Quality Growth
Global equities specialists since 1984. We provide a boutique investment experience for institutional and intermediary clients around the world.
The t-shirt test: Competing on brand vs price
Quality Growth Boutique
Mark Zuckerberg, the CEO of Meta, believes that wearing the same t-shirt everyday reduces the number of decisions he has to make, allowing him to become more productive. However, he does not wear just any t-shirt. He reportedly only wears Brunello Cucinelli, a luxury Italian fashion brand whose t-shirts have a price tag of more than $300.
For sure, Cucinelli’s t-shirts are made of the best materials and have a better fit than the Hanesbrands t-shirt you can buy for $10 at your local Wal-Mart. But Cucinelli’s premium comes mostly from its brand, which is associated with sophistication and exclusivity. If it is good enough for Mark, it is good enough for you.
Cucinelli generates a profit of $75 for every T-shirt it sells, Hanebrands, a US manufacturer of basic clothing, makes just $2 per t-shirt. Hanesbrand faces tough competition, and it needs to compete on price, Cucinelli sells its brand. This is hard to replicate. Cucinelli is also growing faster. It’s no wonder that Cucinelli’s stock outperformed Hanesbrands by more than 9x’s over the last decade.
Vontobel Quality Growth only invests in quality companies that have strong brands, pricing power and higher margins, like Cuccinelli. This is why a portfolio of quality companies can compound wealth over the long-run, with less risk.
Important Information: Past performance is not a guarantee of future results. Company discussed herein is a portfolio holding and for illustrative purposes only to elaborate on the subject matter under discussion. Investments referenced should not be considered as a reliable indicator of the performance or investment profile of any composite or client account. Further, the reader should not assume that any investments identified were or will be profitable or that any investment recommendations or decisions we make in the future will be profitable. Information provided should not be deemed a recommendation to purchase, hold or sell any security nor assumption should be made as to the profitability or performance of any company identified or security associated with them.
Forward-looking statements regarding future events or the financial performance of countries, markets and/or investments are based on a variety of estimates and assumptions. There is no assurance that any assumptions made in connection with such projections will prove accurate, and actual results may differ materially. The inclusion of forecasts should not be regarded as an indication that Vontobel considers such to be a reliable prediction of future events and should not be relied upon as such. Vontobel reserves the right to make changes and corrections to the information and opinions expressed herein at any time, without notice.
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