Sip, Savor, and Invest: How Everyday Favourites Can Boost Your Portfolio

A tried-and-true piece of investing wisdom is to "invest in what you know," and products you use regularly can be an excellent starting point. Whether it’s bubble tea during a sunny afternoon or a crisp Tiger Beer shared among friends, these everyday experiences can offer more than just enjoyment—they can lead to investment opportunities.

Let’s explore the concept of investing in familiar products, with a focus on Singapore’s love for bubble tea and alcoholic beverages like Chang Beer and Tiger Beer.

The Case for Investing in Familiar Products

Investing in products you use regularly offers several advantages:

1. Familiarity Breeds Insight As a consumer, you’re already familiar with the product’s quality, pricing, and popularity. For example, if you notice long queues at your favourite bubble tea shop or a constant demand for Tiger Beer at gatherings, it signals strong consumer appeal—an essential ingredient for business success.

2. A Personal Connection to Your Portfolio Owning shares in companies whose products you enjoy creates a tangible connection to your investments. It’s exciting to see your favourite brands succeed and rewarding to benefit from their growth.

3. Market Awareness Your daily observations can help you spot trends before they appear on analysts’ radars. For instance, the rise of bubble tea as a cultural phenomenon in Singapore and across Asia was evident long before it became a global trend.

Bubble Tea: A Sweet Investment Opportunity?

Singapore’s love for bubble tea is legendary, with brands like Gong Cha, Koi, and LiHO capturing the hearts (and wallets) of consumers. The bubble tea craze has grown into a multi-billion-dollar global industry, driven by young consumers who value its mix of novelty, customization, and Instagram-worthy appeal.

However, while bubble tea is a massive trend, investing directly in it can be challenging. Most bubble tea chains are privately held, limiting opportunities for retail investors. That said, there are ways to gain exposure:

• Ingredient Suppliers: Look into companies supplying tapioca pearls, tea leaves, or dairy alternatives, as they benefit from the industry’s growth.

• Food and Beverage ETFs: Some ETFs focus on consumer trends, including fast-growing food and beverage sectors.

Bubble tea’s appeal is undeniable, but as an investor, consider whether its popularity is sustainable or a passing trend.

Alcoholic Beverages: Timeless and Profitable

Unlike bubble tea, alcoholic beverages have been around for centuries and are deeply entrenched in global culture. Brands like Chang Beer (owned by $ThaiBev(Y92.SI)$) and Tiger Beer (under $HEINEKEN NV(0O26.UK)$) are household names in Singapore and beyond.

Why Invest in Alcoholic Beverages?

1. Steady Demand: Alcoholic beverages are resilient, with demand often holding steady even during economic downturns.

2. Global Appeal: Brands like Tiger Beer have expanded internationally, tapping into emerging markets where beer consumption is on the rise.

3. Strong Brand Loyalty: Consumers often stick to their favourite brands, providing companies with predictable revenue streams.

Take Thai Beverage (ThaiBev), for example. It owns not only Chang Beer but also spirits and non-alcoholic beverage brands. The company’s diversified portfolio provides stability and reduces reliance on any single product line. Meanwhile, Heineken, which owns Tiger Beer, benefits from its premium brand positioning and extensive global distribution network.

Risks to Consider:

• Regulatory Challenges: Taxes and regulations on alcohol can affect profitability.

• Changing Consumer Preferences: Health-conscious trends may lead to a shift away from traditional alcoholic beverages.

Balancing Personal Preferences with Investment Strategy

While investing in familiar products has its advantages, it’s important not to let personal preferences cloud your judgment. Here are some tips to strike the right balance:

1. Do Your Research: Even if you love a product, dig into the company’s financials, market position, and growth prospects. A great product doesn’t always mean a great investment.

2. Diversify: Don’t put all your money into products you use. Broaden your portfolio to include other sectors and asset classes for risk management.

3. Watch for Hype: Popularity doesn’t guarantee profitability. Bubble tea, for instance, has high operating costs and fierce competition, which could squeeze margins.

4. Look for Moats: Companies like ThaiBev and Heineken have strong competitive advantages, such as brand strength and distribution networks, which help them maintain market share.

Final Reflections

Would you invest in products you use regularly? The answer depends on how well the company behind the product performs financially and strategically. Everyday experiences can indeed lead to investment opportunities, but due diligence is critical to avoid falling into the trap of emotional investing.

Personally, I love spotting trends from my daily life and translating them into actionable investment ideas. Whether it’s a refreshing bubble tea or a classic Tiger Beer, these moments remind me of the power of understanding what you’re investing in.

So, next time you grab your favourite drink, take a moment to think: Could this product be more than just a treat? Could it be a potential investment opportunity? By staying curious and informed, you might just sip your way to smarter investing. Cheers to that!