Here's an amusing example of economics in action: Clorox's profit is up 23% in the third-quarter. Why would that be? Check out the news blurb from MarketWatch:
The bleach maker said profit was aided by sales of disinfectant wipes to combat the worldwide H1N1 flu virus, shipments of Hidden Valley salad dressing, and lower costs. These gains were offset by soft demand for Glad trash bags and promotional spending.
Let's dissect this, because it's a fascinating explanation of human behavior in action.
First, the easiest phenomenon: people are freaked out about H1N1. They're far more worried about this dangerous flu strain than they are the flu in most years. As a result, Americans are stocking up on Clorox wipes that kill bacteria and germs. Demand for these products increases, so do profits.
Next, let's think about trash bags. This might seem an odd one. Why has demand decreased? Well, consumption has decreased during the recession. Just last week, I noted the awful September spending numbers. When people are buying less stuff, they have less waste: they're throwing away less merchandise packaging and replacing fewer old products. As a result, they need fewer garbage bags. Although I have no clue where I'd find such data, I'd bet that garbage collected has decreased overall during the recession.
The salad dressing blip isn't as clear, and it may be more than purely recessionary. But I can think of two possibilities. One is that people are eating out less, so they're making their own salads and using more store-bought dressing as a result. Another explanation might be that people are eating more salads, because lettuce is cheaper than meat -- the recession diet! This seems a little less likely, but not wholly improbable.
With all the bad press macroeconomics has gotten over the past few years, it's nice to see that microeconomics is still holding up.
The decreased demand for Glad trash bags only signifies something about the Glad brand, and only for 1 quarter. Maybe the Hefty brand ran promotions that cut into Glad sales. Perhaps some people decided to try cheaper store brands of garbage bags. It really doesn't dignify much about the economy in general.
The salad dressing can also be a quarterly blip. Anybody who has ever had responsibility for for P&L knows that sometimes the gods reward you and other times they punish you. You generally have to look at a longer time period than a quarter to get any real knowledge of sales trends.
The sanitizer is most definitely being helped by all the news, etc, telling you to wash your hands to avoid swine flu. The problem with all this "sanitizing" is that it helps prevent all types of, even very mild, infection and, thus, prevents the body from building normal antibodies. Then you can end up really really sick from what should be a mild infection, because your body lacks antibodies.
I think you're right on the trashbags. I used buy Glad or Hefty without even looking at the prices. Now I'm using Safeway brand. They're not nearly as sturdy, but I don't really need "the very best" to take out the trash.
I think it is because people go cheap where they can in a recession. If you are going to cut costs, trash bags would certainly be a good place to start. It is also a fact that new couples are spending less on their engagement rings too. So while many jewelers are going out of business, our low cost engagement rings company sales are actually up this year. It's all about cutting costs where you can
I agree with the others. I've started buying store-brand products whenever possible, from trashbags to toothpaste. I make my own salad dressing, so can't comment on the rise in Hidden Valley sales.