Canning study: Impact of new public buying habits;

              Canners and consumers of fruit and vegetables in the 1980's may soon fee! a bit like an overripe tomato squeezed from all sides, especially by inflation. The only difference is that the tomato may end up in a good spaghetti sauce.
Inflation is, however, only one of the pressures affecting the canned goods industry at the beginning of the 1980's, according to a recent study sponsored by Touche Ross & Co, Energy shortages and government regulations are also causing changes in competition and the structure of the canning industry-changes that will make the grocery shelf in 1990 look quite different than now.
The authors of the study, Dr. Ray Goldberg of Harvard Business School and Leonard Wilson of Agribusiness Associates, have spotted trends that will be visible at times to the con-sumer—and certainly to the econo-mist. It is the growers and processors who will be the most affected.
In the next decade, the study suggests, consumers will change their food-buying habits in order to coax more purchasing power from their budgets. As this changing demand impacts supplies, the variety of sizes, shapes, labels, and products will probably diminish.
Thus, the grocery shopper in 1990 could see fewer brands to choose from, and those brands may very well belong to the supermarket chain rather than to a national-brand processor. The shelves could also display more staple products and fewer high-convenience, premium-priced items. Such a difference in
mpact of new public buying habits.
by CHARLES F. STAMM/Partner and RICHARD N. McCOMBS/Sr. Consultant San Francisco
price may often send the shopper from the canned-goods aisles to the produce section. And in general, the consumer will eat at home more while dining out less than he did in the 1970's.
What forces are causing these changes? Some of the trends more obvious to the economist will be less
visible to the consumer. Food prices will outpace general inflation. Per capita food consumption will continue its recent slow growth. Food purchases as a percent of disposable income will, after many years of decline, become constant. And canned food products will no longer be considered relatively inexpensive.
Outlook for Food Processors
For the food processors, the outlook appears distressing. Faced with rising costs and slow growth in demand, they will become fewer in number and more diversified. But more importantly, they will not have the finances necessary to make invest-ments that improve productivity,
A fundamental trend is behind (his forecast: canners continue to lose their competitive position in a basically mature industry. Using tomato canners as an example, since 1974 their share of the retail price of a can of tomatoes has shrunk from 65 percent to 58 percent. When the re-tail price rose 47 percent between 1974 and 1979, the canner's price went up only 31 percent, while the wholesaler's rose by 131 percent.
If anything, this trend has intensi-fied recently. Between 1977 and 1979, while the price to the consumer went up 18 percent, the wholesaler's and retailer's spread went up 147 percent and 5.3 percent, respectively. But the canner's price remained the same. Exhibit 1 shows how the price of a can of tomatoes is apportioned as the product moves from the fields to the grocery shelf.
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