About ten years ago I heard an interesting question. At what age do people buy the most potato chips? I thought maybe when they are in college. The answer? Forty-five. That sounded kind of strange. What is it about middle age that brings on the munchies? Forty-five is when you’re most likely to have teenagers in the house. Then the statistic started to make sense. When kids are really little, I’m guessing you buy more cheese sticks, cookies, and juice. Once those kids leave for college, there’s only so many potato chips adults can eat. But a hungry teenager with friends can go through a lot of food, and potato chips is on their list of good snack foods.
I’m going to caveat this by noting that I looked up this statistic and couldn’t find anything to support it. Even if it’s not true, though, it still makes a lot of sense. We buy more of different products at different ages.
The same thing happens to countries as they develop. A country in early stages of development is probably more likely to buy potatoes than potato chips. As it develops, spending on consumer products often grows as incomes grow. For instance, development in India is increasing their consumer spending so much that it’s expected to double between 2016 and 2020 to over 5% of global consumption1. If this rapid growth rate continues, I can see a lot of potato chips, cars, clothes, and other goods being purchased in the next few decades. The same is happening in China and other developing countries around the world.
So what does this mean for an investor? Look for people buying potato chips. We don’t know what the economy of the US or India or Germany or Cameroon will look like next year or 10 years from now. But we do know that over time, countries develop and consumers want the same things that make life easier and more fun like phones, cars, and snacks. A well-rounded portfolio will include some exposure to international markets. It’s about more than potato chips but the principle is the same. For most consumers, it’s hard to have just one and we want to make sure we are exposed to some of that growth.
Send me an email at firstname.lastname@example.org if you have some interesting food or international facts to pass on. I’m a sucker for fun facts that may or may not be useful.
1 – India’s retail market expected to double to $3.6 trillion by 2020: report