A key focus of the WCM International Small Cap Growth portfolio is to find quality global companies with durable, strengthening economic moats and corporate cultures aligned to this growth. An example of a company that demonstrates these characteristics is Royal Unibrew.
Royal Unibrew is a leading Danish brewing and beverage company with a strong presence throughout Eastern and Western Europe. With over 2,000 employees, Royal Unibrew has a history of staying close to their customers to remain relevant and ahead of the curve.
In this ‘Stock in Focus’ Brian Huerta, Client Portfolio Manager at WCM Investment Management (WCM) discusses the company’s competitive advantage and how the culture of the organisation supports its economic moat.
Tom Hickey (TH): Hello and welcome to this ‘Stock in Focus’ update for the WCM International Small Cap Growth Fund. Today I’m joined by Brian Huerta from WCM. How are you, Brian?
Brian Huerta (BH): I’m well, how are you Tom?
TH: Very well, thank you. Today we’re talking about a stock called Royal Unibrew, can you tell us a bit about what this company does?
BH: Royal Unibrew is a beer and non-alcoholic beverage company based in Denmark. Over the years it’s evolved from being a Danish brewer into a maker of ready-to-drink cocktails, energy drinks and flavoured sodas. We really think it’s well positioned because these are the fastest growing categories within beverages, and they’re expanding all throughout Eastern and Western Europe.
TH: What’s its competitive advantage like and how do you see that changing over time?
BH: Over the years Royal Unibrew have built up a nice scale in Eastern and Western Europe, but probably most importantly is its brand strength. Its focus on craft premium beverages and it continuously invests in these brands to protect them from competitive pricing pressure. It also increases the longevity of the brand and makes that moat expand and become more valuable over time.
TH: What’s the culture like within the organisation and how does it support that moat trajectory?
BH: There’s a long history of being close to their customers. Royal Unibrew put people out on the field, allowing them to really develop relationships with restaurant owners, bar owners and retailers, enabling them to essentially to keep an ear to the ground so they can detect the changes that might happen in consumer preferences.
They are also able to ensure that the brand is being represented properly and be on the lookout for potential acquisitions as they look to build out some of the brands and add to Royal Unibrew’s existing franchise of high quality premium brand beverages.
TH: Brian, thanks for your time.
BH: Thank you Tom.
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