UBS Sees Developed Market Challenges in Home & Personal Care, Beverages Sectors

In a note released Tuesday, UBS analyst Stephen Powers compared pre-recession performance in the Home & Personal Care and Beverages sectors to current challenges facing these companies. Before the 2008 recession, companies in the HPC and beverage groups were, “simple, profitable, and highly cash-generative businesses,” as well as optimistic about “ever-rising consumption” from emerging markets, according to Powers. Moving to present day, Powers sees the following challenges:

“Developed market growth is likely to remain slow and price-competitive,
Emerging market growth is also likely to face structural challenges, and
External forces (e.g., regulation, taxation, commodity/FX volatility, new technologies, channels shifts, etc.) are going to make the operating environment consistently more complicated.”

Powers is a buyer of Estee Lauder

Monster BeveragesMNST

, Church & Dwight

CHD

, and Colgate-Palmolive

. Powers is staying on the sidelines on

Proctor & GamblePG

PepsiCo PEP

Coca-ColaKO

, Coca-Cola Enterprises

CCE

, and Dr Pepper Snapple