Carrot Country

Factors Affecting Carrot Consumption in the United States

Carrot Country
Summer 2007

By Gary Lucier and Biing-Hwan Lin
USDA Economic Research Service

Carrots are one of the most popular vegetables in the United States and fresh-market carrot consumption has been increasing over the past few decades.
Basic knowledge of the distribution of carrot consumption across different market channels, geographic regions and population groups is very limited.

Using a combination of ACNielsen Homescan panel data and USDA’s Continuing Survey of Food Intakes by Individuals, this article examines where and how much fresh and processed carrots are eaten and links this consumption to various economic, social and demographic characteristics of consumers. The analysis indicates that per capita carrot consumption is greatest in the East and Central regions of the country. About 80 percent of fresh-market carrots are purchased at retail and consumed at home, with the majority consisting of fresh-cut (including baby) carrots. Per capita use of fresh carrots is strongest among Asians, with per capita use of both fresh and freezing carrots greatest among upper income households.

The versatile carrot has long been a favorite American vegetable, popularly used in soups, stews, snacks and desserts. But today’s U.S. carrot industry is quite different from that of just 20 years ago, having been transformed by the introduction of fresh-cut technology. In 1986, a prominent California carrot grower invented the baby carrot (included in the term fresh-cut used henceforth in this article) to save some of the broken and misshaped carrots culled from the fresh carrot packing line. Although more expensive than the traditional cellophanewrapped (cello) carrot pack, fresh-cut carrots eventually gained wide appeal by the early 1990s. Time-pressed consumers quickly recognized the convenience factor embodied in these new products, which broadened the carrot market by making them more portable, convenient and tasty. As a result of these exciting new products, domestic disappearance of carrots (fresh and processing expressed on a fresh-weight basis) was explosive during the 1990s, reaching a record 5 billion pounds in 1997 (table 1).

Despite the popularity and convenience of fresh-cut products, disappearance of carrots declined during the fi rst 6 years of the new millennium. While this drop may have partly refl ected reduced demand for whole carrots, it is more likely that the maturation of the fresh-cut industry fostered increased production
and processing effi ciency, thus reducing waste and allowing lower raw carrot production. During 2000-05, average disappearance of carrots for the fresh market (down 15 percent) and for processing (down 20 percent) have each declined from the 1990-99 average. Despite this drop, per capita use of all carrots this decade remains 20 percent above the average of the 1980s (Lucier, 4).

Carrots are very high in beta carotene (the precursor to Vitamin A) and also contain Vitamin C, Vitamin K, potassium, other vitamins and minerals, and dietary fi ber (USDA, 15). In this century, carrots have largely been used as a popular cooking vegetable, salad item, snack food and raw vegetable. Interest in how the consumption of vegetables like carrots is distributed among various demographic components remains strong. Although much is known about the supply side of U.S. fresh and processing carrot markets, much less detailed information has been published about consumer demand, aside from such things as basic USDA disappearance data and retail sales information.

Economic theory suggests that wide-ranging factors directly infl uence movement in per capita carrot consumption, including immigration trends, changing family sizes and lifestyles, rising disposable incomes and shifts in America’s tastes and preferences. However, due to limited consumer research, the demographics of carrot consumption have not been quantifi ed in detail. Some basic questions include: What proportion of fresh and processed carrots are purchased at retail
for use at home and purchased away from home at places such as restaurants? Who consumes carrots? Have the increasing Asian and Hispanic populations in the United States influenced carrot demand?

The purpose of this article is to provide basic economic information about the market distribution of carrots, largely using data from the 1998-2003 ACNielsen Homescan and a USDA individual food consumption survey. Following a short discussion of the history and supply factors for carrots, the article briefl y describes the economics of the fresh and processing carrot markets and U.S. carrot consumption by food source. The focus then shifts to various demographics of the food-at-home portion of the carrot market, including market share and per capita use by region of the country, ethnic background and income class.

The United States Is a Leading Carrot Producer
Thought to be native to central or western Asia (likely Afghanistan), cultivated carrots first arrived in North America with the early Virginia colonists (Yamaguchi). Carrots (Daucus carota L.) are an important member of the parsley (Unbelliferae) family, which also includes celery, anise and dill. Like many vegetables, the early history of carrots centered on various medicinal attributes thought suitable for curing a wide range of conditions and maladies. This, together with later varietal improvements, helped carrot culture to spread throughout the world.

