The Future of Demand for Food Away from Home and Prepared Food: Cohort and Age Effects in Japan

The demand for two composite goods, food away from home (FAFH) and prepared food (PF), are trending upward in Japan as Japanese society ages. This paper estimates the demand function of FAFH and PF. We adopt the almost ideal demand system and predict the effect on future demand from age and cohort changes. We find that the age effect decreases both while the cohort effect increases the share of FAFH but decreases that of PF. Over time, the demand for FAFH gradually decreases but remains stable. The demand for PF has been decreasing as of 2010 and more quickly than for FAFH. The reason is that both the age effect and the dynamic population trend decrease the demand for both goods, while the cohort effect slows the decrease in demand for FAFH but accelerates that for PF.