RECENT NEWS
The Economic Times  Jun 3  Comment 
Buy Godrej Consumer Products with a target of Rs 1600 and a stop loss of Rs 1519
Wall Street Journal  Jun 2  Comment 
Nestlé’s status as the gold standard for consumer staples has faded in recent years, but CEO Paul Bulcke dismissed concerns the sprawling, 150-year-old Swiss company, isn’t nimble enough to be a strong competitor.
Benzinga  Jun 1  Comment 
The consumer staples sector, whether it be by single stocks or exchange traded funds, is an investor favorite due to its low beta ways and tidy dividend yields. However, when it comes to consumer staples ETFs, a different way of looking at the...
New York Times  Jun 1  Comment 
Consumer staples companies led the gainers, while telecommunications stocks lagged the rest of the market.
MarketWatch  May 31  Comment 
U.S. stocks closed lower Tuesday after stronger-than-expected economic data raised the likelihood of a summer rate hike from the Federal Reserve. The Dow Jones Industrial Average fell 86.09 points, or 0.5%, to close at 17,787.13, barely holding...
Reuters  May 24  Comment 
Apple Inc , which has resisted pressure from U.S. law enforcement to unlock encrypted iPhones, this month rehired a top expert in practical cryptography to bring more powerful security features to a wide range of consumer products.
Benzinga  May 23  Comment 
David Tarantino of Baird reiterated a Buy rating on shares of Starbucks Corporation (NASDAQ: SBUX) on Monday with a $68 price target. Speaking as a guest during CNBC's "Call Of The Day" segment, the analyst defended his bullish thesis and said...
The Hindu Business Line  May 23  Comment 
The board of directors of Jyothy Laboratories has approved the merger of subsidiary Jyothy Consumer Products Marketing (JCPM) with itself. In a notification to the stock exchanges, Jyothy Laboratories...
Wall Street Journal  May 20  Comment 
Marketer of consumer products including Ajax, Fab and Rit files for bankruptcy court protection from creditors and puts its collection of household products on the auction block.




 
TOP CONTRIBUTORS

The Toy business leads this category, and by a wide margin. The 3 largest U.S. toymakers, Hasbro (HAS), Mattel (MAT), and JAKKS Pacific (JAKK), were all on the screen for significant periods of time. I think this is another illustration of how the Magic Formula does a lot of the work of digging up beaten down sectors for us. The first quarter is generally a weak one for toymakers, as most of their profits come in the Christmas season (as much as 60%).

The original thought was to separate between Consumer Staples (items that we must buy regardless of our financial condition) and Consumer Discretionary (luxury goods). However, many of the industries above would be ambiguous. For example, we need shoes (making them a staple), but in tight times we may decide to buy a store brand instead of more expensive Nike (NKE), adding a measure of discretion to the purchase. Consumer goods companies can make great long term investments - just ask Warren Buffett, whose investments in Coca-Cola, Anheuser-Busch Companies (BUD), and Procter & Gamble Company (PG) are legendary.

Forces affecting the Retail Industry

Brand is unquestionably the strongest form of competitive advantage in Consumer Goods. However, it's important to also judge the durability of the brand. For example, Coke is a brand known around the world, and has endured over 100 years of competition to still enjoy the top spot in the soda category today. That's a durable brand. Compare this to Gap (GPS).Ten years ago, Gap and it's spin off stores Old Navy and Banana Republic were considered fashionable and chic for the all important teen and college set. Today, the store is avoided by those same groups, lest their fashion sense be ridiculed by friends. That's a fickle brand. It's important to be able to separate a fad from a juggernaut. Add this to the PR problems Mattel faced last year with lead paint, and you have an unwanted sector, with some interesting potential investments.


Distribution is also important in the Consumer Goods sector. A company with a wider distribution network can leverage economies of scale to earn more on their fixed costs. An especially attractive arrangement is when one of these companies has an exclusive deal with a large distributor. Take Anheuser-Busch (BUD), for example. While this firm has an incredibly strong brand, they also require exclusivity from distributors. This allows them to lock out competitors like Molson Coors (TAP) and Miller, protecting profit margins. The soda companies also do this well. Have you noticed that McDonald's (MCD) only sells Coke products, while Pizza Hut (Yum! Brands (YUM)) only sells Pepsi? With these exclusive deals, competitors are blocked from those roads of distribution, protecting profits for the established companies.

Companies in the Consumer Products Industry (346)

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