In this conversation, Ben Bates, Cresset’s Managing Director of Private Markets, sat down with Kevin Kingman and Michael Farello of L Catterton for a discussion on the U.S. consumer and factors the speakers believe are important beyond short-term headlines. Drawing on L Catterton’s proprietary research and long history of consumer-focused investing, the discussion explored why recession fears had not materialized at the time of the conversation, how consumer fundamentals were described as supportive of spending, and where longer-term structural shifts may be creating opportunities across categories.
Key Themes
Consumer Fundamentals and the Headlines
Despite a year dominated by recession talk, tariff anxiety, and volatile sentiment, L Catterton’s outlook for consumer spending was described as relatively steady. The speakers emphasized that consumer behavior has historically tracked fundamentals—employment, wage growth, balance sheets, and household wealth—more closely than consumer sentiment surveys, which they noted can reflect media narratives rather than actual spending behavior.
Tariffs, Inflation, and Consumer Conditions
Early concerns around tariffs and renewed inflation were viewed by the speakers as less severe than initially anticipated. Companies adapted supply chains, negotiated outcomes reduced the effective impact, and inflationary pressure appeared more gradual than acute. These changes occurred during a period when consumers were described as being relatively well positioned, supported by employment levels, real wage growth, and household balance sheets.
Why “The Consumer” Is the Wrong Lens
A central takeaway was the importance of segmentation. U.S. spending was described as being disproportionately driven by more affluent households, whose incomes and consumption patterns have historically been more stable across cycles. This was cited as one factor that may help explain why stress in some mass-market segments can coexist with relative strength in premium categories—and why investors may focus on specific consumer segments rather than broad averages.
Finding Growth Beyond the Cycle
L Catterton described its approach as identifying subsectors growing faster than their broader categories, and then seeking businesses that may be gaining share within those areas. Rather than mirroring consumer spending broadly, the focus is on areas aligned with longer-term structural trends, including premium leisure, health and wellness, and performance-oriented products.
AI, Automation, and the Next Consumer Landscape
The conversation closed with a forward-looking discussion on AI and robotics as potentially significant forces shaping consumer industries. AI was described as influencing discovery, personalization, and cost structures, while robotics may affect logistics, retail, healthcare, and services. The speakers discussed potential opportunities emerging at what they described as the “implications layer,” as categories, value chains, and profit pools may be evolving.
