What Are Consumables?
Consumables are goods used by individuals and businesses that must be replaced regularly because they wear out or are used up. They can also be defined as the components of an end product that is used up or permanently altered in the process of manufacturing such as semiconductor wafers and basic chemicals.
- Consumables refer to products used for day-to-day living (e.g., food and clothing) that are used up or depleted during their consumption,
- Consumables producers are usually considered safe investments in any economic environment as these goods must constantly be repurchased.
- Retailers often make hefty profits by selling consumables—which can range from non-cyclical staple goods to discretionary items whose demand changes with the overall economy.
- Consumables can be classified either as non-durable (soft goods) or durable goods that are consumed once and persist.
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Consumables can be compared with durable goods (durables) and are sometimes segregated into:
- consumer staples, which are used by many households regardless of how the economy is doing
- consumer discretionary, which are purchased out of want and not need.
Stocks of companies that make consumables are considered safe harbors for equity investors when the economy shows signs of weakness. The reasoning is simple in that people always need to purchase groceries, clothes, and gas no matter what the state of the broad economy.
Many of the items measured in the basket of goods used to calculate the consumer price index (CPI) are consumables. Inflation in these items is closely watched because it can lower the discretionary income people have to spend on items such as cars, vacations, and entertainment.
While certain consumables like food, gasoline, clothing, and personal hygiene products are ubiquitous, the world of consumables also has some interesting niche areas and sectors. Here are just a small set of examples.
- Discount Grocery Consumables: Large grocery retailers may lower prices on consumables as part of a long-term strategy to gain traffic and fend off competition. For example, Wal-Mart Stores Inc. (WMT) and Whole Foods Markets, a subsidiary of Amazon.com Inc. (AMZN), both have announced they would roll back prices on consumables such as fresh produce, laundry detergent, and over-the-counter drugs. The rollbacks reduced profit margins but also drew traffic to those stores and boosted the retailers' market share in the face of competition from other discount grocery stores.
- Dental Care Consumables: Dental consumable products include dental crowns, implants, and bridges as well as orthodontics wires and other biomaterials. Factors contributing to the growth of this market include increasing awareness of dental health in emerging economies such as Hungary, Turkey, and India. Dentsply Sirona, Inc. (XRAY) and Align Technology Inc. (ALGN) are all leading suppliers in the dental consumables market through the year 2026. The global dental consumables market is valued at an estimated USD $30 billion in 2021 and is projected to reach USD 38.7 billion by 2024, according to industry reports.
- Nanotechnology Consumables: Nanotechnology components are increasingly being incorporated into electronic products such as camera displays and battery systems. As a result, growth in the nanotechnology industry is driving the market for cleanroom consumables which are a necessary part of the production and testing phases of these tiny products. Cleanroom consumables used in nanotechnology include disposable clothing, gloves, and wipes to prevent contamination from dust and other unwanted elements. Leading producers in the cleanroom consumables department include Berkshire Corporation and DuPont de Nemours, Inc. (DD), but smaller competitors are expected to compete for market share in regional markets.