November 15, 2008

In A Slowing Economy, SPAM Thrives

It may be "Crazy Tasty," as the can says, but the increasing demand for SPAM is not crazy to economists. SPAM is an inferior good, where as income falls, demand rises for an inferior good. In the following article from the NY Times, demand is also rising for other inferior goods, such as rice, beans, among others. Here is more from the NYT:

"The economy is in tatters and, for millions of people, the future is uncertain. But for some employees at the Hormel Foods Corporation in Austin, MN, times have never been better. They are working at a furious pace and piling up all the overtime they want.

The workers make Spam, perhaps the emblematic hard-times food in the American pantry....

Even as consumers are cutting back on all sorts of goods, Spam is among a select group of thrifty grocery items that are selling steadily.

Pancake mixes and instant potatoes are booming. So are vitamins, fruit and vegetable preservatives and beer, according to data from October compiled by Information Resources, a market research firm.

“We’ve seen a double-digit increase in the sale of rice and beans,” said Teena Massingill, spokeswoman for the Safeway grocery chain, in an e-mail message. “They’re real belly fillers.”

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