Bad Economy means Good News

At least for some businesses:

For Some Products, Recession Is Not All Bad

It's not all doom and gloom in the U.S. economy. Some products are bucking the recession and flying off store shelves.

Sales of chocolate and running shoes are up. Wine drinkers haven't stopped sipping; they just seem to be choosing cheaper vintages.

Gold coins are selling like hot cakes. So are gardening seeds. Tanning products are piling up in shopping carts; maybe more people are finding color in a bottle than from sun-worshipping on a faraway beach.

Strong sales of Spam, Dinty Moore stew and chili helped Hormel Foods Corp. post a 6 percent increase in first quarter sales in its grocery products unit.

Consumers have trimmed household budgets and postponed buying cars, major appliances and other big-ticket items. Yet they still are willing to shell out for small indulgences and goods that make life more comfortable at home, where they are spending more time.

Recession shoppers also are drawn to items that make them feel safe, both personally and financially.

"The focus on the family hearth is something that has happened in nearly every recession. It's, 'How can I have more fun at home?"' said Paco Underhill, whose company, Envirosell, monitors the behavior of shoppers and sellers across the U.S. and in other countries.

"People are much more focused on their homes and their immediate happiness and they're buying things that they can use themselves -- seeds, fishing equipment. Lipstick and chocolate are small rewards that make you feel better."

Profits in the first three months of 2009 at Hershey Co., the nation's second-largest candy maker, surged 20 percent and beat Wall Street's expectations. Kraft Foods Inc. reported double-digit growth in macaroni and cheese dinners -- the consummate comfort food.

Recessions, it seems, are good for love, too. Over the final three months of 2008, condom sales rose 5 percent and Match.com reported its strongest performance in seven years.

But economic woes are as rough on the tummy as they are on the wallet. Chicago-based market researcher Information Resources Inc. reports that sales of laxative liquids and powders rose 11.5 percent for the 52 weeks ending April 19. Sales of stomach remedy tablets, including Pepto-Bismol and Phillips brands, climbed 8 percent.

As expected during any economic slump, recession shoppers looking for deals have boosted sales at discount chains such as Wal-Mart Stores Inc. Dollar Tree Inc. sneaked into this year's Fortune 500 for the first time, at No. 499.

There's a general tendency to trade down, according to Leo J. Shapiro & Associates, a consulting firm in Chicago. That means eating dinner at the kitchen table instead of restaurants, buying used cars and shopping at do-it-yourself auto parts stores. It means spending less on clothes. Sales at luxury retailer Saks Inc. fell 32 percent last month. Sales at Goodwill Industries International stores in the U.S. and Canada jumped by 7 percent in March.

"If you're used to eating out, maybe you're now buying a high-end steak at the supermarket," said Bill Patterson, a senior analyst in Chicago with Mintel International, which supplies consumer, product and media intelligence. "If you eat at home mostly, maybe you are going down from the branded product to a private label."

People are not drinking as much beer or wine at bars and restaurants, but they haven't stopped drinking. The Wine Institute says that despite the recession, U.S. sales of California wines totaled about 467 million gallons last year -- 2 percent more than the year before. But people are looking more closely at cheaper selections: The overall retail value of California wine sales fell slightly from 2007, the institute said.

Those on the go are not shying away from footing the bill for sturdy running shoes. Sales increased 2 percent in 2008, said Tom Doyle at the National Sporting Goods Association in Mount Prospect, Ill.

"Runners aren't going to hurt themselves to save a few bucks," he said. Likewise, sales of bicycle helmets are up as parents continue to spend money to protect youngsters, he said.

The financial meltdown produced more interest in home safes. Coin dealers are awash in customers as investors big and small see the safety of gold.

Sunshine Minting Inc. in Coeur d'Alene, Idaho, which supplies gold blanks to the U.S. Mint, doubled its work force in 2008.

"It just came on like gangbusters," said president Tom Power, who struggled to hire, train and get new equipment to handle demand that doubled, then tripled. "You can't just flip a switch and jump up production overnight."

Guns are selling well, too. Total firearms sales rose 27.5 percent at Smith & Wesson for the three months ending Jan. 31. It's not a sudden interest in hunting behind the increase; hunting firearm sales at the company declined during the quarter by 46 percent.

Gun sales are being driven by concern that the Obama administration will tighten gun laws. But people also are feeling a level of fear and heightened interest in self-reliance as they weather the recession.

"They are looking down the road going 'What could happen here?"' Underhill said. "I think a lot of Americans are truly scared. One of the things that tickles is our pioneer ethos, which is, 'I feel better with a year's supply of toilet paper' and 'Maybe I should start canning and pickling."'

Many people already are.

The number of home vegetable gardens is predicted to jump more than 40 percent this year, compared with two years ago, according to the National Gardening Association. Sales of vegetable seeds such as green beans, tomatoes, cucumbers, squash and lettuce climbed 30 percent as of March at W. Atlee Burpee, a large seed company in Warminster, Pa. It organized a basic training course called "root camp" for hundreds of would-be gardeners this month outside Philadelphia.

Still, when the economy grinds to a halt, people clench their teeth. That could mean spending money at the dentist.

There's no statistical evidence, but dentists such as Dr. Matthew Messina in Cleveland, Ohio., are seeing more people with tooth-grinding injuries.

"The body responds the same way to a real threat, 'There's a burglar in the house,' as it does to a perceived stress like 'I'm worried I'm going to lose the house,"' Messina said.

(Source: Associated Press, 05/16/09)

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