SOURCE: The Boston Consulting Group

The Boston Consulting Group

November 17, 2009 00:01 ET

The Boston Consulting Group Picks Recession Winners by Targeting Long-Term Value Creation

Fast Retailing, Esprit Holdings, Shinsegae, British American Tobacco, and Imperial Tobacco Group Are the First Five Global Companies in BCG's Top 25 "Consistent Value Creators in the Consumer Industry" Over the Past Ten Years

BOSTON, MA--(Marketwire - November 17, 2009) - Consumer companies suffering from the global economic crisis should look to an elite group of sustainable value creators that have generated sizable and consistent shareholder returns over a decade, according to a new report by The Boston Consulting Group (BCG).

In "Lessons from Consistent Value Creators in the Consumer Industry," BCG identifies 25 consumer companies with a market capitalization of at least $7 billion that have consistently outperformed their local stock-market average during the ten years from 1999 through 2008. "Rankings are limited to the largest companies," explains coauthor Jeff Gell, a partner in BCG's Chicago office, "because the bigger the company, the harder it is to exceed expectations and deliver superior total shareholder returns (TSR) year after year."

The top 25 consumer-company consistent value creators are shown on the included image.

BCG also ranks the top ten companies from 2004 through 2008 in each of three sectors of the industry: consumer goods, retail, and travel and tourism. The number-one company in the consumer goods sector is KT&G (formerly Korean Tobacco and Ginseng Corporation); in the retail sector it is Dairy Farm, a leading retail group in Singapore; and in the travel and tourism sector, it is SMRT, a mass-transit corporation in Singapore.

Among the key findings:

-- The average annual return for the 155 companies in the sample was 3.9 percent. The average annual TSR of the top ten across the three consumer-industry sectors was 24.5 percent (about six times greater).

-- To qualify for the top ten in our sample of 155 global consumer companies, a company had to achieve an average annual TSR of 20.7 percent. The top performers achieved an average annual TSR of 30 to 35 percent.

-- Companies in the top quartile of the three consumer-industry sectors had a TSR of at least 11 percent per year.

-- The weighted average annual TSR for the top ten consumer-goods companies was 21.1 percent; for retailers it was 19.5 percent; and for travel and tourism companies it was 15.1 percent.

Lessons from the Sustainable Value Creators

The main focus of this year's report, however, is on performance over an even longer time frame. The experience of the 25 consistent value creators suggests four distinct pathways to long-term outperformance, each with its own preconditions, necessary management disciplines, and potential pitfalls:

-- Growth Engines that consistently deliver sales growth well above the GDP average -- usually 15 percent per year or more

-- Cash Machines that emphasize generating cash through margin improvement and the direct payment of free cash flow to shareholders in the form of dividends and share repurchases or to debt holders by paying down debt

-- Portfolio Migrators that systematically refashion the mix of their business portfolio over time through acquisitions and divestitures in order to move into businesses and markets with greater value-creation potential

-- Value Impresarios that use some combination of all these approaches, shifting their emphasis to the one that has the most potential to exceed investor expectations at any moment in time

"Lessons from Consistent Value Creators in the Consumer Industry" provides consumer executives with a road map for sustainable outperformance at a time when more and more investors are on the lookout for companies with a long-term track record and a credible plan for delivering value not just this year or the next but for many years to come.

To receive a copy of the report or arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 66 offices in 38 countries. For more information, please visit