Lessons for All in Bellamy's Troubles
Six months ago, organic baby-food company Bellamy’s was flying the flag for a new Australian economy. Australia’s reputation for healthy, clean food was going to pick up the commodities slack as China’s growth transitioned from infrastructure to consumption. Yet just a few weeks after the company’s first profit downgrade caused the share price to halve, Bellamy's is in another trading halt. What has happened to the great Chinese consumption story? Almost by definition, a strong brand is one that has been around a long time and has a permanent place in its customers’ psyche. China’s economy is so new and changing so fast that very few brands have been able to establish themselves. Asia will have plenty of established local brands in a few decades’ time. Indeed, Australian food brands like Bellamy's may well have a place. For every company that manages to reach the peak, though, there will be hundreds that get a foothold only to tumble back down. It is almost impossible to pick the winners today. Indeed, the victors might not even exist. (VIEW LINK)
MORE ON Equities
Steve began Forager Funds in 2009, and now manages approximately $470m across two funds. Offering a listed Australian Shares Fund (FOR) and an unlisted International Shares Fund, Steve focuses on long-term investing in undervalued companies.