The Future Of Food

Thinking Points

  • My recent trips to several food processing plants in China and Japan has triggered a few thoughts about the food industry.
  • Frozen food quality is improving. This is likely to drive change in how the industry operates.
  • Investors ought to not only pay attention to frozen food companies, but also companies impacted by frozen food (like distributors).

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Poking The Convenience Giants – Welcia Holdings (TYO: 3141)

Thinking Points

  • Major drug store operator Welcia (TYO: 3141)  is becoming Japan’s neighborhood pharmacy.
  • In doing so, the company directly competes with the convenience industry.
  • Welcia maintains a strong position against the giants in convenience, thanks to Aeon’s (TYO: 8267) backing.
  • With its 18x EV/EBIT price tag and many moving parts, Welcia does not present a compelling investment opportunity.
  • Investors ought to look at pharmacy and drug store related industries for opportunities.

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Drug Stores Inconveniencing 7-Eleven

Thinking Points

  • Drug stores are entering convenience territory, offering goods typically available at convenience stores.
  • Convenience chains are fighting back by slowly working into the more regulated OTC drug market, mostly through partnerships with drug and pharmacy chains.
  • The distinguishing characteristics of the convenience, drug store, and pharmacy industry are less apparent now.

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