Bega's Brands Aren't Strong Enough to Warrant an Economic Moat

Despite Bega Group's strategic shift toward a more diverse product offering, we expect dairy products to continue to represent the majority of Bega's sales over the next decade, exposing the firm to commodity pricing and volatile input costs. In our view, Bega has not carved an economic moat required to consistently generate economic profits, and we expect the firm's powerful customers to limit margin growth potential.