Diageo

There’s an idea out there called “The Lippy Effect”. Which is that when times are hard folk will give up on those now out of reach luxuries and will substitute down to something that’s just a small luxury. This can be large enough – sorta Jevons Paradox effect even if not really – that sales of the small luxury can rise in those hard times.

The intuition coming from the idea that women who can’t have the new outfit, the full cut and hair pamper, might go for a wash and blow dry, or perhaps a new lipstick just to pamper in the manner that can be afforded.

Elsewhere I’ve wondered whether this might be true of booze as well when talking about Diageo:

There’s also something called “The Lippy Effect” which is derived, of all things, from female behaviour in recessions. This is that often enough lipstick sales actually go up as those of fashion, handbags and so on go down. The observation being that we all desire a little luxury, a little pampering, and if we can’t have it on big and major things then we’ll take a little bit of it by buying smaller yet premium items. It’s easy enough to see how this could happen with spirits. That luxury of better whisky for a few pounds more when the tens or hundreds of pounds to spend aren’t available. As long as things don’t get so bad we’re all back to bathtub gin of course.

The thing I’m not really sure about is the Lippy Effect itself. Sure, I’ve heard it said but I’ve a vague memory of seeing someone scouring the figures and showing that it doesn’t actually happen.

As to booze it’s possible. If the pub is out of reach financially then might we upgrade the home consumption? Dunno to be honest….