Long-term investing using a different lens: From being a commodity to a brand trigger; 6 stocks from 3 different sectors to look at
In some industries, the nature of business is commoditised. That is, every player does the same thing: Buy the raw material, process it, and sell it. Margins are thin, because there is not much valuation-addition happening. But then, over the years, some players have built brands for their products. And the margins of players who invest in building a brand get better. But this change is a process and not an event – and it takes time. But the change is likely to be durable as it is not easy to build brands in commoditised businesses.
In some industries, the nature of business is commoditised. That is, every player does the same thing: Buy the raw material, process it, and sell it. Margins are thin, because there is not much valuation-addition happening. But then, over the years, some players have built brands for their products. And the margins of players who invest in building a brand get better. But this change is a process and not an event – and it takes time. But the change is likely to be durable as it is not easy to build brands in commoditised businesses.
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