Fisher Investments on Consumer Staples

The third installment of the Fisher Investments On series is a comprehensive guide to the Consumer Staples industry—which includes companies that manufacture and sell food and beverages, tobacco, prescription drugs, and household products, to name a few.

This reliable resource provides you with the tools to help you understand and analyze opportunities within today's global Consumer Staples sector. With this book as your guide, you can quickly become familiar with how the Consumer Staples sector is segmented by industries, their respective macroeconomic drivers, and the challenges facing companies in this sector. Additionally, there are chapters dedicated to explaining many of the unique aspects of Consumer Staples products in emerging markets and security analysis techniques focused on Consumer Staples firms.

You don't have to be a professional to learn to better invest in the Consumer Staples sector—but you do need to be prepared. Fisher Investments on Consumer Staples can help get you up to speed in this area and help you make better decisions through any market conditions.

For more information visit www. consumerstaples.fisherinvestments.com

Foreword ix

Preface xi

Acknowledgments xv

Part I Getting Started in Consumer Staples 1

Chapter 1 Consumer Staples Basics 3

Overview 4

Staples’ Distant Cousin—Consumer Discretionary 7

The Business Cycle’s Winds of Change 10

Boring Can Be Beautiful 15

Chapter 2 History of Consumerism in America 21

Colonial America and Consumerism 22

Mass Production in the Late Nineteenth Century 26

The Roaring Twenties and the Consumer Economy (1921–1929) 28

Mass Marketing and Modern Consumer Products 35

The Modern Landscape 37

Chapter 3 Consumer Staples Sector Drivers 39

Economic Drivers 39

Political Drivers 52

Sentiment Drivers 55

Part II Next Steps: Consumer Staples Details 59

Chapter 4 Consumer Staples Sector Breakdown 61

Global Industry Classification Standard (GICS) 62

Global Consumer Staples Benchmarks 63

Food, Beverage & Tobacco 65

Household & Personal Products 86

Food & Staples Retailers 90

Chapter 5 Challenges in the Consumer Staples Sector 101

Challenge 1: Growing in Mature Industries 101

Challenge 2: Dealing With Volatile Input Costs 113

Chapter 6 Consumer Staples in Emerging Markets 123

Opportunity Knocks 123

Emerging Markets and Consumer Products 125

Investment Idiosyncrasies 135

Part III Thinking Like a Portfolio Manager 139

Chapter 7 The Top-Down Method 141

Investing Is a Science 141

The Top-Down Method 145

Top-Down Deconstructed 150

Managing Against a Consumer Staples Benchmark 158

Chapter 8 Security Analysis 163

Make Your Selection 164

A Five-Step Process 165

Important Questions to Ask 173

Chapter 9 Consumerize Your Portfolio—Investing Strategies 181

Strategy 1: Playing the Market Cycle 182

Strategy 2: Playing Style Shifts 186

Strategy 3: Develop New Categorizations 189

Implementing Your Strategy 191

Appendix: Consumer Staples Sector Resources 195

Notes 199

About the Authors 209

Index 211

MICHAEL CANNIVET is a Consumer Staples Research Analyst at Fisher Investments. He is also a contributing columnist for MarketMinder.com. Michael is a graduate of Georgetown University. Originally from Chicago, he currently resides in the Bay Area with his wife, Jennifer.

ANDREW S. TEUFEL has been with Fisher Investments since 1995 where he currently serves as a Co-President and the Director of Research. Prior to joining Fisher Investments, he worked at Bear Stearns as a corporate finance analyst in its Global Technology Group. Andrew also instructs at many seminars and educational workshops throughout the United States and United Kingdom, and lectures at the Haas School of Business at UC Berkeley. He is also the Editor in Chief of MarketMinder.com. Andrew is a graduate of UC Berkeley.

• An in-depth look at the global Consumer Staples investment universe including food, beverages, household products, retailers, and more
• Tips and tools for security analysis and portfolio management
• A useful guide for investing in any market condition

FISHER INVESTMENTS™ on CONSUMER STAPLES

The third installment of the Fisher Investments On series is an all-encompassing guide to the Consumer Staples industry—which includes companies that manufacture and sell food and beverages, tobacco, prescription drugs, and household products to name a few.

This reliable resource provides you with the tools necessary to understand and analyze opportunities within today's global Consumer Staples sector. With this book as your guide, you can quickly become familiar with how the investment universe of the Consumer Staples sector is segmented by industries, their respective macroeconomic drivers, and the challenges facing companies in this sector. Additionally, there are chapters dedicated to explaining the unique aspects of Consumer Staples products in emerging markets and security analysis techniques focused on the Consumer Staples sphere.

You don't have to be a professional to successfully invest in the Consumer Staples sector—but you do need to be prepared. Fisher Investments on Consumer Staples can get you up to speed in this area and help you make the most of your time in any market.