Fast moving consumer goods (FMCGs) are an essential part of our lives today. Not all FMCGs are commodities however. Some brands continue to engage a loyal and growing user base due to superior products, global outreach, and decades of advertising. Colgate is synonymous for the entire dental care industry, as Gillette is for men’s hygiene.
A billion people are being added to the middle class over the next decade. Purchasing power continues to grow and demographics continue to be favourable. We have more single person households than ever before. At the same time, there is disruption happening at an unprecedented scale. Whether it’s better online distribution like the Dollar Shave Club or a growing number of white label products, moats that were considered unbreachable have started to chip away.
I surveyed Colgate, P&G, and Unilever in mid January. It involved reading dozens of 10-Ks, and close to two weeks of work. At the end, I was rewarded with an increased clarity in thinking about this space. There are only two major factors that matter over a decade – organic sales growth, and capital allocation. The rest, as they say, is noise.
You can find a summary of my findings here.