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Why Invest In Consumer Businesses
We all have Needs and Wants
Consumers vote with their wallets each day.
Driven by basic desires and wide availability, products and brands can have an emotional connection with people.
The connection Consumers feel to a brand and product can lead to consistent and reliable demand. In some cases this results in a lifetime, or even transgenerational pattern of repeat purchases.
You may find these products in your fridge, wardrobe or handbag.
Several of these businesses have been selling products for over a century.
Why We Invest in Consumer Businesses
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High quality Consumer businesses have fundamental characteristics and structural tailwinds which have led to a history of outsized returns.
Our Founder has been investing in selective Consumer businesses for 30+ years and has identified attributes, including:
1) Moats that are difficult to replicate: brand power, scale and advantaged process such as preferred and secured locations, supply chains or industry expertise.
2) Businesses that are either leaders in fast growing emerging industries, or are dominant in mature markets that may face modest competition, and may earn oligopolistic profits, supported by innovation and R&D.
3) High quality consumer businesses have a track record of delivering resilient revenue growth and/or elevated profit margins. This provides a foundation for compounding of cashflows over the long-term, supporting shareholder returns.
The returns of high-quality Consumer businesses have exceeded US, UK and Australian residential real estate, as well as the S&P 500
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We call this Consumer Alpha.
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