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3 weeks ago | 
morningstar.com | Kristoffer Inton
Japan Tobacco is the third-largest tobacco company by volume, globally excluding China, with a market share of about 18%, according to Euromonitor. Its competitive edge is greatest in its home market, where it holds a commanding 62% cigarette market share. However, the popularity of its leading brands, especially Mevius, extends to other Asia Pacific countries as well.
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1 month ago | 
morningstar.com | Kristoffer Inton
Smucker has leading share in some categories, especially its Uncrustables brand, but we don’t think it has enough pricing power or entrenched retailer relationships to create an economic moat. Its long-term strategy is to turn low-single-digit sales growth into mid-single-digit adjusted operating income growth, leading to high-single-digit adjusted EPS growth—but we expect mid-single-digit run-rate growth.
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1 month ago | 
morningstar.com | Kristoffer Inton
With its fresh products, Freshpet is well positioned to capitalize on continued growing pet ownership along with humanization trends by expanding its store footprint and growing its sales-per-store. It primarily focuses on the $42 billion US dog food market (2024 estimate according to Euromonitor) through company-owned and -maintained refrigerators in 28,141 grocery, mass and club, pet specialty, and natural stores. Of these, 22% have more than one refrigerator.
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1 month ago | 
morningstar.com | Kristoffer Inton |Sean Dunlop
McDonald's strategy emphasizes its competitive strengths through a "MCD" framework: relevant marketing, core menu development, and the four D's: digital, drive-thru, delivery, and development. Recently, the firm has been leaning into its scale-driven cost advantage to emphasize its value offerings amid a challenging consumption spending environment. We view this strategy as prudent.
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1 month ago | 
morningstar.com | Kristoffer Inton
Altria offers pure-play tobacco exposure to the US, where cigarette volumes declined 6% per year from 2019 to 2024, faster than the global market's 1% annual loss, according to Euromonitor. Moreover, excise taxes are constantly increasing and regulations tightening.
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1 month ago | 
morningstar.com | Kristoffer Inton |Sean Dunlop
Wendy's is the second-largest QSR burger chain in the US behind wide-moat McDonald's, sporting a value proposition around fresh and craveable products at competitive price points. The banner has benefited from a resurgence over the last few years, driven by the renewed launch of its breakfast platform, store reimaging, and strong value positioning.
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2 months ago | 
morningstar.com | Kristoffer Inton
Private-label manufacturers can offer customers lower prices by minimizing the marketing and product spending that most packaged-food companies rely on to create strong brands. Secular trends create tailwinds for growth, but preferences for private label differ greatly by category. Since Steve Oakland took over as CEO in 2018, TreeHouse has slimmed its portfolio.
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2 months ago | 
morningstar.com | Kristoffer Inton
British American Tobacco is the world’s second-largest tobacco company by volume, with sales in around 180 countries. But with global cigarette consumption declining a mid-single-digit percentage each year, BAT has invested in several next-generation products that can deliver nicotine with reduced risk. This strategy makes sense, but we think the firm has placed too many bets, leading to it becoming a “jack of all trades, master of none.”
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2 months ago | 
morningstar.com | Kristoffer Inton
Even as the second-largest poultry producer in the US (59% of 2024 sales), the UK and Europe (29%), and Mexico (12%), Pilgrim’s Pride remains beholden to commodity cylicality, in our view. It primarily sells fresh chicken (with pork also sold only in Europe), with just 26% of sales coming from prepared products, though this includes private-label offerings. Because meat is a commodity and carries little to no brand or pricing power, it is exposed to volatility in input costs and selling prices.
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2 months ago | 
morningstar.com | Kristoffer Inton
No-moat Tyson primarily sells raw beef, pork, and chicken, although it has increased its exposure to prepared foods. Despite the scale it has amassed (with a sales base around $53 billion), meat is a commodity that carries little to no brand or pricing power, exposing sellers to volatility in both costs and revenue. Tyson's strategy to sell three meats is intended to offer diversification.
