Americans are not buying new cars or homes in this nose-diving economy, but how about low-price-point instant-gratification items such as booze and makeup?
According to a recent report by the U.S. Census Bureau, liquor and personal care products are faring well in this credit-strangled environment.
Marcia Mogelonsky, senior research analyst with the market-research group Mintel International in Chicago, is not surprised.
“Yes, we still keep buying these products even in a recession,” Ms. Mogelonsky says. “What we see are changes within these product categories.”
Meaning we might opt for a store-brand cosmetic instead of the high-end versions, and we might buy that bottle of Glenfiddich at a liquor store to serve at home rather than ordering a couple of drinks on the rocks at a bar or restaurant, where the markup can be astronomical.
“The on-premise sales will flatten out, but people will entertain more at home instead,” says David Ozgo, chief economist for the Distilled Spirits Council of the United States.
Mr. Ozgo says he doesn’t regard liquor as a “recession proof” category, but it’s certainly not in the same league as the car or housing market.
Not recession proof? Even though sales of liquor are predicted to increase this year?
“Yes, but the growth is slowing,” he says.
That sounds like the car industry during good times.
In the alcoholic beverage segment, beer is the most recession proof, says Jie Zhang, assistant professor of marketing at the University of Maryland at College Park.
“Products that make people feel good without costing a lot of money will do well in this economy,” Ms. Zhang says, adding that cosmetics fit into this category as well.
Also, Ms. Mogelonsky says, there is so much variety in each product category that consumers most likely will find something that fits the particular constraints of their pocketbook.
“There are so many inexpensive varieties of lipstick nowadays,” Ms. Mogelonsky says. “Many women are just moving from a high-end brand to something cheaper.”View Entire Story
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