Did you know during the last Great Recession of 2008, FROZEN food sales actually went up? For example sales increased for chicken pot pies by 23% and frozen side dishes like appetizers and frozen peas went up by as much as 48%... It's surprising to hear about a product increasing in sales and especially one like frozen food!
What does that mean for us in the food and beverage industry?
First it means that during a recession, not all products see a decline in sales.
Secondly, it means that there are surprising winning brands in every category you might be selling in.
Some product sales stay the same and some brands actually saw an increase. In fact grocery and convenience stores did well in 2008 as consumers chose to stay home and cook meals with their family instead of eating out at sit down restaurants.
We can divide unique consumer spending trends in a recession into 3 categories: necessity, comfort and luxury goods:
1. Necessity goods are the ones we can’t live without. Which includes examples like baby diapers or formula, cereal and milk, eggs, bread, cheese, everyday snacks, dish washing soap and toilet paper. These products and brands don't usually see a change in total sales because shoppers are already buying the brands they like based on a budget.
The exception can be for brands that don’t have strong customer loyalty but have a higher price. Consumers may downgrade to private labels or less expensive brands. For example in 2008 organic vegetables saw a decrease of 31% as some consumers didn't’ feel the value was worth it. That may not be true in the next recession but it’s helpful to notice trends.
Brands that saw an increase in sales include items in the frozen food category mentioned earlier and also included ready made meals like lasagna or stir fry. Refrigerated and shelf stable meal kits and easy snacks all did very well. Customers also bought more Tupperware and laundry detergent in 2008 as they made their purchases last longer.
Your next steps?
What are simple methods to help build the argument that your brand offers value? Create bulk packs, market with easy meal preparation options on the back recipe and highlight the value or incomparable quality on packaging re-designs.
2. Comfort goods are items we don’t need to live, but that make our lives more enjoyable and fun. It’s an easy category to eliminate on a budget and most consumers in 2008 saved money by skipping the Salon and a local cafe, choosing to buy hair dye or nail polish in stores OR making a Keurig coffee at home.
The good news is that consumers still want indulgences and will buy them if they feel it will provide an entertaining “escape” in their day, but that won’t break the bank. For example in 2008 sales went up for alcohol by 17%, chocolate 15%, candy 12% and video games were up 36%. Other products that did well include energy drinks and convenience store “impulse” packaged products as sales at 7-11 went up.
Your next steps?
What can you do to convince customers your products are an affordable escape? Create smaller versions of your products if they are currently an expensive item so consumers can afford a little indulgence each day. During packaging revisions, ensure imagery is bright, fun and efficient at calling out how it meets consumer desires like eating a restaurant quality indulgence or finding an easy solution for healthy meals.
3. Luxury goods are those items we spend money on when we’re doing well and are a symbol of success, status or showing off. These items are the first to go in the budget for every day households as they postpone those purchases for the future.
But there is still good news in this category as well, because there still will be people with discretionary income and when they spend, they will want to buy from brands that are positioned as “an investment in quality” (like a Rolex) which historically carry resale value or a timeless reputation for good taste.
For the uber wealth, sales for premium caviar and champagne in 2008 didn’t see a decline in sales as it seems they are able to avoid being impacted by a recession. Well off consumers still wanted USDA Grade A Beef so sales actually increased in grocery stores as it declined in restaurants.
For other luxury brands, the middle class certainly bought less but when they did buy, they downgraded within their favorite brand. For example while eating out they might switch from the anejo to silver version of their favorite tequila brand or buy a Louis Vuitton wallet instead of the more expensive purse. During the holidays, people still bought gifts but they choose a smaller gift pack of luxury chocolates so they show “budgetary restraint” with appreciation.
Your next steps?
How can luxury brands effectively communicate investment in quality? Market the more accessible versions of your brand and offer more affordable versions in smaller pack sizes so consumers feel justified indulging. Use packaging artwork that emphasises the timelessness of your brand that embodies classic wisdom, success and prudence instead of being showy or wasteful, which will not be in good taste.
In conclusion, we can learn from past economic downturns that A) consumers will still buy, and B) they will be motivated to buy differently in 3 categories: necessity, comfort and luxury goods. The key is understanding the motivations of consumers in your category and pivoting to meet their needs. The tools in your arsenal to overcome a recession are branding, packaging artwork, packaging structure/size and product offerings. Revise your brand or packaging artwork to communicate the message needed in your category. Review your product offering or packaging size to make sure you have options to meet buyers budgets. Recessions can come and go but the adaptable brand will weather the next economic downturn and capture new sales.
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** This video and related article were written by and posted on NEW HOPE NETWORK on 4/20/20: https://www.newhope.com/market-data-and-analysis/which-products-sell-well-during-recession**
I hope that information helps. I’d love to hear in the comments what your product is and what category it falls under? And what strategies are you going to implement in the future when a recession hits?
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ABOUT THE AUTHOR:
Emily Page has a Masters in Economics from the University of Southern California and 12 years of experience in selling consumer brand products in the food industry with packaging. She is the CEO and founder of Pearl Resourcing (http://pearlresourcing.net), an international brand and packaging design agency where she has launched multiple 7-figure brands into retail and e-commerce with 2-5x growth in sales. She also offers business growth consulting (http://emilyannepage.com) and free advice for product brand owners through START TO SOLD YouTube video channel.
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