Covid has really changed European economy drastically. As a result of it, more and more industrials, banking, automaker, energy, insurance, retail etc. type companies of Europe are getting disrupted. Yet, most of the remaining strong ones seem to be the luxury brands who gain their power from century-old branding that has gone beyond world wars. Let's see some examples: In Spain the top company is the producer of Zara: https://companiesmarketcap.com/spain/largest-companies-in-spain-by-market-cap/. In France the top 4 are LVMH, Loreal, Hermes, Dior: https://companiesmarketcap.com/france/largest-companies-in-france-by-market-cap/ (kudos to all growing so fast during pandemic times) In Italy, the 3rd one is Ferrari: https://companiesmarketcap.com/italy/largest-companies-in-italy-by-market-cap/ (note that they sell ~10k cars per year) In Switzerland, their top one is Nestle: https://companiesmarketcap.com/switzerland/largest-companies-in-switzerland-by-market-cap/. Let's be fair that besides these, there are a few success stories, e.g. the semiconductor industry in Netherlands (ASML, NXP etc.), biotech in Switzerland, crazy growth of Biontech in Germany, Spotify and gaming companies in Sweden etc. But all in all, these are nowhere near how much US and Asia were able to capture the growing sectors. What is the future for Europe? Will people keep wearing LV, driving Ferrari and eating Nestle, or will these get disrupted too? Will there be many more success stories like ASML, Spotify and Biontech?
Outlier in your list of companies is Nestle, primarily a consumer goods company. Nestle is a huge company. Infact, it is the biggest food company in the world. There is no major threat to Nestle. People will continue to use Nestle products in the future.
You mean Nesquik, Kitkat, Aero, Cheerios, Nescafe are not replaceable? These are low quality products that rich people don't want any more. With the increasing health consciousness, and tendency to buy more boutique brands (e.g. good luck finding these at Whole Foods or Trader Joes), people will but Nestle less and less.
You’re severely underestimating the size and scope of Nestle. It’s the Disney of the food industry https://en.wikipedia.org/wiki/List_of_Nestl%C3%A9_brands
My Hermès stocks are doing great. Rich people don’t get affected by economy as much and will continue to buy luxury goods
It is definitely a great investment. Rarely tech people hold luxury goods stocks, so congrats!
European can juice US tech companies by imposing random taxes and regulations.
They get tiny bit of the revenues yeah.
SAP. Software made with famed German craftsmanship
It is a dying company
it is not dying fast enough though …
They are sitting ducks under changing tech world or consumption patterns. Tesla could pretty well kill German car manufacturing, Apple could kill Swiss watches and some new cool fashion will kill these high flying brands. We saw these happening during the industrial revolution too, when European manufacturing killed handicrafts worldwide.
Tesla isn’t going to kill any German brands, and the people who buy Rolex and Patek Philippe watches aren’t suddenly going to switch to a $400 disposable smart watch.
That’s why the top end brands are doing well but not the mid tier luxury brands. Also why I buy Hermès and not other stock. The real rich is not going to switch to some cheap made in China designer goods. But brands like coach that’s low end luxury is going to get destroyed.
Zara is not a luxury brand, it’s the Spanish version of H&M.
They also have luxury brand, Massimo Dutti
Right, but that’s not Zara, that’s the Inditex Group.
Massing Dutti is not a luxury brand. It’s a nicer version of Zara. Try zegna, isaia, Brioni, Kiton for men’s brands.
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It's not exactly an accident that not many recent high growth, innovative companies come from Europe. It's a mixture of how the culture is and how the government is