Despite this widespread acceptance and growth, according to the United Nations’ Food and Agriculture Organization (FAO), three countries produced nearly half of the world’s carrots during 2003-05. The United States was the third-leading producer of all carrots, just behind Russia, with each producing about 7 percent of world output (fi g. 1). Both distantly followed the Peoples Republic of China, which produced 34 percent of the world’s carrots (United Nations). FAO data
indicate that worldwide carrot production averaged 24 million metric tons during 2003-05—up 51 percent from 1993-95. Much of the world increase over the past decade was due to a nearly three-fold increase in China’s output.

According to the 2002 Census of Agriculture, carrots were grown on 1,792 U.S. farms—down 16 percent from 2,138 farms in 1997, but about the same as in
1982 (USDA, 13). California (65 percent), Washington (8 percent) and Michigan (6 percent) were the top producing States during 2003-05. California accounted for 76 percent of fresh-market output, while Washington produced 34 percent of the carrots destined for processing. Over 2003-05, U.S. growers
produced an annual average of 3.5 billion pounds of carrots for all uses, with three-fourths sold into the fresh market (the fresh market also includes fresh-cut carrots) (USDA, 11). Among processing (largely frozen and canned) uses, ERS estimates indicate that output destined for frozen products accounted for about 52 percent of processing production during 2003-05. An additional unknown (but likely substantial) volume enters a growing juice market, with a portion of the juice squeezed from odd sized or shaped carrots culled by fresh-cut processors.

Several firms are also known to manufacture dried and dehydrated products (e.g., carrot flakes, powder and fi ber), but there are no specific data on the volume of carrots used for these products. The farm value of U.S. carrots (fresh and for processing) averaged $573 million per year during 2003-05, with fresh-market carrots accounting for 94 percent (USDA, 11). Average grower cash receipts for all carrots during 2003-05 exceeded those for such crops as bell peppers ($492 million), romaine lettuce ($509 million) and cantaloupe ($332 million). Led by an 80- percent share of the value of fresh-market carrots, California accounted for more than three-fourths of the value of all carrots produced in the Nation.

The average farm value of the fresh-market carrot crop has risen 27 percent since 1993- 95 as stronger demand during the 1990s boosted production, while infl ation-adjusted prices held constant. Over the same period, the farm value of carrots for processing has declined 23 percent. This largely refl ects an apparent reduction in demand for frozen carrots. Per capita use of carrots used for frozen products, which peaked in the 1990s, has declined by about one-third this decade.

According to the 1998-2003 ACNielsen Homescan panel data used in this report, the majority of fresh-market carrots consumed at home consisted of baby/ fresh-cut carrots. The average retail price for all fresh-market carrots during this time was $0.95/lb. Baby/fresh-cut carrots sold at a premium to whole carrots
(cello and bunched), with the average retail price at $0.99/lb, compared with $0.66/lb for fresh whole carrots. Although most all the carrots marketed in the United States today are orange, other colors such as red, yellow, or purple can occasionally be found in various fresh, frozen and juice products (Snider). In fact, until the
Dutch bred orange carrots in the 17th or 18th century, carrots were largely purple, yellow, or white.

While color is not necessarily an indicator of variety (of which there are hundreds), carrots are generally grouped according to size, shape and intended use. There are four basic types of carrots in the U.S. market: Imperator (the most common fresh-market type), Nantes, Danvers and Chantenay (largely used for processing). Fresh-cut“ baby” carrots are not true baby carrots but are usually Imperator types that have been planted closer together to force them to grow long and thin. After harvest, these carrots are brought to a processing plant where they are washed, sorted, mechanically cut, trimmed, grated, polished and shaped into the small uniform sizes found in supermarket packages.

Fresh-Cut Drives Carrots
The development and rapid consumer acceptance of packaged fresh-cut carrot products during the 1990s has helped the carrot industry evolve from supplier
of low-value bulk products to marketer of relatively upscale valueadded products. This product metamorphosis has required structural changes in the U.S.
carrot industry largely because fresh-cut/baby carrot products must be manufactured in elaborate, capital-intensive processing facilities. With the majority of
carrots now sold as fresh-cut products, the industry has consolidated and become concentrated in California where carrot marketing is dominated by two large fi rms.

