Consumer
Staples
Andrew Bennett
Jordan Conn
Lan Gao
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Consumer Staples Sector Analysis: Market Size, Industries, Forces, Valuation, Comparison, Slides of Business Accounting
An in-depth analysis of the Consumer Staples sector, including its size and market capitalization, major industries, Porter's Five Forces analysis, economic and financial drivers, valuation, and industry comparison. topics such as sector performance, industry sales trends, margins, profitability, free cash flow, and relative valuation to the S&P 500.
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2021/2022
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Consumer
Staples
Andrew Bennett
Jordan Conn
Lan Gao
Overview
Industries
Largest Companies
Procter & Gamble Co $232.16B
Wal-Mart Stores Inc $214.55B
Anheuser-Busch $199.01B
Coca-Cola Co $183.6B
PepsiCo $153.79B
Philip Morris International Inc $149.83B
Altria Group $126.43B
British American Tobacco $110.72B
Business Analysis
Business Cycle
Defensive
Demand is constant regardless of where the economy is headed, since people
cannot cut out consumer staple products
Stocks have steady dividends and low Beta
Porter’s Five Forces
1. Bargaining Power of Buyers - High
a. Low costs to switch brands b. Buyers have many options
2. Bargaining Power of Suppliers - Low
a. High number of suppliers reliant on low number of companies for the majority of business
3. Threats of Substitute Products - High
a. Small number of established brands, but products are easy to replicate and can be sold for
cheaper prices
4. Intensity of Rivalry - High
a. Low product differentiation
5. Threats of New Entrants - Low
a. High capital requirement
b. Brand recognition is significant
Economic Analysis
Economic Correlation
● Other drivers
○ CPI
○ FAO Food Price Index ○ Foreign Exchange/ Strong or Weak Dollar ○ Unemployment
Financial Analysis
Industry Sales
Downward Trends
● Household and Personal Products
● Mondelez and P&G
Profit Margin
● -12% PM in 2008 Vs. -66% S&P ● 11% currently vs flat S&P 500
Free Cash Flow
● Very Established Sector ● Not extremely cash intensive in terms of new projects, concepts, etc. ● Positive and consistent cash generator