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Monday February 19, 2018

Are college students a lucrative market?

As Nebraska's 140,000 college students settle in for the new academic year, marketers eye their impact on the food system — and their bottom line. From Cody, Neb., population 156 people, where volunteer students are manning the town's last grocery — now a non-profit — to Toronto's Sheridan College, where time-stressed college kids can order their university food via app and avoid standing in lines, to small college towns throughout the country where local businesses hope the return of students will lead to higher sales. "We've got students [here] who, like most college students, have discretionary income," a Maryland marketing professor told the Baltimore Sun. "They're going to buy food, they're going to buy music, they're going to buy clothing."

But is the campus outlook all that rosey?

A trio of agricultural business researchers from North Carolina A&T State University presented a study at the Southern Agricultural Economics Association’s 2016 annual meeting, summarizing data from a sample of 54 undergraduates collected between January and April 2015. Each of 54 students in the sample provided information on monthly food expenditures and income. They showed the average monthly food expenditure for the respondents was about $160; however, it ranged wildly, from a low $30 to a high of $540.

The average student spent about 30 percent of income on food, the research found, compared to only about 10 percent for the average American. This share of income going toward food also varied substantially; the lowest proportion of income spent on food was 2 percent, while the highest proportion was 57 percent.

In earlier work presented by the same research team using a similar sample of college students, just over half said they buy food from a supermarket at least once a week, and 40.6 percent patronize a supermarket once a month. Another 51.6 percent of the students said they either seldom or never use a small, local grocery store for their food purchase. A combined 61 percent of students buy food from a convenience store daily, weekly or monthly.
More than 69 percent of the respondents buy ready to eat food items from a grocery store on a daily, weekly or monthly basis, while 82.5 percent do so from a cafeteria or regular restaurant. Over half patronize a fast food restaurant weekly, 25 percent do so every day and another 12.5 percent do so monthly.

The most important food attribute is taste, which 93.8 percent of the respondents indicated to be of some or great importance. Price was the second most important food attribute, with 89 percent of the respondents indicated some or great importance. About 75 percent of the respondents attach some or great importance to nutrition levels shown on a food label, while 76 percent attach some or great importance to food contents shown on the label.

In their work presented this year, the researchers modeled the typical student's monthly food expenditures as a function of their monthly income. Their estimates imply that for every $100 of extra income a student earns, he can be expected to spend only about $7.60 of it on food for each $100 of additional income. Budget allocations to food decrease by about one half percent for each percent increase in student income. Food retailers looking to capture a larger portion of any expected rise in student incomes will be most successful, the study advises, if they find ways to diversify into selling non-food items.

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