Largely driven by the marketing efforts of these two fi rms, packaged baby and fresh-cut carrot products have been the fastest growing segment of the
carrot industry since the early 1990s. Within the $1.3-billion fresh-cut vegetable category (excludes pre-packaged salads), carrots account for the largest share (about half) of supermarket sales, followed distantly by potatoes, celery and others (Cook). Within canned and frozen carrot markets (in this retail sales discussion, carrot-containing products such as soups, stews and juice are excluded), retail sales volume has generally been sluggish over the past 5 years. Although sales volume was down 10 percent between 1999 and 2005, the value of retail sales of canned carrots totaled $35 million in 2005— up 4 percent from 1999 as average retail prices increased 17 percent (American Institute of Food Distribution). For frozen carrots, retail sales volume has generally declined, with volume in 2005 down 26 percent from 1999. The average retail price for frozen carrots increased 6 percent, but this was not enough to offset the drop in volume.

As a result, the value of frozen carrot retail sales fell sharply in 2005 to $23 million, after reaching a recent high of $38 million in 2003. Carrots also appear in a wide variety of processed food products, such as canned soups and stews and frozen dinner entrees, all of which were not included in the retail sales data
discussed above. During the first 6 years of this decade (2000-05), domestic disappearance of all carrots declined 2 percent from 1990-95 to 3.5 billion
pounds (freshequivalent basis) (table 1). However, after accounting for population growth, use of all carrots declined 12 percent to 12.1 pounds per person
(table 2). Fresh-market carrots (including fresh-cut) account for nearly three-fourths of all carrots consumed in the United States. Per capita use of freshmarket
carrots averaged 8.9 pounds during 2000-05—down 10 percent from 1990- 95 but 38 percent higher than 1980-85 (Lucier, 4). Fresh use peaked in the mid-1990s as the industry responded to strong widespread demand for the still relatively novel fresh-cut products (fi g. 2).

By the late 1990s, demand had settled into a more stable pattern where it remains today. Largely because of a declining pack (production) of frozen carrots
over the past several years, per capita disappearance of processing carrots averaged 3.2 pounds during 2000-05—17 percent less than 1990-95, but just 4 percent below the average use during 1980-85.

Market Share By Location
The delineation of the terms“ at home” and “away from home” are based on where a food such as carrots was obtained or prepared, not where it was consumed. Food at home is generally obtained at a retail store such as a supermarket, grocery store, or convenience store. Food away from home is generally purchased from
foodservice establishments but can also be obtained from such places as school cafeterias or child/adult care centers. Both at-home and away-from-home food can be consumed at or away from home.For example, a bagged lunch prepared at home and consumed at work is classified as at-home food. A commercially prepared pizza delivered and consumed at home is classified as away-from-home food.

According to the CSFII, nearly 82 percent of all carrots were purchased at retail stores and considered at-home foods (table 3). The advent of convenient, fresh pre-packaged carrot products in retail stores over the last decade has greatly simplified the inclusion of carrots as snacks and lunchbox items. According to analysis of the Nielsen Homescan data, fresh-cut carrots now account for more than three-fourths of all fresh-market carrot retail sales volume. In addition to a strong retail presence, freshmarket carrots also featured a significant away-from-home share, with 20 percent of carrots being sourced from within the foodservice sector. In comparison, 30 percent of freshmarket tomatoes and 33 percent of fresh-market onions were found to be consumed in the away-from-home market
(Lucier, 5 and 6).

Restaurants with table service accounted for 11 percent of fresh-carrot consumption likely due to salad bars, entrée salads, side dishes, combination entrees
such as Yankee pot roast, and hors’ d oeuvres such as carrot sticks. While just 3 percent of fresh carrots were sourced from fast-food establishments (also known as quickservice restaurants (QSR)), this share may be on the rise, with QSR chains continuing to carry combination salad and vegetable options on their menus.

Steady industrial food demand (frozen dinner entrees, stews, soups, etc.) and relatively weak foodservice demand, has resulted in most processed carrot products being used in foods purchased at retail for home use. A versatile vegetable, carrots can be eaten raw or prepared in any number of ways. About 86 percent of all processed carrots are bought at retail and used for home meal preparation (table 3). About 60 percent of processed carrot consumption consists of frozen products (such as TV dinners, dinner entrees, or frozen carrots in polybags), with canned products (such as vegetable soups, various stews and canned sliced carrots) accounting for most of the remainder.

About 87 percent of frozen carrots were purchased at retail due in part to the popularity of microwaveable frozen
vegetable entrees—many of which contain carrots. About 16 percent of canned carrots are purchased away from home, with few sourced from QSR establishments (under 1 percent). However, 3 percent of all canned carrots were reported to be consumed in the school lunch program—the single largest share among all forms of carrots. Carrots also appear in juices (e.g., as a component of V-8) and dried and dehydratedproducts such as soups, flavoring agents and
food coloring, with most of these products consumed at home.

