In 2025, the diversified boom of new retail channels proved that retail efficiency gains significantly undermine brand value, while the rise of private labels further demonstrated brand value depreciation.
Retail and brands are in a seesaw battle.
This momentum is set to continue into 2026, making the new year even more challenging for FMCG brands.
How should brands correctly assess their asset value in a harsh competitive environment?
The answer still lies in looking to mature Western FMCG markets for solutions; the market itself provides clear guidance.
Let's start with the conclusion: Famous consumer brands won't have as easy a time as before, but they remain highly valuable.
This conclusion comes from the 2018 Daily Journal shareholder meeting, where the chairman, Charlie Munger—the legendary investor and Buffett's most important partner—shared his views.
Charlie Munger, Buffett's "spiritual mentor," shared insights at the Daily Journal shareholder meeting.
Even with intensified competition, brand assets remain highly valuable
The following is a transcript from the 2018 Daily Journal shareholder meeting:
Shareholder: My question is about brands. You've said before that investing should focus on companies with sustainable competitive advantages. In the past, famous brands had pricing power, which provided a clear competitive advantage.
Now, many old brands are losing favor with younger consumers, internet upstarts are emerging, and private labels like Kirkland are gaining market share. Traditional consumer brands are showing weakness, with declining sales and pricing power. Companies like Amazon and Costco have gained more leverage through scale. Can traditional consumer brands still be considered a moat?
Munger: Famous consumer brands are still very valuable, but their competitive advantage isn't as strong as before. You're right. Amazon—I don't know much about it, only that it's growing rapidly and its leader is very smart. Bezos is smart, but what he's doing is also very challenging.
Costco, I know very well; I've been a director for over 20 years. I think Costco will become more and more successful. Kirkland, its private label, is growing very fast and becoming increasingly popular. Famous consumer brands won't have as easy a time as before, but they remain very valuable. Brands like Snickers will still be extremely valuable assets 60 years from now.
Companies holding famous trademarks, even if their future isn't as bright as the past, will still do well. But investors in these companies are different; their returns may continue to decline. You already know the answer; I'm just repeating what you said.
Why is this judgment worth pondering? Because Buffett and Munger, this legendary duo, have been key participants in the nearly 30-year battle between U.S. retail giants and FMCG brand giants.
Munger has been a director of Costco for over 20 years, and both he and Buffett have long held significant stakes in FMCG brands like Coca-Cola, See's Candies, and Kraft Heinz.
Their judgment on brand value comes from over 20 years of market decisions and assessments, and to some extent, it's the simplest and most effective feedback from the market.
Back to basics: re-understanding the key to brand asset value—brand mindshare
Why are FMCG brands still very valuable?
To understand this, we must return to the classic positioning theory that FMCG professionals can't avoid, and the often-mentioned brand mindshare.
As a Coca-Cola director, Buffett defined brand mindshare as "the consumer's unconscious first choice when a specific need arises." The economic value of this mindshare far exceeds what financial data reflects.
Buffett has held Coca-Cola stock since 1988, for 37 years without ever reducing his stake, with a cumulative investment of $1.3 billion, now worth approximately $27 billion.
At the 2007 Berkshire Hathaway shareholder meeting, he cited Coca-Cola: "When a person feels thirsty, the brand name that automatically comes to mind is the foundation of a billion-dollar business empire."
Occupying brand mindshare means creating a purchase reflex in consumers that requires no thought. In terms of data, this translates into increased repeat purchase rates, leading to better sales results.
Therefore, for brands, brand asset value is the result of this consumer mindshare occupation. And the measure of brand asset value is the depth of consumer mindshare occupation.
In practice, this brand asset value can also be supported by more quantitative data.
Brand mindshare has a huge impact on sales share Source: Ocean Engine × Kantar, "Ocean Engine Brand Mindshare Marketing Report"
Undoubtedly, no matter the competitive environment, as long as consumers are carbon-based beings with neural arcs, there will always be mindshare for brands to occupy, and brands will always have value.
The only change is that with intensified competition, retail companies have also joined the battle for mindshare, resulting in FMCG brands' mindshare not being as deep as before, thus diluting their asset value.
Take Coca-Cola again: the past consumption reflex might have been: mouth tastes bland, want something to drink, think of Coca-Cola.
With intensified competition, this reflex might become: mouth tastes bland, want something to drink, besides Coca-Cola, consumers might also think of checking out Costco for something good, or consider trying Costco's private label Kirkland cola.
This dilution of brand mindshare is undoubtedly a huge and irreversible impact.
Because in the past, consumer brands could use saturated product exposure, whether through advertising or terminal displays, to exclude other products in the same category, ensuring a firm hold on mindshare.
But now, retail companies' competitive intervention, on one hand, doesn't directly conflict with brands in terms of mindshare, and on the other hand, shelf placement rights are in the hands of retailers, giving them a unique advantage in capturing consumer mindshare.
That's why, as mentioned at the beginning, the diversified boom of new retail channels has a significant impact on brand value, and as retail channels continue to develop in the new year, this impact will persist.
For brands, how to minimize mindshare dilution and maximize brand value retention in the new year's competitive environment
might be the biggest challenge.