Wednesday, March 22, 2006

Boomers = “Trading-up” – I wonder

This article appeared in today’s FT

With their line-up of gingermint baking soda and apricot flavoured toothpastes, Tom and Kate Chappell have done a brisk trade in all-natural oral care since they founded Tom's of Maine with a loan of $5,000 in 1970.

But on Tuesday the couple sold a majority stake in the company to Colgate-Palmolive for $100m in cash.

The deal not only showed the couple's business acumen but also underlined that "trading up" is increasingly critical for the world's largest consumer goods companies.

The emergence of millions of baby boomers with almost limitless spending power has sparked a scramble by US food and consumer goods companies to devise products that will appeal to them, and for which they can charge more.The all-natural oral care business pioneered by Tom's of Maine is a classic example.


The same seems to be happening in other sectors, with some of the products commanding twice the price of standard products:

Nestlé's Purina US pet foods division has launched a range of "prepared meals" for dogs

McDonald's, the hamburger chain, has launched a promotion for a new range of "premium roast coffee".

Campbell's has launched Select Gold Label, a series of "restaurant quality" soups.

The article suggests that: “To wealthy baby boomers, the premium price is scarcely noticeable”.

76 million people is a lot of people (the number of US Baby Boomers). I wonder what percentage of this group come into the “Trading up” category? I will have a bet with you that it is less than 20%. Any offers on 20%?
Dick Stroud

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