Erosion risks

• Private label and value brands trade-down in downturns
• Shifts to at-home specialty coffee and smaller roasters
• Brand damage from sustainability or deforestation issues in supply chain

Leading indicators

• Coffee category market share (in-home and out-of-home)
• Net price realization vs commodity inflation
• Brand equity and consideration surveys in key markets

Counterarguments

• Coffee is heavily commoditized; consumers can downshift to cheaper options quickly
• Premiumization can be copied by rivals through marketing and flavor innovation

Erosion risks

• Climate change impacts coffee yields and quality; supply becomes structurally tighter
• Regulatory changes (deforestation, labor) raise compliance costs
• Major rivals scale procurement similarly

Leading indicators

• Green coffee cost inflation vs hedging effectiveness
• Supply disruption frequency (origin issues, logistics)
• Certified and traceable coffee share

Counterarguments

• Input advantages are not exclusive; other global buyers can access similar supply
• Extreme supply shocks can overwhelm procurement scale advantages

Erosion risks

• Third-party compatible capsules reduce effective lock-in
• Regulatory pressure on packaging waste (capsules) and recycling
• System switching if competitors win on machine ecosystem or convenience

Leading indicators

• Active machine base growth
• Capsule volume growth vs machine sales
• Subscription penetration and churn

Counterarguments

• Many consumers multi-home with other coffee formats (pods, beans, instant)
• Compatible capsules and alternative systems can cap pricing power

Erosion risks

• Technology diffusion to contract manufacturers and rivals
• Quality issues or recalls offset productivity gains

Leading indicators

• Manufacturing yield KPIs and scrap rates (if disclosed)
• Gross margin trend in coffee segment
• Product defect and recall incidence

Counterarguments

• Operational best practices can be replicated; advantage may be incremental rather than structural

Erosion risks

• Private label and value competitors expand quality perception
• Shift toward fresh or refrigerated pet food challengers
• Reputation damage from contamination or recalls

Leading indicators

• Global and regional petcare market share
• Premium mix and price realization
• Recall frequency and quality incidents

Counterarguments

• Brand preference may not prevent switching if rivals price aggressively
• Newer fresh and DTC brands can build loyalty quickly in niches

Erosion risks

• Retailer consolidation and bargaining power
• Algorithmic e-commerce search reduces brand-driven shelf advantage
• Regulatory changes on pet nutrition claims

Leading indicators

• E-commerce share and search or share-of-shelf metrics
• Retail distribution points and weighted distribution
• Trade spend as a percent of sales

Counterarguments

• Large competitors (for example, Mars) have similar retail scale and can match execution
• Retailers can prioritize private label placement

Erosion risks

• Regulatory tightening and scrutiny on health claims (especially infant nutrition)
• Quality incidents or recalls can destroy trust quickly
• Competitors with pharma-scale QA and clinical evidence narrow differentiation

Leading indicators

• Recall events and quality alerts
• Regulatory actions and label or claim changes
• Clinical evidence pipeline and new product launches

Counterarguments

• Large peers (Abbott, Danone, Reckitt) also have substantial regulatory and R&D capabilities
• Compliance is table stakes; advantage may be smaller than implied

Erosion risks

• Brand damage from controversies (marketing practices, safety issues)
• Consumer shift to local or regional brands or clean label challengers

Leading indicators

• Brand trust metrics in infant or formula categories
• Mix shift toward premium and science-backed SKUs
• Share trend in key regulated markets

Counterarguments

• Healthcare-driven categories are evidence-based; brand alone may not win without superior clinical proof
• Switching can occur quickly after safety and quality events

Erosion risks

• Private label substitution and retailer leverage
• Shifts toward fresh cooking, meal kits, and foodservice
• Health and regulatory pressure on salt, sugar, and processed foods

Leading indicators

• Private label share in key markets
• Promotion intensity and trade spend
• Category volume growth vs price growth

Counterarguments

• Brands do not prevent consumers from switching based on price or promotion
• Local incumbents can outperform global brands via taste localization

Erosion risks

• Raw milk and input cost volatility
• Private label growth in dairy
• Local incumbents with fresher supply chains

Leading indicators

• Gross margin vs dairy input inflation
• Ice cream volume vs temperature seasonality
• Private label penetration in core markets

Counterarguments

• In dairy, freshness and local sourcing can beat global brands
• Switching costs are minimal; promotions can drive rapid share shifts

Erosion risks

• Cocoa price spikes compress margins and force price hikes
• Health scrutiny (sugar) and regulatory labeling
• Private label expansion in chocolate in some markets

Leading indicators

• Cocoa cost trend vs price realization
• Promotion depth and frequency
• Brand share in core confectionery subcategories

Counterarguments

• Competitors have equally strong global brands (Mondelez, Lindt, Hershey)
• Impulse categories can shift quickly with innovation and promotions

Erosion risks

• Regulatory scrutiny on natural mineral water processing and labeling
• Water scarcity and climate-driven constraints on springs and extraction
• Plastic packaging backlash and environmental regulation

Leading indicators

• Regulatory actions and site permits in key spring locations
• Volume trend in premium mineral water vs mainstream
• Packaging mix shift (rPET, refill, alternative formats)

Counterarguments

• For many consumers, water is a commodity; brand premium is fragile
• Local competitors and private label can replicate value proposition at lower prices