"Lipstick effect reappears": US tea and coffee consumption demand remains strong

Coffee and tea shop sales in the US are set to grow by double digits this year despite a growing cost of living crisis, according to a survey by GlobalData .

Sales at coffee and tea shops are expected to grow 10.5% this year, according to GlobalData , as they become an established habit in consumers’ daily lives and follow the market downturn caused by the pandemic .

The research firm 's consumer surveys show that the number of U.S. consumers willing to " spend big " at coffee and tea shops fell just 1% in the most recent quarter , suggesting shoppers are less willing to make sacrifices when it comes to coffee and tea .

“Cheap luxury”

"This could be a 'lipstick effect ' due to the economic downturn , " commented Jenny Questil, senior analyst at GlobalData .

The "lipstick effect" refers to an interesting economic phenomenon in which lipstick sales are hot due to economic depression, also known as the "trend of preference for low-priced products."

In the United States, whenever the economy is bad, the sales of lipstick will rise sharply. This is because people in the United States think that lipstick is a relatively cheap luxury product. In the case of economic downturn, people still have a strong desire to consume, so they will turn to buy relatively cheap luxury products.

As consumers return to the office , purchasing such products is a relatively cost - effective indulgence and is also part of the traditional office ritual - coffee breaks give people a chance to socialize and relieve work fatigue .

U.S. entertainment spending remains weak

However, according to GlobalData, the number of US consumers who said they were willing to make "large purchases" in entertainment venues other than cafes and teahouses fell by 7%.

"If a family were to go to the cinema to watch a movie, they would probably have to go to a restaurant afterward, which would cost a lot of money, " Questil said. "So, many families are choosing to cook at home and watch the movie online to save money."

According to GlobalData's third quarter 2022 consumer survey, 34% of US consumers go to coffee shops or tea houses once a week or more, while the proportion for leisure venues is only 25%.

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Consumption