Monday, February 16, 2009

New Habits of the Formerly Upper Middle Class

People are eager to report all the ways they’re saving money these days. Whether they’re well-off or not, everyone has a story about spending less. Some people are substituting private labels for brands. Others are simply buying less. Then there are those who are behaving differently and buying accordingly.

The Chicago Tribune ran a story recently about how home cooking, familiar brands are gaining in popularity during the recession. A recent Google search on “money-saving tips” returned 598 results spread across 60 pages! From articles, to focus groups, to informal polls of friends, to noticing what's going on in my own family, here are ten new food-related habits of the potentially formerly upper middle class:

10. Having friends over for dinner more often instead of going out

9. Buying fresh fruits and vegetables in bulk

8. Shopping at Walmart

7. Using coupons more and shopping the sales

6. Checking the “market” price on eBay before going shopping

5. Making more from scratch

4. Getting more of our protein from beans

3. Buying fewer prepared foods

2. Serving and eating less

1. Eating comfort foods that remind us of better times

Which brands stand to benefit most from these new habits? According to the Chicago Tribune’s Recession Survival Guide, “Walmart, Gold Medal Flour … Kraft's Velveeta cheese or Hormel's canned chili. Hormel's chili and its Dinty Moore brand stews posted double-digit sales growth during its most recent quarter. Ditto for Kraft's Velveeta, despite a run-up in cheese prices.”

As consumers have gotten choosier about what we put in our shopping carts (and our mouths), upscale grocer Whole Foods has taken a beating. The stock is down nearly 80% from its year-ago level, while Kroger and Safeway are down less than 20% and 40%, respectively. To be fair, this difference is not entirely due to Whole Foods’ higher prices. As the WSJ reported recently, the company’s acquisition of Wild Oats is compounding its problems. "Instead of concentrating on our business," Whole Foods Chairman John Mackey laments, "we are forced to focus on dealing with regulators in Washington at a time when (our) business is declining."

An unexpected beneficiary of these trends (except the comfort foods one)? Try Weight Watchers. Competitors like Jenny Craig and NutriSystem sell pre-made meals to participants as part of the program, which is more expensive than making it yourself. In contrast, many of the new habits are fully in sync with the Weight Watchers program – no pre-made meals, more from scratch, eating less meat, and making and eating less overall are all fundamental aspects of the Weight Watchers plan. So, with the program more simpatico with the times than ever, people should be seeing more success on the scale. And that means more good buzz, which should drive up membership. Note to Weight Watchers, Inc. – take advantage of the trends in your favor!

A silver lining to the recession? Maybe we’ll actually get healthier while we’re learning how to live on less.

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