LONDON

Even as consumers face soaring energy costs, rising food prices and higher mortgages or rent, it seems clear they're not prepared to forgo many of life's little treats: Makers of alcohol, cigarettes and candy are all reporting healthy sales amid the gloom.

"I would never give it up, not unless I was dying of alcohol poisoning or something," said Kelly Piggeln, a 62-year-old retired nanny, as she indulged in her favorite two vices - a cigarette and a glass of wine - on the patio of a London bar.

Cash-strapped consumers around the world are echoing Piggeln's stance. It's a trend that is reflected in strong financial reports this season from some of the biggest so-called "sin stocks," while banks and many retailers report sliding income.

Sin stocks - gambling, liquor and tobacco included - are usually a safe bet in hard times. While shares in some such companies have fallen along with stock exchanges this year, lots are still seeing strong revenues and sales.

"It's inelastic demand as far as many of these stocks are concerned," said Hargreaves Lansdown analyst Keith Bowman, using the economists' term for consumption that is not deterred by higher prices. "So far there's signs that they are holding up, although there's still concern that these industries will see some impact."

Anheuser-Busch Cos. Inc., the biggest brewer in the United States, turned a profit in the most recent quarter despite fears that rising costs for raw materials such as glass, barley, wheat and fuel would cut into the King of Beers' bottom line.

The company, which last month accepted a $52 billion takeover bid from Belgian brewer InBev, is so confident that consumers won't abandon the beer that it plans to increase prices for brands such as Budweiser and Bud Light to stay ahead of higher costs.

Similarly, Denmark's Carlsberg A/S reported a 36 percent rise in second-quarter net profit, saying stronger sales, particularly in eastern Europe and Asia, helped offset rising costs.

In Milwaukee, Katie Brozovich, a teacher who also works three part-time jobs, said she makes choices in her spending, such as not having her hair and nails professionally done, so she can keep drinking the pricier craft brews she prefers. Craft beers are those traditionally brewed from small, independent breweries.

"I'd rather spend $4 or $5 on quality beer than $3 on hopped-up water," said the 46-year-old, who was sipping on a craft beer from nearby Michigan. "It's worth the extra buck or two to get quality."

Diageo PLC, the world's largest producer and distributor of spirits, dubs many of its brands - including Johnnie Walker whiskey, Smirnoff vodka, Captain Morgan rum and Guinness stout - "affordable luxuries" that people are loath to give up, even in an economic downturn.

London-based Diageo expects its Scotch whisky business to continue to grow at least 8 to 9 percent annually, amid growing demand from emerging markets in Asia and Latin America.

Those emerging markets, particularly the developing economic powerhouses of China and India, are playing a key part in the buoyancy of such companies amid the turbulence, boosting demand for alcohol and cigarettes, which are increasingly used as status symbols denoting success and wealth.

But much of the demand is also still coming from the United States and Europe, which have been hardest hit by the credit squeeze, with price rises not dissuading many consumers in those regions.

Constellation Brands Inc., the world's largest wine company by volume, posted a 35 percent rise in branded wine sales in North America in the first quarter.

And although spreading smoking bans keep people from smoking at the bar , tobacco companies are doing just fine.

Philip Morris International said its earnings rose 23 percent in the second quarter and it raised its earnings forecast for this year, saying it had not been affected by inflationary pressures like other consumer products companies.

"Cigarettes in general can withstand such an environment better than many consumer products," Chief Financial Officer Hermann Waldemer said at the time.

British American Tobacco PLC posted a 15 percent rise in its first-half profits with help from higher prices and increased sales of premium brands.

Sales of the company's most expensive brands, such as Dunhill and Lucky Strike, grew 7 percent.

"While not immune from the consequences of an economic slowdown, we can certainly look to the future with more confidence than most," Chairman Jan du Plessis said when announcing the results.

Imperial Tobacco Group PLC, which recently acquired rival Altadis, says it remains on track for a successful year.

Richmond-based Altria Group, the owner of tobacco company Philip Morris USA, saw second-quarter profits slide because it spun off its international unit. But earnings from its continuing operations rose, and the maker of Marlboros reaffirmed its outlook for this year.

Not all the vices have profited. There are signs that Lady Luck has deserted gambling stocks . Moody's has downgraded the debt of almost 20 gaming companies, and four U.S. casinos have filed for bankruptcy this year.

But a drink and a smoke do not appear to be the only ways that consumers are comforting themselves in tougher economic conditions.

Cadbury PLC, the world's biggest confectionery company, reported a 7.3 percent rise in first-half sales in its first results since spinning off its U.S. drinks business. Among the big sellers in its candy store was Dairy Milk chocolate, rising 9 percent.

In the United States, the Hershey Co. reported dramatically higher second-quarter sales and profit and reaffirmed its 2008 guidance of sales growth of 3 to 4 percent.

"The odd bar of chocolate is not going to break the bank," said Louise Hill, 33, a London office worker. "I always have a piece a day, and I can't see that changing."

chocolates

Hershey reported dramatically higher second-quarter sales and profit. Cadbury was up as well, with Dairy Milk chocolate leading the way. drinks

Anheuser-Busch turned a profit in the most recent quarter and plans to increase prices for brands such as Budweiser and Bud Light. smokes

Philip Morris International said its earnings rose 23 percent in the second quarter, and it raised its earnings forecast for this year.

Originally published by The Associated Press.

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