Why Americans are buying $22 smoothies despite feeling terrible about the economy

Americans are skipping restaurant dinners, postponing car purchases and looking for grocery deals. Amid tariff fears and broader stress over affordability, consumer confidence has fallen to levels not seen in more than a decade, according to The Conference Board, a business think tank. Currently, wealthier consumers account for the majority of spending in the U.S. economy.

So what explains the success of Erewhon’s €22 smoothie?

The Los Angeles-based supermarket chain that sells these luxury concoctions is doing so well that it has opened three new stores in 2025 – its biggest expansion since 2011. The chain reportedly generates $1,800 to $2,500 in sales per square foot, up to five times what a typical American supermarket makes.

These are no ordinary mixed drinks; they contain ingredients such as high-quality sea moss gel, adaptogenic mushrooms and collagen peptides. They often come with a celebrity’s name attached to it.

It’s all part of the broader boom in the U.S. specialty food market, which has surpassed $219 billion, according to the Specialty Food Association — an increase of nearly 150% in a decade. That easily exceeds the approximately 47% growth in total U.S. supermarket sales over the same period.

Independent retail data from market research firm Circana also confirms this growth: Even as inflation-weary consumers have turned to store brands across many categories, premium and specialty products have held their ground and even grew their dollar share of the market through 2025. On TikTok, creators who once filmed the shipments of designer bags are now posting $12 worth of canned fish boards. Artisan chocolate bars costing between $8 and $12 are being marketed without irony. marketed as ‘self-care’.

So if consumers are so concerned, why are they still spending money? In fact, these are not contradictions; they are two expressions of the same psychological reaction.

When people feel like life has gotten out of control, they reach for something small, expensive, and a sign of virtue. This is the real reason premium food is booming while some traditional luxury brands are struggling, consumer psychologists say.

We are professors of consumer behavior and marketing who study how people make purchasing decisions amid economic uncertainty, and wonder what explains the gap between how consumers feel and how they actually spend money. Our work points to a consistent finding: When people feel like they’ve lost control of the big things, they look for it in the small ones.

A quick detour through the makeup drawer

Economists have seen this before.

In 2001, Leonard Lauder, chairman of Estée Lauder, coined the term the “lipstick index” after seeing an 11% increase in lipstick sales following the September 11 attacks. When great luxury seems out of reach, consumers look for a small alternative. A $60 lipstick is extravagant for cosmetics, but next to the Hermès handbag it psychologically replaces, it feels like a bargain.

Then, as now, people seek freedom of choice wherever they can find it. Consumer psychologists call this “compensatory consumption”: buying things to feel in control when life seems to be spiraling out of control.

While even sales of beauty products are declining, that momentum hasn’t gone away. It just found better hosts, like food.

Food is in many ways an ideal product for this compensation. It is experiential: something you taste, smell and savor. It is also emotional: it carries associations with comfort, care and home. And it’s visible because when you’re on social media, what you eat is now as public as what you wear. Premium food is not just eaten; it is filmed, posted and performed.

Most importantly, it is still relatively accessible. Twenty-two dollars may be an absurd price for a drink, but it’s cheap compared to a $400 wellness retreat.

Indulgence with a side of virtue

Here’s what sets this moment apart from Lauder’s lipstick index. That example was purely about pleasure, as consumers sought pampering as comfort. Today’s premium food purchases have an added layer: they are coded as virtuous.

An Erewhon smoothie is not just a treat. It is organic, enriched with superfood and tailored to well-being. By the same logic, a $20 bottle of olive oil isn’t just shortening; it is a commitment to craft and health. Premium canned fish is not a convenience food; it’s sustainably produced protein that’s been caught in the wild and whose packaging is nice enough to show off.

This “virtue coding” does the most important psychological work in the sales transaction: it transforms indulgence into self-investment. You don’t spend during a recession; you do something for your health. You are not frivolous; you support small producers. Research shows that people need reasons to justify pleasurable purchases, especially during financial worries – and premium foods are powerful because the justification is built into the product. The organic label, the sustainability story, the wellness framework – they all solve guilt before it even starts.

Consumed in the kitchen and again on the feed

There’s a reason why this trend is accelerating now. Many premium food purchases are consumed twice: once physically and once digitally. When purchasing an Erewhon smoothie, it’s not really about the drink; it can be as much about the content as it is about the drink. The canned fish plate is plated on Instagram before anyone takes a bite.

Social media not only reinforces the trend; it makes it complete. When you post a photo or video of the smoothie, you broadcast that you value well-being, quality and purpose. In a cultural moment when showing off a designer bag feels tone-deaf, food provides the perfect cover. It is the safest flex available. It’s no surprise that a YouTube video of an Erewhon trek by food producer @KarissaEats has been viewed more than 14 million times.

All this raises a fair question: Does the growing focus on the ‘K-shaped economy’ explain this boom? As many economists see it, low- and middle-income buyers are increasingly pulling out as they face affordability crunches from health care to housing and education. But wealthier consumers are picking up the slack, spending on luxuries and driving gross domestic product growth.

In this scenario, premium food thrives because it is still affordable for the people who do well, even as everyone cuts back. That is partly true. But this explanation doesn’t take into account another shift: why affluent consumers are ditching spending on things like designer handbags in favor of premium groceries.

That is why the framework of virtues is so important. If the demand were purely about having money to spend, traditional luxury would also boom. That’s not it. An example of this is LVMH, the conglomerate behind Louis Vuitton and Dior, which saw profits from its fashion division fall by 13% through 2025.

Even consumers with disposable income need psychological permission to spend during anxious times. The premium food phenomenon is about why food has become the thing they choose – and not about who can afford to spend a lot of money on it.

And when a smoothie becomes a status symbol, it tells us something about economic security more broadly. According to the Bureau of Labor Statistics, food prices have risen nearly 30% since 2019, which is more than 23% for overall consumer prices. For a family on a tight grocery budget, $22 is not a smoothie. It’s dinner.

The need for control, the desire for identity, the comfort of virtuous consent – ​​these are universal. A single mother with two jobs feels the same desire for freedom of choice as the influencer who films her messages. It’s just that the purchases that meet these needs are increasingly limited by price. The justification only works if you can afford to indulge.

What’s really in the shopping cart?

The next time you’re at the grocery store and looking for something more expensive than what you might need, pause for a moment—not to put it back, but to think about what you’re actually reaching for.

Chances are it’s not really about the product. It’s about the feeling of choosing something when the world is spiraling out of control.

A $22 smoothie is never just a smoothie. It’s what people look for when they need permission to feel good.