When actual economic indicators – unemployment, jobs creation and gross domestic product, for example – aren’t meshing with the media theme of an economy in turmoil, leave it to journalists to create unconventional indicators. That’s just what NBC “Nightly News” anchor Brian Williams did May 29 when he introduced the Spam indicator.
Spam sales were 10.6 percent higher in the second quarter of 2008 than the same period in 2007, according to an Associated Press article dated May 28. Its manufacturer, Hormel Foods (NYSE: HRL), has seen profits increase 14 percent. That’s a sign of “our times,” according to Williams.
“And in what may be a huge economic indicator, this may say more about our times than we realize,” Williams said. “Spam, the canned luncheon meat product, not the junk e-mail but, Spam sales have surged, lifting profits for the maker Hormel by 14 percent in just the first quarter of this year.”
One factor contributing to the profit rise is the price of Spam, which has increased 17 cents, or nearly 7 percent, to $2.62 for a 12-ounce can. A rise in the price along with no decrease in demand has a positive impact on profits.
Williams didn’t note that many fresh meats are still cheaper than Spam, which sells for about 22 cents per ounce. According to the U.S. Department of Agriculture, ground beef (15 cents), boneless hams (20 cents), most chicken (10 cents) and whole frozen turkeys (7 cents) retail for less per ounce than Spam.
Still, Williams construed it as a sign of hardship of families meeting their need for food.
“At $2.62 a can on average, Spam starts looking a little better to a lot of families who are strapped right now by the rising cost of food,” Williams added.
Executives for Hormel attributed the strong showing to an advertising campaign and a new product, in addition to consumers fixing their own meals more often.
“The Austin, Minn.-based company, also known for the Jennie-O Turkey Store, has embarked on its first national advertising campaign for the 71-year-old brand in several years,” Emily Fredrix wrote for the AP. “They’ve credited the sales increase to that, along with new products like individually packaged ‘Spam Singles’ slices. Also helping sales, executives said in an earnings conference call, was the fact that people looking to save money are skipping restaurant meals and eating more at home.”