What Companies are Profiting from Doomsday?
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Haven’t you heard? The world is going to end, or so the participants in the National Geographic Channel’s new show Doomsday Preppers are concerned. According to these individuals chronicled in this new show, there are various ways that civilization will grind to a halt, with the sunbursts that destroy the electrical grid, nuclear war, earthquakes, or even hyper-inflation. One way or another, these people believe their world will come to an end, and they are preparing for that inevitable event.
Regardless of the merit that these people base their end of the world theories on, the reality of it is they are preparing, and spending quite a bit of money while doing it. The American Preppers Network estimates that there are currently over 3 million Americans who are classified as preppers. Those individuals don’t take being prepared lightly; they are spending massive amounts of money on upgrading buildings, food, medical supplies and protection. As the prepper movement gains traction, select companies are well positioned to benefit off this momentum for as long as…well…society continues to exist.
Individuals who prepare for the worst can usually be classified into two categories, self-reliance and hoarding (not the house full of useless stuff or dead rodents kind). Individuals who are preparing to become self-reliant don’t need services such as public utilities or groceries from chains. They grow their own food, and develop their own energy sources. Those individuals who hoard supplies are more likely to purchase those supplies in advance and store them for later consumption.
Wholesale grocery giant Costco (NASDAQ: COST) has over 400 stores across the United States with over 64,000 members. Costco provides a low-price, high-quantity retail experience for bulk items. Costco even has ties to the prepper movement. In 2009, at the height of the recession and as uncertainty about our economy was a major concern for those who fear an end to civilization, Costco was quick to recognize this trend and offer prepper bundles. This offer retailed for $799 and offered a one-year food supply for one person. Even Wal-Mart (NYSE: WMT), through their bulk wholesaler Sam’s Club, began offering a ‘lite’ version of emergency preparedness in the form of an 11-day "panic pail" that provided enough food and supplies for 11 days for one person, which they priced at almost $50.
Many preppers believe that if society completely spirals out of control, laws and public protection will cease to exist, putting the responsibility of protection onto every individual. What this entails is home defense, usually in the way of firearms or other self-protection methods. Holding about 4% of the firearms market share, Smith & Wesson (NASDAQ: SWHC) has become a popular favorite among the prepper community. With handguns, shotguns and semi-automatic guns being the preferred firearm of choice, preppers are loading up on these necessities by the droves. The effects of panic buying or the purchase of a firearm because of unpredictable events can largely been seen in the revenue of Smith & Wesson. After the 2008 presidential election, Smith and Wesson attributed their 21.3% revenue increase for the following year directly to firearm sales because of the political uneasiness in the United States. After 2009, Smith & Wesson saw a decrease of revenue of 3.4% in 2010-2011 as political unrest calmed.
For the record, I am not a prepper. I am simply a fan of a show that highlights the ingenuity of individuals who think that the end is near. The concept of prepping does have valid roots, in that every individual should have the basic necessities and plans to survive at least a few days without help, but the concept of preparing for the end of civilization is a stretch for me. If NatGeo is able to make this current sub-culture mainstream, similar to what TLC did with extreme couponing, the opportunities for companies to maximize their revenue playing off of the needs and fears of other preppers increases. These companies are just a few that are leading the charge to the end of the world.
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