Companies that are able to produce products or services at lower costs than competitors are often able to sell at the same price as competition and gather excess profit, or have the option to undercut competition.
Example: Anheuser-Busch InBev SA/NV
Anheuser-Busch InBev SA/NV is the largest brewer in the world. The company’s size provides it with huge bargaining power as well as a lower average cost of production. Morningstar states: “Vast global scale and near-monopoly dominance in several Latin American and African markets give AB InBev significant fixed cost leverage and pricing power in procurement.”
Risk: Investors should consider risks before investing. See dedicated risk factors section on this website.