As a reader of the Motley Fool (an excellent, and free publication) I came across their article about Philip Clarke (Tesco CEO) vision. You can find the article here. Owning a slice of Tesco is the only thing that I know of that Warren Buffett and I have in common though I suspect I may well have the ability to make an expensive suit look cheap.
Looking through the article I noticed that Tesco want to focus, amongst other things, on developing brands. Philip Clarke put it as: "To be a creator of highly valued brands". This is interesting. To my mind there is a natural conflict between supermarkets and brands. The manufacturers of brands have a higher margin than the manufactures of generic goods. People want to drink Coke even though blind testing shows that few can tell the difference and often people prefer competing products. Strong brands give pricing power. They are the classic moat and a moat like Coke is a hard one to breach.
The emerging markets and growing middle class is a natural area of expansion for both the food manufactures (Nestle, Denone, Kraft, Pepsico and friends) as it is great expansion ground for the big supermarkets - Tesco is expanding very aggressively. It will be intersting to see how the brand war shapes up there as it does here.
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