of our meals for us.
Solutions and the options we have available
Simon:
For me, I see a massive opportunity here. Going back to supermarkets as a supply source, we can see the massive abundance of food choice. In fact, today when I walk around one of the latest flagship supermarkets, I feel like it’s Christmas. The big supermarkets might be the manipulating bastards in our food supply chain, but they sure know how to source, care for, and present food.
If you are looking for convenience, the sector I find especially impressive is the innovation and recent advancements in ready meals or semi-prepared foods. Wonderful fresh gnocchi and tortellini that are so good they make Nonna frown. Oven ready pizzas, or just bases, well-portioned cuts of salmon, fresh mussels that keep in the fridge, amazing deli foods, breads, a huge choice of side dishes, prepared vegetables, and salads. There are so many options.
Matilda:
Sometimes the choice is overwhelming, like being in a massive bookshop and not being able to think what you would like to read, . . . and then you either walk out with nothing, or are left wondering if you might have chosen better.
Simon:
If you select well, the range available will provide you with wonderful fresh foods which remain tempting and viable for around 3 or 4 days, after which you can move on through the week with some easy part-prepared, packaged options that stay fresh in the fridge until the weekend.
Of course many of these easy meals, would be cheaper and better if prepared at home by even an average cook, but the fact is the quality is improving all the time, and of meals when convenience is critical, the price is far better than home delivery and, most importantly, they provide a quality option that is available in the fridge for those days in the week when you tend to run out of ideas.
Matilda:
Yes, though in the context of this discussion we are talking about supermarkets when of course independent butchers, grocers, deli’s and specialty suppliers also play an important role and bring their own quality and value proposition.
Simon:
Of course, for this we haven’t covered smaller independent outlets, and while they bring their own value, the fact that they tend not to compete on price perhaps gives some indication that volume and efficiency does keep grocery prices down so which-ever you choose the consumer is definitely the winner.
How to regain power over the price of food
Matilda:
From this I think if we are able to think differently about our food options in the perspective of our lifestyle, then we are empowered with choice. We can buy meal ingredients at the lowest possible price and save money, and at other times we can shop for convenience ahead of time. You can save money, and find convenience even when selecting premium ingredients, like fine steak and seafood, combined with semi-prepared side dishes that combine to create a five star family experience for less cost and in less time than it takes for delivery.
Simon:
So, I hope I have made a fair point that objectively groceries are cheap, when compared both historically and in the context of how we prioritise and value our food choices. When we seize the power we have to actually save at the supermarket and reduce food costs, we can become more mindful around what we value and the options we actually have. We need to combat food waste. Buy only what you need, prepare and preserve the foods you buy, cook meals with intention, and use all ingredients and leftovers creatively.
Also, reconsider the role of convenience. While delivery services are helpful, they should be the exception, not the norm, when it comes to feeding your family. Finally, let’s reclaim our cooking skills. You don’t have to become a meal prep maniac, but cooking doesn’t have to be a chore – it can be a way to bring families and friends together. Make cooking your thing!
Matilda:
Thanks Simon, and thanks all for joining us on today’s episode.
Simon:
Thanks Matilda.
If you’re interested in learning more about how to manage your kitchen better, head over to Fooderer.com. And don’t forget to subscribe to the podcast for more tips on how to improve your food lifestyle. Until next time, happy cooking!