As is frequent among vegetables, fresh and processed markets vary widely in where foods are obtained (table 4). Using the 1994-96 CSFII data as distributors, ERS per capita disappearance data were broken down by the various food sources (see box, “Calculating Per Capita Shares”). This estimation procedure
assumes that market shares today are similar to those discovered by the survey during 1994-96/98. In 2005, an estimated 9.5 pounds per person of all carrots were purchased at retail for home use. The freshweight equivalent of about 2.2 pounds per person was obtained from away-from-home sources through various foodservice outlets

Among many other factors over the past 20 years, having a presence in the expanding foodservice sector has been key in promoting market growth for vegetables such as potatoes, tomatoes and onions. Until recently, growth in carrot use within the foodservice sector has largely been in salad bars and
various salad products. Given increased consumer interest in carrots, the larger share of food being sourced away from home and the general increase in the diversity and ethnicity of foods, foodservice establishments have been increasing the number of menu items featuring fresh produce like carrots over the past decade. For example, a leading sandwich chain now routinely offers shredded carrots as a condiment. As a result, the share of carrots being consumed away
from home may have risen from that documented by the 1994-96/98 CSFII, although the data currently available are not able to adequately document the trend.

At-Home Carrot Consumption Strongest in the East
The Nielsen Homescan data are broken down by four scantrack regions, which contain the same standard State groupings defined by the Bureau of the Census
(fi g. 3). The regional data show that during 1998-2003, the East, Central and West each consumed proportionately more carrots at home than their share of
the national population (table 5). The South was the only region to consume fewer carrots than its share of the population. (The same conclusion held with 1994-96/98 carrot data.) To illustrate differences in regional carrot consumption, the 1998-2003 Homescan data were used as share distributors for 2005 ERS carrot
disappearance data. Carrots appear to be most popular in the East, followed closely by the Central States (table 6). While the population in the West consumed just under the national average of 9.5 pounds, those in the South consumed about one-tenth less than the national average. In the fresh market, at-home carrot consumption is very similar in three regions (West, Central and East) at 7.6 to 7.9 pounds per person, while consumers in the South ate about 2 pounds less.

Consumption of fresh-cut carrots dominates the at-home fresh market, accounting for 6.1 of the 7.0 pounds used per person in 2005. Consumers in the Central States were the top consumers of fresh-cut carrots, while the West was the only region to consume more than the national average for freshmarket whole carrots
(cello-packs and fresh-bunched). Because of scarce data, the analysis of processed products in this article excluded juice and dried/dehydrated products, focusing
on canned and frozen products. At home consumption for these two processed product groupings was fairly even at a fresh equivalent of about 1.2 pounds per person. Refl ecting the popularity of frozen products containing carrots (such as prepared dinner entrees), consumers in the East were the top consumers of processing carrots at 3.1 pounds per person.

Consumers in the West were on the other end of the spectrum, reporting the lowest consumption of processing carrots at 1.4 pounds per person. Western consumers largely shun canned and frozen carrots, focusing instead on fresh-cut and whole carrots. In fact, the West was the only region to consume less than 1 pound per person of both canned and frozen carrots, with the other regions recording at least 1.1 pounds per capita for each. Canned carrots, which tend to cost less, were most popular in the South, partly refl ecting the popularity of carrot-laden prepared foods such as soups and stews. According to the CSFII, carrot consumption was strongest in suburban areas, followed by metropolitan and rural sections of the country (CSFII was used because the Homescan data did not readily offer metro breakouts). For fresh-market carrots, suburbanites reported consuming more per capita than those in rural areas. On the processing side of the market, consumers in metropolitan areas reported eating the greatest amount of processing carrots—nearly three quarters more than those in rural areas.

Acknowledgements
The authors gratefully acknowledge the reviews of Linda Calvin and Cheryl Christensen of ERS, John Love of the World Agricultural Outlook Board,
Jim Smith of the National Agricultural Statistics Service, Shari Kosco of the Foreign Agricultural Service and Enrique Ospina and Joyce Witters of the Agricultural
Marketing Service, USDA; Phil Gruszka of Grimmway Farms, Tim McCorkle of Bolthouse Farms, Ed Estes of North Carolina State University and Jose Pena of Texas A&M University. The authors also appreciate the observations and support provided by Jerry Munson of the California Fresh Carrot Advisory Board. Excellent support was provided by the editor, Dale Simms, and by the designer, Wynnice Pointer-Napper.

TO BE CONTINUED. This is the first installment of a two-part article that will be continued in the Fall issue of Carrot Country.

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