How could understanding the incredible amount of strong brands owned by one of the largest companies help us be better investors? I thought of that last Sunday morning as I was doing my traditional Sunday morning routine of looking over the Sunday Bergen Record. One of the best conveniences is having the local Bergen County newspaper delivered to your driveway. The only thing that would be better if I could teach my American lab – Taxi – to retrieve the paper from the driveway and bring it into the house (especially on those extremely cold mornings).
This past Sunday as I was looking through the many sections of department store advertisements, I came across a booklet of coupons. The title on the booklet was P&G brandSaver. For those who are not familiar, P&G stands for the very large American conglomerate called Proctor and Gamble. P&G is one of the largest publicly traded companies in the United States and is a member of the so-called S&P 500.
We have discussed in previous posts the benefit of owning pieces of these large companies both here in the US and overseas. As I flipped through this booklet of coupon savings with the various P&G products, it helped illustrate the reason for this belief. As you go through the various brands that are sold under many different divisions of Procter & Gamble, we can see why this company has a strong future – not just in the United States, – but in the developed and especially the emerging markets in Asia, Africa and Latin America.
This company sells very well-known brands starting with Ivory soap, all the various products of Gillette from deodorants to shaving supplies and body wash, as well as the diaper brands of Pampers and Luvs. The company sells toilet paper under the Charmin label, detergent under the Tide, Dawn and Cascade labels, tooth paste and teeth whitening under the Crest label, make-up under the Olay label, shampoo under the Pantene and Head and Shoulders label, and batteries under the Duracell label.
Oh there are many more (Wet Jet Swiffer, Puffs tissues, Bounty paper towels), but how many more brands do you need to show the incredible value that P&G has and other large companies have – regardless of the current market environment. These brands are built for growth for many decades through the many market cycles that will come and go.
How will these very strong brands do over the investment lifetime that most investors have? My guess is very well – if history is any guide. What would the cost be to duplicate these P&G brand names or other brand names such as Coke or the Disney characters to name a few? Especially with the increased sales to the growing overseas markets.
When people trade the P&G stock on daily movements are they aware of the long term value of these brands and assets?
They could be. But I guess they are not investors, but are speculators. Which are you?
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