No Starbucks? Then Its a Frontier Market (Forbes)
Alexander Benard, the COO of Schulze Global Investments, a private equity firm focused on frontier markets, says his firm had developed a complex methodology for classifying a market as a frontier market verses an emerging market only to realize the resulting list corresponded almost one for one with what one might call the “Starbucks Corporation (NASDAQ: SBUX) Test:” Markets with a Starbucks did not make their frontier list BUT markets without a one did. Benard noted:
Starbucks needs to know that there are enough consumers in a market who are willing and able to pay relatively high prices for coffee. And not just enough to support one location, but multiple locations (one location is not enough to justify the headache and expense of putting together a whole new country strategy). It would need to know that there is a sufficiently capable labor force to provide the level of service that its customers would expect. A robust legal framework, including protection of intellectual property, would be important. And Starbucks would need to have comfort that the country’s infrastructure is robust enough to manage its supply chain.
The absence of some or all these factors is exactly what makes a market a frontier market rather than a developed or even an emerging market.
Benard ended his article by noting:
An interesting question to ask is which frontier market is likely to have a Starbucks location in the next 5-10 years. Those are the markets that have the potential to jump from frontier to emerging. Invest in them just before that transition occurs.
To read the whole article, If It Doesn’t Have A Starbucks, It’s A Frontier Market, go to the website of Forbes.
- Frontier Markets: Attractive Valuations with Limited Correlation (Mobius Blog)
- Nigeria, Argentina and Vietnam Top the Frontier Markets Sentiment Index (WSJ)
- Better Investing Strategy: Blend Emerging & Frontier Markets (Financial Advisor)
- Busting Frontier Market Investing Myths (Mobius Blog)
- Frontier Markets Book List (Krish’s Garden on Notion)
- Unlike Emerging Markets, Frontier Markets Are a Less Volatile Haven (FT)
- Are Frontier Markets a Viable Alternative to Underperforming Emerging Markets? (PA)
- “Fragile Five” Emerging Markets No Longer That “Fragile” (AP)
- 3 Successful Frontier Market Investing Strategies (DraculaCapital.com)
- Emerging Market Infrastructure ETF List
- Mild Recession in the US may Aid Asian Markets Including India: Credit Suisse’s Dan Fineman (Money Control)
- Investing in Emerging and Frontier Markets: An Investor Viewpoint (World Federation of Exchanges)
- ING IM’s Ruijer: China and the Fed are the Biggest Risks to Frontier Markets (Citywire)
- Debunking Myths of Investing in Israel (Aberdeen Asset Management)
- Most of What You Believe About Emerging Markets is Wrong (Forbes)