Even after a thousand or more years of trade, Indian garam masala remains exotic and out of reach for parts of Central and Eastern Europe. What comes from India still has its allure and aroma and it becomes more valuable if it’s hand delivered. Hence, I had an additional bag full of chai and garam masala and some silk fabrics on my back from Delhi to Budapest. I felt more like a modern silk route trader than an economist.
The strong essence of coriander, with red pepper steeped out of the multi-layered plastic bags made things more tricky, worrying me about the fellow passenger and what if he requested a change of seat. Fortunately, nothing like that happened. Rather, the German tourist guided me about the journey ahead, navigating on his iPhone and turned out to be an India curry lover. It just dawned on me that we were in the new age of consumption. Consumption connected with novelty, whether it was taste, technology, and look or simply something just branded “new”.
The new consumption is more small ticket consumption or should “feel” like small ticket consumption. You have a choice to not pay for the iPhone upfront but as a part of a small fee over years from the provider. This new consumption was also linked to something the instant, like food or clothes or social network consumption, where we consume internet bandwidth for instant pleasure of sharing or connecting with friends. This consumption trend drives businesses valuing together more than a trillion dollars. Apple is a technology company with products which seem like small-ticket consumption.
Marketing and credit has converted the superior good of yesteryears into inferior goods of today. We consume iPhones and iPads like chocolates, consume fashion wear like daily bread and spend a lot of time consuming entertainment. Smart marketing has reinvigorated the ghost malls. There is more action now. There are films, cultural events and flash mobs all churning the structural economic cycle slowly but surely. The fear evaporates and acceptance and complacency comes in, as we realise the whole system has a risk and the neighbour is as much in trouble as we are. Maybe this is the reason even near bankrupt European countries have crowded shopping malls and increased social activity.
There is another reason powering this new consumption. The proportion of money we spend on food and utilities has gone up. And, the very fact that we are left with little to save, we think it better to consume the rest on entertainment. After all, what collateral are we left with or what collateral can we create? It all happened so fast that the new-age consumption is all that we are left with.
I am backing my bullish case on the crazy consumption (May 4). One might feel it all an isolated consumption signal but if you look at it closely, the social actions are already pushing selected sectors higher. The sports betting industry is bigger than the sports sector itself.
The gaming and betting industry at $400 billion is about $100 billion larger in size that the sports industry itself. Trends in sports betting indicate trends in consumption patterns. Sporting Bet, a gaming company listed at London Stock Exchange with a value of $350 million is a takeover target by William Hill, another $2 billion segment leader.
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How can secular bears explain this undercurrent in the gaming sector? Sports betting comes under entertainment and consumer discretionary sector, an early economic stage sector. Activity in an early economic sector suggests more growth ahead, rather than a period of late economic cycle decay.
The author is CMT and co-founder, Orpheus CAPITALS, a global alternative research firm