Shrinking the Price Gap for Whole Grains

Abstract

SUMMARY Whole grains have historically cost more than refined grains, creating an additional barrier to consumer acceptance. Although this price gap has diminished over the past few years, the ideal outcome would be to see whole grain foods achieve price parity with refined/enriched grain foods. The price premium for whole grain foods is due to many reasons, including processing issues and supply-and-demand. While the gap is indeed closing, especially since 2005, when the Dietary Guidelines changed and the Whole Grain Stamp was introduced, regional and category differences still exist. There are many knowledge gaps in this area, because government data lag years behind current time. (A recent USDA ERS report on this topic included information only through 2006–2007.) However, official data are not key to understanding this problem: a trip through a typical grocery store confirms the state of the situation. Factors Contributing to the Price Gap Whole grain foods should cost less than refined grain foods, since a bushel of wheat can make 60 loaves (24 oz each) of whole grain bread and only 42 loaves of refined/enriched bread (2). It’s not that simple, however. There are increased production costs in working with whole grains. Whole grain flour costs more (since it’s a niche product) and extra ingredients like additives and dough conditioners may be needed. Longer rising times or baking times may limit throughput and fixed costs are spread over fewer units. Distribution costs may also be higher for whole grain products. They have a shorter shelf life, and their higher price may mean slower sell-through, resulting in more potential waste. In short, economies of scale and other factors result in a price premium for whole grain products. On the other hand, it must be acknowledged that whole grains also offer greater value than refined grains. Refining grains removes half to two-thirds or more of scores of nutrients; even grains that are enriched have only had five of those nutrients returned (and not in the same original proportions). Part of the “solution” to the price gap may involve educating consumers to understand that whole grains may sometimes cost more because they are worth much more. The Price Gap is Shrinking USDA data from 2006 show that the price premium for whole grains varies widely by region and by market within regions (4). In the nonmetro Pacific West and in San Francisco markets, the gap was the smallest, with whole grain consumers paying about 23–24% more than refined grain consumers. At the same time, in the nonmetro Middle Atlantic, consumers paid the highest premium for whole grains, spending about 66% more than refined grain consumers. In addition to regional differences, there are category differences. In a 2009 grocery store survey (3) of best-price choices for both whole grain and refined grain foods, eleven categories showed a premium for whole grains, while five (cold cereal, hot cereal, granola bars, granola, and wraps/tortillas) actually offered less expensive whole grain options than refined grain ones. Overall, the price gap is shrinking. In the period 1998 to 2006, areas with the smallest gap decreased from about a 35% premium to about 23%, while those with the highest gap decreased from a peak of about 66% to about 45%(4). The 2012 Gap: A Grocery Store Visit Official data lag so far behind the momentum of the whole grain surge that a look at today’s real-world conditions may be more instructive than analysis of numbers that are six or even three years old. A May 2012 visit to supermarkets in Portsmouth, NH (1), showed that many whole grain foods have already achieved price parity with refined foods, while others retained the whole grain premium and a few even offered a savings for whole grains. For instance, see Table I. As we compare products, it also becomes apparent that de1 Oldways and the Whole Grains Council, Boston, MA, 02116, U.S.A. E-mail: Cynthia@oldwayspt.org http://dx.doi.org/10.1094 / CPLEX-2013-1001-17B © 2013 AACC International, Inc. Table I. Price comparison of selected whole grain and refined grain products. Product Refined vs. Whole Thomas’ bagels both cost same Chi-Chi 12” tortillas both cost same King Arthur Flour both cost same Success Rice both cost same P. F. Goldfish Crackers both cost same Newtons Cookies both cost same Manichewitz Matzos whole = 17% more Joseph’s Pita Bread whole = 26% more Generic Sandwich Bread whole = 33% more Generic Pasta (rotini) whole = 24% more