When one imagines the Great Depression, the first things to come to mind are probably images of hobos and soup lines, government infrastructure projects and FDR.
However, another, even more important legacy of that time is the idea of thrift. When I was a kid, many of my friends' grandparents were survivors of the Depression, and they tended to share a disdain for eating out, a desire to save everything, and a belief that homemade items were morally and physically superior to anything that could be purchased in a store. Tied in with these prejudices lay a loyalty to the products that had served them so well in the worst of times.
A few months ago, I explored brand addiction phenomenon in my review of Kevin Roberts' book Lovemarks. Basically, Roberts argues that "lovemarks" are brands that evoke a deep, unbreakable loyalty and are intricately tied to the user's identity. Far from weakening the lovemark bond, recessions, depressions, faltering stock markets and foreclosed homes only make that bond deeper. In fact, the worse things get, the more many consumers will run for the comfort of their favorite products.
This was borne out on September 29, 2008. As the stock market took the largest point drop in its history, the three S&P 500 companies that fell the least were Procter and Gamble, Kraft Foods, and Coca-Cola Enterprises. Not surprisingly, the only one that rose was Campbell's soup. In fact, it's easy to imagine depressed traders on that black day, salivating at the thought of a nice big bowl of chicken noodle soup and a big pair of fuzzy pajamas.
In addition to being lovemarks, all three of these companies represent staples. When things are good and the cash is flowing, people tend to eat out more, send out the laundry, and try expensive, exotic brands. In tougher times, however, many people cut prices by eating in, going back to the midlevel brands of their childhood, and doing their own household chores. When that happens, both lovemarks and staples are likely to hold their value or go up. After all, when everybody stays home and eats mac and cheese, Kraft is sitting pretty!
Bruce Watson is a freelance writer, blogger, and all-around cheapskate. Right now, he's thinking about ramen stock. Salty, salty ramen stock...
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