Last Updated on December 28, 2023 by BFSLTeam BFSLTeam
The upcoming Cricket World Cup is not only a thrilling event for sports enthusiasts but also an opportunity for investors. While cricket fans cheer for their favourite teams, savvy investors can consider consumer stocks as potential winners during this global sporting spectacle.
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What Are Consumer Stocks?
Consumer stocks encompass products purchased regularly by the general public. There are two primary categories: consumer staples, which include essential items like groceries and personal care products, and consumer discretionary goods, which encompass items like electronics, entertainment, and clothing – not vital but desired. Each category has its unique challenges, advantages, and pricing patterns.
Boosting India’s Economy With World Cup 2023
Cricket reigns supreme in India, capturing more than 85% of the sponsorship and media investments in the world of sports. The 2019 edition of this cricket spectacle drew an astounding 750 million unique viewers and a staggering 14 billion hours of total viewing time. Given cricket’s unrivalled popularity in India and its vast and dedicated fan base, we can expect a surge in consumption and media engagement over the next 45 days, as evident in the current rise in flight and hotel prices. While Indians are eagerly anticipating a victory, investors and brands are also eyeing a robust December quarter, perfectly aligned with the festive season – that’s the undeniable home advantage. Furthermore, the World Cup coincides with a series of upcoming festivals in the next couple of months, including Navratri, Durga Puja, Dussehra, Karwa Chauth, Dhanteras, and Diwali, all considered auspicious periods for various purchases.
Reasons Why Consumer Stocks Surge During World Cup 2023
1. Increased Consumer Spending:
Major sporting events like the World Cup often lead to increased consumer spending. Fans buy team merchandise, upgrade their home entertainment systems, and host viewing parties. This surge in demand can benefit consumer-focused companies.
2. Apparel and Accessories:
Cricket fans love to show their support by wearing team jerseys, caps, and other accessories. Apparel companies that hold licensing rights for official merchandise can see a boost in sales.
3. Electronics and Gadgets:
With matches broadcasted in high definition, fans may invest in better TVs, sound systems, and streaming devices. Electronic retailers and manufacturers stand to gain from this trend.
4. Food and Beverages:
Whether watching at home or at sports bars, fans indulge in snacks, beverages, and meals during matches. Food and beverage companies could see increased sales during the tournament.
5. Hospitality and Tourism:
Host countries experience an influx of tourists during major sporting events. Hotels, restaurants, and travel companies benefit from increased bookings and footfall.
6. Online Retailers:
E-commerce platforms witness a surge in online shopping during such events. From team merchandise to cricket-themed decor, consumers turn to online retailers for convenience.
Why Consider Investing in Consumer Stocks?
Investing in consumer stocks, whether staples or discretionary, can offer unique advantages to a diversified portfolio. These benefits stem, in part, from their behaviour within the broader economic cycle.
Consumer staples are typically non-cyclical, consistently in demand. These products, which people deem essential, are resistant to price fluctuations and economic downturns. They might see slower growth during recessions, but they rarely come to a standstill. In some instances, consumer staple stocks have outperformed more exciting industries during economic downturns.
Conversely, consumer discretionary stocks are cyclical, influenced by economic cycles. During tough economic times, people tend to cut back on non-essential spending, impacting industries like automobiles, fashion, and entertainment. However, when the economy rebounds, discretionary stocks often lead the way to recovery.
Also Read: Cyclical Stock
Conclusion
Investors should keep an eye on consumer stocks as the Cricket World Cup approaches. While volatility is inherent in stock markets, well-positioned companies could shine as fans celebrate their passion for cricket on a global stage.
