How has a product whose pink color, strange consistency and enviable molecular stability -- which made it fodder for countless jokes and even a Monty Python-inspired musical -- remained relevant as a foodstuff people actually serve to their kids? It's not necessarily the economy, stupid -- a fact that has a lot to do with the role of branding during tough economic times, when, conventional wisdom has it, consumers retreat to less-costly items.
It's a trend explained by the concept of "inferior goods," an economics term that less describes the makeup of a product than its place in consumer-demand theory. They're basically goods or services for which demand increases as income decreases and vice versa. They're staples that are somewhat dispensable in good times but more desirable in bad ones. Commonly cited examples include ramen noodles, bus transit, lipstick (as the New York Times recently postulated) and, often, Spam.
In the current economic climate, the media have given a fair amount of attention to this concept, as part of a tsunami of coverage of how the American consumer is cutting back to deal with rising food and gas prices and the looming threat of an economic apocalypse. Following parent company Hormel's second-quarter-earnings release, which announced a 14% increase in profit, the Associated Press attributed Spam's success to downtrodden simple folk and even quoted a few wretches who seem to have turned to the pork product as a last ditch before gobbling up their own hair clippings.
Hormel doesn't particularly like this explanation. Its executives prefer to attribute any gains to the marketing of the product, and that's probably fair because, when you think about it, Spam isn't simply some cheap generic. In some quarters, it's not even regarded as particularly inexpensive. Wrote one commenter on the popular food message board Chowhound: "Like most canned, processed foods, Spam is not cheap on a dollars-per-ounce basis. You'd be better off buying something like chuck roast when it's on sale, or even ground meat."
The average price of a can of Spam is up almost 7% to $2.62, or 22¢ per ounce, according to the AP. That makes it costlier than both the average retail price of pork, 18¢ per ounce, and ground beef, 14¢, according to figures from the U.S. Department of Agriculture. Not exactly a bargain.
So why the rush to see a Spam surge as a sign of recession? Embedded in the Spam brand, which doesn't get much shrift in the economic analyses, is an association with time of strife. For instance, it was a staple for American soldiers during World War II.
But that's not all the brand has to offer. First, there's the can, a classic of packaging design, plastered on everything from snow globes to T-shirts worn by teens in search of irony. Books have been written, tributes created. There is a museum and there are countless Spam-inspired recipes on the internet that range from the interesting (Cricket's Spam Quiche) to the probably awesome (Spam French Fry Casserole) to the nauseating (Coconut Beer Batter Spam With Raspberry Horse). Running parallel to all this goodwill is some speculation about what the word "spam" stands for and, less palatably, what it "really" consists of.
Mostly, it seems, consumers who bother to write about Spam or create a recipe are pretty much into it. While much of the love seems to have grown on its own, in the past several months the powers that be at Hormel have put more resources behind the Spam brand. They kicked off an ad campaign via BBDO, Minneapolis, that leans heavily on a concoction known as the "Spamburger Hamburger," which substitutes a slab of Spam -- perhaps one of the new individually-wrapped Spam Singles -- for the beef patty in the traditional hamburger equation. The ads -- running in print, on spot TV and as free-standing inserts -- all pointed consumers to Spam.com, which people are not only visiting, but are hanging out at for a heady eight to 10 minutes at a time. Archrival, Lincoln, Neb., is the interactive shop.
In an interview, Spam product manager Dan Goldman said a goal of the marketing campaign was to persuade "occasional users of Spam" to drop the blue-and-yellow tins into their carts more often. "We have heavy, medium and light, occasional users," he said. "They buy it for camping trips or family picnics or have it on their weekly or monthly repertoire, or are buying it six to 10 times a year." Hormel's goal is to have consumers put Spam on their shopping list even more often.
In the age of organic
Sales have increased 10% over the past 12 weeks and have been up for seven straight quarters. Household penetration increased 22% over last year. All of which are impressive metrics for a mature brand, all the more so when you consider cultural crosscurrents that have been putting more emphasis on organic or otherwise healthful foods.
Mr. Goldman, however, wasn't having any of the economic argument. "It's really about building brand equity and usage," he said. "Spam's been around for 71 years. We've been valued through good times and bad. If there was only an economic driver we probably wouldn't have enjoyed 71 years of success."
His claim that the marketing campaign was conceived well before the current cost-of-living concerns became clear makes sense when you consider the time it takes to get a new campaign out the door. Insisting instead it has to do with that brand heritage, the closest Mr. Goldman will come to acknowledging an economic story is Spam's versatility: It can be served at any meal.