Soft drinks are an inexpensive consumer staple that are bought regularly. Unlike many other consumer products, buyers tend to stick with branded versions even in tough economic climates. They do not usually trade down to private-label alternatives where the quality is generally weaker and the cost savings minimal.
For investors, soft drinks companies have a lot to offer. Familiarity with their products makes them easy to understand, while the low-ticket prices mean their sales and cash flows tend to be very resilient.
To be successful in this sector, businesses need to possess strong brands that are positioned towards growth areas such as low sugar, premium specialised drinks and energy drinks.