That May Translate into Long-Term Wealth.
It is likely that demand for these products will increase over time as the global population continues to grow. Add to that the expanding middle classes in many emerging markets, and you have the potential for continued success. Successful companies in this sector (like Proctor & Gamble, Coca-Cola and Kraft) generally hold the number one or two market share position and as a result, they tend to achieve economies of scale that, in our opinion, make it difficult for newcomers to compete. This “moat” effect makes the long term prospect of owning these companies attractive. There is no such thing as a “sure bet,” but the chance of obsolescence is much less with this sector than, say, technology, where the case can be made that items we need today may be out of date in 5-10 years.