Consumer Staples

Report by CHA-AM Advisors

David Scott argues that luxury liquor companies are facing the same structural challenges confronting luxury apparel. While pandemic-era demand and post-Covid inflation masked underlying weaknesses, those issues are re-emerging. Key headwinds include shifting demographics and declining alcohol consumption among younger generations, as well as industry overpopulation and fragmentation. Liquor companies are experiencing falling asset turns but margins have not risen to compensate and the operating leverage effects will be "very vicious" as a result. David also sees the rising use of weight-loss drugs like Ozempic as a further negative catalyst. Companies discussed include Diageo, Pernod Ricard, Brown-Forman, Kweichow Moutai and Wuliangye Yibin.

Consumer Staples

Report by Copley Fund Research

Steven Holden reports how active MSCI China funds are positioned for the outperformance of the Consumer Staples sector - overweights are near record levels at +3.97% above the benchmark. Today’s 7 most widely held stocks in the sector join a prized group of just 15 companies that have ever been owned by more than 20% of funds at any one time. Dubbed the 20% Club, 8 of these stocks have since left, with Luzhou Laojiao the most recent entrant. The remaining 6 stocks are Kweichow Moutai (the highest conviction holding), China Mengniu Dairy, China Resources Beer, Wuliangye Yibin, Inner Mongolia Yibin and Tsingtao Brewery.