Recession is like one efficient washer that no matter how big or well-placed your fund is, will drain all the money from the market. During market volatility, most of the share prices fall down leading investors into a panic situation. The panic further leads to rigorous and unplanned selling of funds where investors are ready to compromise with the prices just to sell-off loss-making funds. if you are such an investor who cannot handle a crisis situation and tend to panic around such times, it is better for you to invest in such industries which are an anti-recession package.
Even if the economies are not doing so well, there are some industries which do not get affected or are least affected due to their consistent demand irrespective of what is happening around. Yes, there is no 100% proofing but here are 5 topmost industries which stay in demand even over recession;
Even if everything goes down, even if you are left with only last few thousands, even if the economy is on an all-time low, there are a few things that are going to be needed till the last penny and breath. They are bread, butter, water, tea, coffee, sugar, salt, etc. even if the situation is bad, there will be a lot of us paying the extra Paisa to get a variety (thanks to our inflated lifestyle).
Groceries are never going to fade out even during recession or down-fall or bubble-burst.
Plus, there are hundreds of discount stores which lure people into buying things they do not need even if only the needs can be met. Major players globally like Walmart, Ikea, Costco and in India like Reliance Mart, BigBazaar, More, etc are such examples.
The next in line is the pharmaceutical industry. Like groceries, they are also the lifeline these days. Given our lifestyle, mental and physical stress, exercise-deprived bodies, we thrive on medicines. A common combination of Diclofenac and paracetamol have seen major heights in the past few years and will keep on growing with the increasing demand.
Even if you argue that people are moving towards a healthier life and are getting aware of the benefits of exercise and natural ways, there are millions of people out there suffering from chronic diseases like cancer who need continuous medication. the survival is almost impossible in such cases if the medicines are not provided on time. According to a report released by WHO in September 2018, 9.6 million people will die of cancer in the given year in the world. Is that not alarming and demanding?
- Consumer staples
The third industry in this category is consumer staples. Irrespective of what is going on in the economy, there is going to be a consistent demand for certain things in the household which will recur time-to-time. Shampoo, soap, toothpaste, dish soap, laundry detergent, toilet paper, etc are few such things.
Also, such overly-demanded product industry is driven by a handful of conglomerates only. Hence the profits are even larger even if the recession hits. Companies like Hindustan Unilever, Colgate-Palmolive Company, Proctor & Gamble, etc rule the industry amongst the few more competitors. If you believe, pick up random 10 items from your household and you will see the facts for yourself. The main reason behind Ramdev’s brand getting hype was this only. Few competitors, all Videshi. Had he been paying little less attention towards his political establishment and a little more towards his so-called ‘Non-profit’ business, it could have established itself as a major player. Now there are more Hindustan Unilever ‘Ayurveda’ products in households than Ramdev’s.
- Alcohol and Alcoholic beverages
Brings a smile? Will bring the same smile to your portfolio as well. Alcohol and Alcoholic beverages are high-margin items which have a never-ending world-wide demand. Especially Distilled beverages, wine, and beer fall under the super-high-margin category. Like consumer staples, this industry is also driven by a few players leading across the globe. Name a few beers you love the most- Budweiser, Corona, Hoegaarden are the first few names everyone says. All three of them are owned by a company called Anheuser Busch InBev SA (BUD).
Other leading joints in this industry are Companhia de Bebidas das Americas (ABV) and Diageo plc (DEO). DEO owns brands like Johnnie Walker, Smirnoff, etc.
Check in your alcohol stock or mini-bar, you will be a customer of one of these for sure.
These days, beauty does lie in the eyes of the beholder but with a twist. Cosmetics form a major part of daily lifestyle. Who does not like looking good? I do! Even if it is going to work or for a party or for a casual meeting or friend’s night-out, cosmetics accompany us in form or the other. Like staples, cosmetics have made a special place in everyone’s routine. Hence the demand never fades away. Major leaders like COTY, Estee Lauder rule the industry. The favorite brand MAC is also an Estee Lauder baby. Apart from these majors, Hindustan Unilever and Proctor and Gamble also bag a portion of the cosmetics industry.
- Death and funeral services
Death is the ultimate truth of life and the only certain thing (apart from taxes). While buying stocks in the taxation department is impossible, you can explore the death-related industry. While it may sound creepy, but it holds true even during the times of recession and economic downfall. Anthyesti, Death Inc and a few more start-ups are blooming on the life’s inescapable truth.
There is nothing like a 100% assurance towards cushioning against recession but investing in industries which thrive even during those times can provide you with a hedge against it. The risk can further be minimized by diversifying the portfolio across industries and categories.
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