The Food Scout

Last fall, when the Starbucks announced slowing same-store sales (and experienced a subsequent dip in stock price), various press reminded us of the “Starbucks Economic Indicator,” wherein rising sales at Starbucks in the past had indicated strong economic waters ahead, and lagging sales predicted economic trouble ahead for all. In fact, while Starbucks got all the press attention last fall, subsequent months showed trouble for Dunkin Donuts, Wal-Mart, and recently a slew of quickservice restaurant chains. But if growth at Starbucks can be interpreted as a sign that consumers are strong on luxury-related purchases, then we need an antithetical brand to Starbucks’ that shows us when consumers have hit the bottom and are economizing. And thanks to the press at large, I have found the perfect brand foil to Starbucks: Spam. True, Spam’s originality as a catch-phrase has been muddied by the overuse of the term for unwanted junk mail. But its application is perfect because as Starbucks sales have suffered in recent months due to a drag in consumer confidence, Spam sales have perked up in inverse proportion.

According to Nielsen information quoted in the press, Spam’s sales have grown 10 percent in the past 12 weeks (vs. year ago), which Hormel reports say have increased profits for the company by 14 percent the company’s second quarter. Interestingly, just as Starbucks has had to raise its prices in the face of rising costs, the average price of a 12 oz. can of Spam has risen 17 cents, or 7 percent, to $2.62 in the past year, according to an AP report. And this fact is what leaves me a little puzzled: Apound of Spam costs about $3.50, when there are other less-adulterated sources of protein available for that price or less (canned tuna for one, fresh chicken for another). So what’s the appeal. Is there some inner voice that tells us things are turning for the worse (imminent nuclear war, food shortages), so it is time to buy Spam and eat it in salads and next to mashed potatoes as a sign that we are enduring economic hardship (all the while paying $180+ per month for cell phone, satellite and Internet service) until our collective confidence returns? Thank you, I think I’ll ride my bike to work and cancel satellite TV, and keep my food budget where it is.

So there you have it. As goes Starbucks, so goes the luxury market. As goes Spam, so goes the economizing market. An easy and early way to monitor consumer mood shifts in these times.