Friday, June 17, 2011

Economics 101 - Burger King To Start Selling Spam

Okay, get the giggling out of the way.  This is an esoteric but serious post.  It’s probably the most newsworthy event I have seen this week.    

Spam was a popular and economical product invented during the Great Depression.  Is this a sign that today’s depression is starting to tighten its grip around the globe?  At a minimum, it is a sign that people are buying down in their purchases; something we were a first to remark was going to happen both with aspirational consumer purchases and with consumer staple products.   In fact we wrote this was going to happen years before Adweek wrote of it.   (By the way, we have been writing for years of the even larger issue of the coming collapse in the advertising bubble as well.  And its impact on Google.  Financial clowns who draw linear trendlines with regards to Google’s growth are only able to do so because their systemic incompetence is constantly bailed out by monopoly access to subsidized taxpayer money courtesy of the Federal Reserve.   By the way, this is the same type of analysis Algore used to determine humans are the cause of global warming.  A lot of data points starting to coalesce around the ad bubble popping but that’s not the intent of this post.  Mind you, it is coming.  Guaranteed.) 

While Burger King probably can’t and won’t sell a Spam sandwich for less than the $1 it charges for its cheapest burgers, it can trade down on its input costs by selling a product essentially made of meat scraps and fillers thus boosting profitability while also providing a unique customer experience. 

While I haven’t called the factory lately for my bulk order, not too long after the financial collapse a few years ago Spam production was booming.   Given its relative tastiness for pork lovers and comparatively cheap cost, we can safely assume Spam production likely remains robust. 

posted by TimingLogic at 8:57 AM