Wednesday, January 14, 2009

Marketing Up the Scale: Foodies as Economic Indicator

As a writer and a market analyst, I am working hard to avoid using the word “recession” or even the less ominous phrase “current economic climate” when describing what’s happening in the retail world. Perhaps until things change, we can just reach a mutual understanding that this is the context in which we’re all working?

Sounds good.

That said, there are some interesting marketing trends reaching for two segments of the market – those who are somewhat insulated from current conditions and those who are affected more directly by a “fear of falling.” In this case, I’ll focus on the upscale side.

Food purchases are some of the best indicators of people’s attitudes about spending. Certainly restaurant-going is way down and there’s a fair amount of concern in the hospitality industry about who – or what – will survive the...well, you know the phrase. The new President’s economic stimulus plan (here it is in full detail) has retail and hospitality high on the list of industries that ideally will receive some help. But general food expenditures, outside of restaurants, remain robust in some sections of the market.

Despite a very recent spike in Baby Boomer savings, Packaged Facts reports that spending is still high among “foodies” (a term that I hate almost as much as I bet the foodies do). Natural Specialty Foods Memo also points to good sales at UK premium grocer Waitrose and other natural upscale food stores over the holidays.

Even though they end up promoting a rather frivolous-sounding label, Packaged Facts actually does a good job unpacking the segment to find that there are subgroups: Foreign/Spicy Foodies, Restaurant Foodies, Foodie Cooks, Foodie Gourmets, and Organic/Natural Foodies. Interesting though these segmentations are, they don’t translate outside the American marketplace to countries where regional cultures have a stronger influence on cuisine.

Among the many intriguing insights in their study, one point seems worth highlighting when thinking about retail marketing: even though foodies are willing to pay more for higher quality foods, they are also bargain hunters. (This goes along with our earlier blog about upscale shoppers being more effective coupon-users.) For example, Bon Apetit just featured 20 excellent wines for $10 or less. NPR reports that while some folks are still shopping based on taste regardless of price, wine sales are up especially among the less expensive vintages. (Remember the slumping restaurant industry? People perceive dining well at home as a less expensive option.)

Chocolate, on the other hand, seems to be benefiting from its association with good things in many of those foodie categories. Again, Packaged Facts finds that sales of premium chocolates remain high: from spicy (high end chocolates infused with chilis) to gourmet (premium microbatch bars) to natural (fair trade organic) to healthy (dark chocolate’s purported antioxidant properties).

The point for retail marketers to take home: Well, we can’t all survive on wine and chocolate, but many people, despite a desire to save and scrimp a bit, would prefer not to do without it. Marketing consumables as both a savings and a luxury is where it’s at.

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