Thread by @unseenvalue

Investors know that the high-quality #FMCG companies are over-valued ⛳️

Yet they prefer to sit tight due to the quality of earnings, low maintenance CapEx and working capital, sustainably high cash-flows, high incremental ROCE and (still) a very long growth runway ahead! 👍

[1]

Growth drivers galore! World's poorest people are in volumes; a fast-growing market segment; untapped buying power!

Note: only 3 #FMCG categories are almost fully penetrated - bath soaps, detergents and matchsticks. Everything else offers good long-term (>5 years) growth!

[2]

Innovative and progressive #FMCG players are continuously discovering new solutions like single-serve packages for dozens of underpenetrated categories (e.g. hand sanitizers, home insecticides).

Across EMs we find these single-use products dangling at the tiny storefronts.

[3]

Unilever perhaps is the undisputed bottom-of-the-pyramid market leader, but there are dozens of very innovative large and midsize Indian companies that have the resources and capabilities to offer "affordable-4-masses" & "profitable-4-shareholders" - stream-of-solutions!

[4]

High-quality companies posses serious economies-of-scale & scope to cover the fixed costs as doing business with the poor is unavoidably complex! This is the sole reason why only select #FMCG and #Pharma companies been able to address the "low-price & high-volume" challenge!

[5]

The key to the bottom-of-the-pyramid business strategy is to approach the market with “small unit packages, low margin per unit, high volume, and high return on capital employed.” - said, late prof. CK Prahalad in his masterpiece 👇

#CKPrahalad #BOP

[6]

"India is not Calcutta and Bombay. India lives in....villages." Gandhi Ji 🙏

Rural and women population at the bottom of the pyramid are both the resource and the consumers. They are the pulse of any emerging and low-income country. Connect with them well and you get a win-win!