Over the past 2 weeks, we have had the opportunity to meet up with the senior management from a few listed companies, one of which is Ginger, a serious long-term compounder. Since we’ve only briefly looked at this company so far, we shall also keep this article short and sweet.
In its domestic market, Ginger reigns supreme with their number one market share built up over the years and which is still growing due to their steady introduction of new parallel health products and overwhelming last-mile reach. They are so strong in their real ground-up network that overseas health products giants willingly lay their trump cards faced up on the table when they discuss joint ventures to grow their business in Ginger’s market – Only Ginger can grow their sales the legitimate way. Grow any other way and these giants risk huge losses or worse still, complete breakdown of reputation if their local partners defrauded them or short-changed their end customers.
Given their unique standing as a reputable health company, consumers readily accept their Over-The-Counter health products, often swearing their health by these locally made products tucked as special remedies in their home medical kit.
One of its peer who specialises in old-school products recently grew very worried as this company strategically launched an ancient formula that the locals loved for centuries. In a short few months, Ginger quickly garnered more than 10% market share from this number one peer and quickly iterated their product launches to include superior functional ingredients which no one else has, hence providing confidence for management to aim for at least a 30% market share in the mid-term for this segment.
When asked about their long-term growth plans, Mr V causally shared “we are currently present in most major cities, covering about 30% of the entire market. Every year we grow our points-of-service by another 5% or so, and our scale increases more than that as our distributors grow organically too.” Not only are they growing strongly organically, the industry tailwind is also strong on their back as manufacturing costs begin to plummet and demand grows exponentially from earlier consumers who could not afford the prices yet.
The only concern is Ginger’s valuations are not as ideal as we would like it to be, yet. So we are watching the China-US match cautiously, ready to take some ginger to relieve the nausea built up from the volatilities.
Are you sure the companies you invest in are built up organically with real distributors who are truly independent and has real on-the-ground demand from end consumers?
We look only at World Best type of companies, not the type of companies that like to claim they are the Best in the World.