Building strong business brands requires long-term investment strategies that can generate compounding returns over time. As outlined in the JAB Holding report, their approach focuses on developing resilient consumer platforms in coffee, restaurants, indulgence and petcare. Key to their 13% annual investment return has been taking a marathon view of brand building, pursuing sustainble growth models and maintaining financial discipline.
Investment Horizon Matters – Take a Decade or Longer View
The JAB case outlines how their investment time horizon is measured in decades, not years. As compounding investors, they evaluate performance over the long-term rather than focusing on short-term annual results. This patient approach allows them to undertake strategic pivots and wait for early stage platforms like Coty beauty to fully mature.
Platform Building Drives Growth – Scale Existing Assets
JAB has built market leading platforms in coffee, restaurants, indulgence and petcare through over 15 acquisitions and partnerships since 2011. They have patiently invested to scale brands like JDE Peet’s coffee and Krispy Kreme donuts into global category leaders. Platform building has been key to generating their overall 17% annual investment return.
Strong Brands Outperform in Downturns
The JAB model of investing in stable consumer brands has enabled them to outperform stock markets during difficult macro environments and volatile conditions. While prolonged bull markets arehard for them to beat, strong legacy brands provide defensive qualities when equity valuations contract.
Financial Discipline Enables Risk Taking
Despite significant platform building, JAB has maintained an investment grade balance sheet. Their financial discipline has provided access to low cost capital to fund acquisitions. It has also allowed them to undertake turnarounds like Coty beauty without putting undue leverage pressure on other assets.
The key lessons from JAB’s investment approach are taking an exceptionally long time horizon, pursuing platform growth strategies and maintaining financial guardrails. These brand building examples demonstrate how consistency over decades and avoiding short-termism are imperative for compounding investment returns.