Imagine you’re at the bar spitting game to the hottest person of your attraction. Things are going great, you’re pretty sure you’re heading to their place instead of yours tonight. At the very least you’ll get a phone number and can do some sexting.
But you get the cold shoulder. You wasted money on drinks and precious time. Now it’s 15 minutes from last call and the crowd has really been picked over. You don’t want to go home alone so you’re left with only one choice… you got to lower your standards.
Now the picture I’ve painted may be familiar to some, and foreign to others. But we all have experience in being forced to lower our standards just to get what we want. No where is this more true than in our finances, especially with this recession stuff.
If before you wanted to buy a Mercedes, you may have decided on a Volkswagen instead. If you used to get pizza every Friday for the family, you might now be checking out the newest flavors of Hamburger Helper. And if in 2007 you were all about the Grey Goose, perhaps today you’re considering Mr. Boston.
Grey Goose and Mr. Boston are vodkas sold on opposite sides of the value spectrum. Grey Goose is what you would call a top shelf, and Mr. Boston is best found in the hands of passed out college students. It’s a recession, we all have to lower our standards. And that’s exactly what’s happened to us Americans.
Because of this recession, you, me (well not me I don’t buy liquor), and your drunk uncle Tom are all cutting back on their spirit consumption. Well, we’re Americans, we don’t really cut back. And when it comes to alcohol, more is usually better, or so we think. In this recession we’ve cut back on our spending for premium booze, but increased our spending on the cheap stuff.
Now this is hardly news, though many news agencies reported just on this as if it’s some kind of a surprise. It’s as big a revelation as unemployment going up, or home sales falling, in a recession. But I won’t leave you broke and sober without even a lesson.
Businesses are more prepared for recessions than you think. Well some are. Take Bacardi for example. The before mentioned Grey Goose is owned by them. But they also sell vodkas under the Bacardi brand for much cheaper. They own many brands across many different kinds of spirits in all the different price ranges. This way when the economy is good they make money on the premium brands and when the economy turns sour they make profits on the cheap stuff.
Just like you diversify your investments, companies diversify their product portfolios. If you would have asked me if I thought a liquor company needed to diversify beyond just liquor I would have said yes. But then again I forgot how much the American consumer loves their alcohol. So perhaps this was news after all.
Photo: melody.loves.you
 By The Weakonomist |
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Said,
Said,
I’ve been waiting forever for someone to explain how swamp donkeys can be related to personal finance and the economy at large. Whoulda thunk.